Court Opinion

ID: 3480374
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:55:58.918106+00
Date Added: 2024-06-11T14:13:12.138947
License: Public Domain

The small loan act (No. 7 of the Extra Session of 1928) punishes the money lender who violates its provisions by fine and imprisonment and by forfeiture of the loan and interest. The civil penalty is imposed only when the interest charged exceeds 42 per cent. per annum. I believe that the acceleration clause, the so-called "discount," liquidated damages, and compound interest clauses, are each and all violative of the spirit and letter of the law and involve criminal responsibility, but only one, the acceleration of interest clause, is of importance here, because this is the only device which results in a charge of more than 42 per cent. interest, and, therefore, involves civil responsibility.
The case of Heirs of Williams v. Sheriff, 47 La. Ann. 1277, 17 So. 805, is not apposite for the reason that the act prohibits the contracting for, and not the collection of, more than 42 per cent. The Texas authorities, Shropshire v. Commerce Farm Credit Co., 120 Tex. 400, 30 S.W.(2d) 282, 39 S.W.(2d) 11, and Parks v. Lubbock, 92 Tex. 635, 51 S.W. 322, are very helpful because in Texas the common-law conception of interest has been modified by statute so as to conform to the civil law and is identical with our Codal definition, as pointed out in Parks v. Lubbock, supra. The reasoning of those cases is to the effect that the acceleration clause makes the note or loan usurious and is, to my mind, most convincing.
  I respectfully dissent. *Page 445