Court Opinion

ID: 7869451
Source: CourtListenerOpinion
Date Created: 2022-09-08 20:28:17.218297+00
Date Added: 2024-06-11T16:31:11.444788
License: Public Domain

Pope, Presiding Judge,
concurring specially.
I concur fully with the per curiam opinion and concur specially with respect to Division 1 because I do not think the terms of this loan are usurious.
OCGA § 7-4-18 (a) sets out the criminal penalty for usury and provides that no loan shall charge “any rate of interest greater than 5 percent per month.” The Supreme Court has held that any loan violating this section is illegal and results in the lender’s forfeiture of interest, but not principal, on the loan. Norris v. Sigler Daisy Corp., 260 Ga. 271, 272 (1) (392 SE2d 242) (1990).
But the criminal usury statute must be read in conjunction with OCGA § 7-4-2, which sets out the legal rate of interest. Under OCGA § 7-4-2 (a) (1) (A), the legal rate of interest of seven percent per annum applies where a rate percent is not established by written contract. And under this subsection, the parties to a loan of more than $3,000 and less than $250,000 are allowed to establish any rate of interest in their contract subject to the usury provisions of OCGA § 7-4-18.
The language of OCGA § 7-4-2 (a) (1) (B), however, provides that parties to a loan of $250,000 or more may establish any rate of interest and does not specifically invoke the limitations of OCGA § 7-4-18. Relying on this omission, the trial court held that OCGA § 7-4-18 does not apply to loans of $250,000 or more and thus did not apply to S & A’s loan in this case.
The prior opinions of this Court are in conflict as to whether the criminal usury statutes apply to loans of $250,000 or more. In at least one case, this Court has applied the criminal usury law to loans exceeding that amount. See First Alliance Bank v. Westover, Inc., 222 Ga. App. 524, 526-527 (474 SE2d 717) (1996) (holding that discount on $1.65 million loan did not render loan usurious). But in Barton v. Marubeni America Corp., 204 Ga. App. 346, 347 (419 SE2d 342) (1992), this Court held, without analysis, that Georgia’s usury provisions did not apply to a note in excess of $2.3 million. See also MOM *386Corp. v. Chattahoochee Bank, 203 Ga. App. 847 (2) (418 SE2d 74) (1992) (holding interest on loan was not usurious per se, but also noting language of OCGA § 7-4-2 (a) (1) (B)).
A review of the legislative history of these statutes compels the conclusion that loans of $250,000 or more are subject to Georgia’s criminal usury statute. In construing the two Code sections together, I adhere to the primary rule of statutory construction and look to the legislative history to determine the General Assembly’s intent: “In all interpretations of statutes, the courts shall look diligently [to] the intention of the General Assembly, keeping in view at all times the old law, the evil, and the remedy.” OCGA § 1-3-1 (a).
Prior to 1983, in addition to setting the legal rate of interest at seven percent, OCGA § 7-4-2 provided that 10.5 percent would be the maximum rate of interest allowable on consumer loans. Ga. L. 1979, p. 355, § 1. In 1983, OCGA § 7-4-2 was amended to allow lenders on loans of over $3,000 to charge, subject to the usury provisions of OCGA § 7-4-18, “any rate of interest, expressed in simple interest terms as of the date of the evidence of the indebtedness.” Ga. L. 1983, p. 1146, § l.6 At the same time, OCGA § 7-4-18 was amended to add subsection (c), which provides that “[n]othing contained in Code Section 7-4-2 . . . shall be construed to amend or modify the provisions of this Code section.” Ga. L. 1983, p. 1146, § 5. Thus, these amendments made the two statutes consistent and clarified that the usury provisions applied to all loans covered by OCGA § 7-4-2.
In 1988, OCGA § 7-4-2 was again amended to break subsection (a) (1) into the three current subparts (A), (B) and (C). The preamble of the amendment provides that it was intended, in part, “to provide that the rate of interest established by written contract on transactions of $250,000.00 or more may be expressed in simple interest terms or otherwise.” (Emphasis supplied.) Ga. L. 1988, p. 534. After this amendment, therefore, under subpart (A), parties to loans of more than $3,000 and less than $250,000 must continue to express the interest rate in “simple interest terms as of the date of the evidence of the indebtedness,” while under subpart (B), the interest rate on transactions of $250,000 or more can be expressed in something other than simple interest. Ga. L. 1988, p. 534, § 1. But as the preamble makes clear, nothing in this amendment was intended to remove loans of $250,000 or more from the protections of Georgia’s usury statute. Moreover, when the 1988 revisions were made, the legislature retained the language in OCGA § 7-4-18 stating that nothing in OCGA § 7-4-2 “shall be construed to amend or modify the provisions *387of this Code section,” indicating that the usury provisions should continue to control. OCGA § 7-4-18 (c).
Thus, while Judge Miller’s special concurrence focuses upon the legislature’s omissions in the 1988 revisions to OCGA § 7-4-2, I am guided by the stated purpose of those revisions. And accordingly, I would hold that OCGA § 7-4-18 applies to the S & A loan and would overrule Barton v. Marubeni America Corp., supra, to the extent that it holds that Georgia’s usury law does not apply to loans of $250,000 or more. And although Judge Miller’s special concurrence invokes stare decisis in upholding Barton, I note that the Barton case has been cited only once on another ground and has never been relied upon for the conclusory statement that the $2.3 million loan in that case was “outside the provisions of Georgia’s usury statute.” 204 Ga. App. at 347. Further, it appears that Barton may not have been heavily relied upon in the business community as neither business entity in this case cited the opinion in its brief.
S & A argues that the trial court erred in calculating whether the interest and charges on the S & A loan were usurious. Under the terms of the parties’ note, interest accrued at two percent above Bank Atlanta’s prime rate, which brought the interest rate to between 10.25 percent and 10.5 percent per annum over the loan term. The note also provided that following the maturity date of March 6, 1997, interest would accrue at a “post maturity” rate of 18 percent per annum, or 1.5 percent per month. The note further provided for a one-time late charge of five percent on any late payments. Bank Atlanta applied this charge to the $320,000 principal balance7 owing at maturity and assessed S & A a late charge of $16,000.
S & A contends that this five percent late charge, incurred in July 1997 after maturity, was usurious when coupled with the 1.5 percent post-maturity monthly interest rate accruing at that time. The company argues that the two charges amounted to interest of 6.5 percent in that one month, thus exceeding the five percent per month limit of OCGA § 7-4-18.
In determining whether a loan is usurious, the definition of interest under OCGA § 7-4-18 applies. Norris v. Sigler Daisy Corp., 260 Ga. at 272 (2). That section prohibits the payment of interest in excess of five percent per month “either directly or indirectly, by way of commission for advances, discount, exchange, or the purchase of salary or wages; by notarial or other fees; or by any contract, contrivance, or device whatsoever. . . .” OCGA § 7-4-18 (a). Here, the late *388charge, whether it is considered a “fee” or a “contract, contrivance or device,” was a cost incurred by S & A for the use of the funds loaned by Bank Atlanta. And though the charge was not incurred until after the loan matured, S & A still retained the use of those funds at that time. See generally Williams v. Powell, 214 Ga. App. 216, 218 (2) (447 SE2d 45) (1994) (“Interest is calculated on amounts of which the borrower had use.”). Therefore, the late charge falls within the definition of interest under OCGA § 7-4-18 and must be included in testing the loan terms for usury.
And although S & A argues that we should determine whether the loan was usurious by looking only at the month in which the onetime late charge was assessed, our Supreme Court has rejected a similar argument. In a case involving allegedly usurious front-end points and fees, the Court held that usury must be determined by measuring the total interest paid over the entire loan period:
[(1)] [B]ecause the interest, including front-end points and fees on a fixed-term, fixed-rate loan induces the lender to make the loan for the entire loan period and not for any one month or year, [(2)] because the borrower has the use of the amount loaned for the entire loan period, and [(3)] because the usury penalty applies to the interest for the entire contract, [cits.], it seems reasonable that the loan has to be tested for usury based on interest charged for the entire loan period.
Fleet Finance &c. v. Jones, 263 Ga. 228, 232 (3) (430 SE2d 352) (1993).
Here, (1) the late charge presumably served as an inducement for Bank Atlanta to make the loan over the entire loan term and not in any one month, as it provided additional protection for the bank should S & A not repay the loan in a timely fashion; (2) S & A had the use of the bank’s funds over the entire loan term and retained the use of the funds even after the term expired; and (3) if the note were found usurious, Bank Atlanta would forfeit all interest on the note over the life of the loan as provided under the usury laws. See Norris v. Sigler Daisy Corp., 260 Ga. at 272-274 (1), (4). Therefore, it is rea- . sonable for the loan in this case to be tested for usury based upon interest charged over the entire loan period, and I would reject S & A’s argument that we must look only at the month of July 1997 in determining usury.
S & A argues, however, that the formula for calculating usury laid out by the Supreme Court in Norris and Fleet Finance should not apply here because the late charge was not incurred until after the loan matured and the post-maturity term, with interest accruing at *38918 percent, is not defined. Although the late charge was not incurred until the end of the loan, it was a charge anticipated at the beginning of the loan and an inducement for the bank to lend its money. Therefore, the loan could be tested for usury based upon the late charge and the 10.25 to 10.5 percent interest paid over the 14-month modified loan term. Alternatively, the late charge could be considered in conjunction with the total interest paid, both pre-maturity and post-maturity, and measured over the entire period during which S & A retained use of the bank’s money. See generally Williams v. Powell, 214 Ga. App. at 218; First Alliance Bank v. Westover, Inc., 222 Ga. App. at 527.
But it is not necessary to decide what the appropriate term would be in this case because testing the interest over any period longer than one month would bring it under the rate prohibited by OCGA § 7-4-18. Accordingly, Bank Atlanta’s loan to S & A was not usurious, and thus the trial court’s denial of S & A’s motion for summary judgment on this issue should be affirmed.
I am authorized to state that Chief Judge Johnson, Presiding Judge Blackburn, Judge Ruffin, Judge Eldridge and Judge Ellington join in this special concurrence.

 In this same amendment, a 16 percent interest cap was placed on all loans involving $3,000 or less. Ga. L. 1983, p. 1146, § 1.

 This balance also reflects three additional draws on the line of credit — $3,642.30 on March 6, 1996, to cover closing costs on the loan; $40,000 in April 1996; and $75,000 on December 20, 1996 — and two principal reduction payments: $20,000 on October 29, 1996, and $78,642.30 on January 23,1997.