Court Opinion

ID: 9770500
Source: CourtListenerOpinion
Date Created: 2023-08-29 16:06:58.029201+00
Date Added: 2024-06-11T07:31:17.640442
License: Public Domain

Supplemental opinion on denial of rehearing delivered September 19, 1977 (In Banc) George Rose Smith, Justice. The appellee, in its petition for rehearing and supporting brief, continues to argue in effect that the so-called lease should be construed according to its form rather than its substance. It is settled, however, that if a transaction, such as a purported sale, is actually a mere device to cover the exaction of usurious interest, the form of the transaction is immaterial. Home Bldg. & Sav. Assn. v. Shotwell, 183 Ark. 750, 38 S.W. 2d 552 (1931). In the case at bar the transaction between the appellant and the appellee was plainly a credit sale, even though the finance company attempted to disguise its role as that of a lessor. On rehearing counsel for the appellee for the first time call our attention to a 1973 amendment to the Uniform Commercial Code, contained in Act 116 of 1973. Ark. Stat. Ann. § 85-9-408 (Supp. 1975). The new section provides that a consignor or lessor of goods may file a financing statement, but the filing shall not of itself be a factor in determining whether the consignment or lease is intended as security. The intent of the amendment is to permit a lessor, for example, to file a financing statement as a precautionary measure, even while contending that the lease is a true lease for which no financing statement is actually required. The 1973 Act does not affect our decision in this case, for two reasons. First, by its terms the statute did not take effect until January 1, 1974, which was after this financing statement had been accepted and presumably filed. Second, in Arkansas whether a transaction is usurious is a question arising under the Constitution, Art. 19, § 13, and is therefore for the courts rather than for the legislature. As we noted in Strickler v. State Auto Finance Co., 220 Ark. 565, 249 S.W. 2d 307 (1952): “[T]he lawmakers are powerless to declare that a usurious charge is not to be so considered by the courts.” Counsel also question the statement in our original opinion that the equipment, “according to the indications in the record, would still have been worth $10,000 at the expiration of the 5-year lease.” At the close of the trial, counsel for the appellant, in asking that the appellee be required to give security to protect the appellant pending the appeal, stated without contradiction that at a pretrial conference it had been decided by attorneys for both sides and by the court that a reasonable value of the property was $10,000. The appellee in fact filed a bond in that amount. There is also a showing that as of September 10, 1975, when only 55% of the purchase price was still unpaid, the appellee itself offered to execute a bill of sale to the appellant for $8,950, which was 70% of the original purchase price. Hence according to the record the $10,000 figure, at least as of the date of the trial, appears to be a fair one. The actual figure, however, is not of much importance, the point being that in any event the value at the termination of the lease would apparently be far in excess of the 10% payment by which the “lessee” could acquire the property. Rehearing denied.