Court Opinion

ID: 9632182
Source: CourtListenerOpinion
Date Created: 2023-08-22 11:06:04.242897+00
Date Added: 2024-06-11T18:08:10.516822
License: Public Domain

WADE, Justice
(dissenting).
I agree that no intention to violate the usury law is necessary, it is sufficient if there is an intention to enter into a contract which in fact violates that law. On that question the narrow issue is whether from the evidence it is *557within the bounds of reason to infer that these parties intended that the extra $100 was an additional interest charge on the loan of $1500, and did not intend that it was a charge for services performed or property rights surrendered by appellants thus increasing the principal of the loan to $1600, in accordance with the provisions of the note. In view of the evidence and the trial court’s finding I am not prepared to hold as a matter of law that appellants did not intend this extra charge to be interest, although I think the trial court might reasonably have so found.
This case and the recent case of Seaboard Finance Co. v. Wahlen, 123 Utah 529, 260 P. 2d 556 which were pending in this court at the same time, bring graphically to our attention the great possibility for injustice under the present usury law. In that case we held that a charge of 37% interest is permitted to industrial loan corporations. Here we hold that individuals who charge more than 10% interest are guilty of usury and lose all of the principal and interest of the loan. This is true although the appellants in making the loan acted fair in every detail in their dealings with the borrowers, respondents here. In order to enable the borrowers to purchase a home appellants borrowed the $1500 from other people on their own credit, and then after the borrowers said they could not complete the purchase, they entered into a contract to buy the property as joint purchasers with another, still reserving the right in the borrowers to purchase it if they should change their minds. Later the borrowers did change their minds and appellants destroyed their contract of purchase and surrendered their interest in their property to the respondents and loaned them the $1500, and in the note which they took therefor they added an extra $100 making the principal sum of $1600 with interest at the rate of 6% per annum for 90 days.
This money was made available to respondents on the credit of the appellants for which appellants, had they *558changed the transaction slightly, could have legally charged this $100. Appellants, in order to make this loan, had to travel about 172 miles, and spend a day of their time, for which they were entitled to make a charge. They surrendered their right in this home which they and the real estate company had contracted to purchase, and had they had any idea that what they were doing constituted usury, they could have required the additional $100 as payment for that right. Then when they try to collect on the note the respondents raise the defense of usury, after accepting all the benefits which appellants have bestowed upon them. There is no claim that in any of these dealings appellants acted unfairly or in any way misrepresented anything.
The usury laws sets aside and makes void a contract which would otherwise be binding. It is done for the benefit and protection of the borrower, and can be justified under the constitution only on the ground that such contract is unfair, and unconscionable to him. Certainly in this case there was no unfairness to the borrower, but by this law he was enabled to do the appellants a grave injustice and hardship. This seems to be somewhat akin to the situation created by the statute of frauds which induced the saying that the courts will not allow that statute to be used to perpetrate a fraud.
Undoubtedly the statute was originally enacted to curb what is referred to as the loan shark business. It was intended to curb unconscionable charges made by professional lenders of money. But our statute, although very rigid and harsh in its remedy, now allows exceptions to its strict provisions in favor of the very people it was originally intended to curb.6 As we have noticed in the Seaboard Finance Co. case an industrial loan company may charge as much as 37% interest on its loans with impunity. I cannot *559understand how our usury statute is constitutional when the evil which it was intended to curb is expressly permitted to flourish under exceptions to that statute.

See section 7-8-3, U.C.A.1953, and section 7-10-13.