Court Opinion

ID: 9863236
Source: CourtListenerOpinion
Date Created: 2023-09-25 03:16:46.569972+00
Date Added: 2024-06-11T11:39:17.708468
License: Public Domain

J. SeaborN Holt, J., dissenting. I am so firmly convinced that the undisputed facts in this case show that it was purely a bona fide credit sale, that both parties to the sales contract so understood and intended it, and made it in good faith — that I cannot bring myself to agree with the majority that usury was involved. To constitute usury we are all agreed there must appear to be a charge of more than 10% for the loan or forbearance of money. The words “loan” and “forbearance” are not synonymous. Appellant concedes that there was no actual loan applied for or involved, either directly to appellant or through any third party or finance company, and the trial court so found. Therefore, if appellant is to prevail he must show that there was a usurious forbearance in the case at bar. “Usury is a corrupt agreement for more than the legal rate of interest on a loan of money, or for the forbearance of a debt * * * Therefore where the intention is not apparent, it is a question for the jury to determine whether it was a bona fide credit sale, or a device to cover usury,” Ford v. Hancock, 36 Ark. 248. Black’s Law Dictionary (4th Ed. 1951) defines Usury: “A profit greater than the lawful rate of interest, intentionally exacted as a bonus, for the forbearance of an existing indebtedness or a loan of money, * * * ” and defines Forbearance: “Act by which creditor waits for payment of a debt due him by debtor after it becomes due. * * * A delay in enforcing rights. * * * Indulgence granted to a debt- or. * * * Refraining from action. The term is used in this sense in general jurisprudence, in contradistinction to‘act’. * * * Within usury law, term signifies contractual obligation of lender or creditor to refrain, during-given period of time from requiring borrower or debtor to repay loan or debt then due and payable.” Appellant is a practicing attorney, be knew wbat be was doing when be signed tbe contract in question. Ap-pellee is engaged in the selling of merchandise at retail, is not in the loan business, and there was no third party such as a loan agency or finance company involved here. As I see it, Sloan bought the merchandise purely on a credit sale, there was no pre-existing debt at the time of the transaction. The trial court found that the transaction was a bona fide sale on credit. I think the preponderance of the testimony supports that finding. In each case, whether there was an intent to collect usury depends upon the facts. In our recent case Hare v. General Contract Purchase Corp., 220 Ark. 601, 249 S. W. 2d 973, we said: “It is not usury for one who sells a piece of property on credit, to contract for a higher price than he would have sold it at for cash. If the intention be, in fact, to sell on credit, he has the right to fix a price greater than the cash price, with legal interest added; but if the sale be really made on a cash estimate, and time be given to pay the same, and an amount is assumed to be paid greater than the cash price, with legal interest, would amount to, this is an agreement for forbearance that is usurious. Therefore, where the intention is not apparent, it is a question for the jury to determine, whether it was a bona fide credit sale, or a device to cover usury. Tyler on Usury, 92. * * * (1) We leave unimpaired the doctrine that a seller may, in a bona fide transaction, increase the price to compensate for the risk that is involved in a credit sale. But there may be a question of fact as to whether the so-called credit price was bona fide as such, or only a cloak for usury. (2) If the seller, -whether he has quoted two prices to the purchaser or not, subsequently transfer the title documents to an individual or company which is engaged in the business of purchasing such documents, at a price which permits the transferee to obtain more than a return of 10% on its investment, then a question of fact arises as to whether the seller increased Ms cash price with the reasonable assurance that he could so discount the paper to such individual or finance company. If that reasonable assurance existed, then the transaction is in substance a loan, and may be attacked for usury. (3) When finance companies or purchasers of title paper supply dealers with a set of forms and a schedule for credit price increases, such will tend to show that the dealer had reasonable assurance that such finance company or purchaser of the paper would take the paper at such discount. ’ ’ As indicated, in the present case there is absent any loan or finance company, or any interested third party. What we said in Blake Brothers v. Askew & Brummett, 112 Ark. 514, 166 S. W. 965, announces the governing rule in this state and applies with equal force here. We there said: “Appellants also testify that they paid Askew and Brummett for goods which they purchased from them, a greater amount than 10 per cent added to the cash price of the goods. Askew & Brummett were retail dealers in merchandise, and sold goods mainly on a credit. It was the intention of the parties at the time the mortgage was executed that Askew & Brummett should furnish them with supplies, and that the goods should be sold on a credit. Askew & Brummett had a right to sell goods on a credit for a higher price than they would have sold them for cash. It is true that they sold them to appellants at a profit greater than 10 per cent over the price they were usually sold for cash, but there is nothing to show that this was done to evade the usury law. On the contrary, the evidence shows that it was done in good faith, for the purpose of making a profit on the goods sold. Ap-pellees testified that they sold the goods to appellants at the usual price they sold goods to their customers generally on a credit, and this statement is not denied by appellants. Therefore, there was no usury in this transaction. ’ ’ In the present case it appears undisputed that the credit terms offered Sloan were available to all customers and had been openly held out as available to customers for more than a score of years. I think'all the cases relied on by the majority are clearly distinguishable on the facts — all, in effect, involved an interested loaning agency or a third party. As indicated, here we are concerned only with the alleged usurious forbearance of money, which can only come into play when there is a pre-existing debt. While I feel certain of the soundness of my views, I feel doubly certain that scores of retail merchants throughout Arkansas are not only going to be surprised but shocked at the far reaching effect of the majority decision. I would affirm the decree as not being against the preponderance of the evidence.