Court Opinion

ID: 9771301
Source: CourtListenerOpinion
Date Created: 2023-08-29 16:38:48.560142+00
Date Added: 2024-06-11T07:31:28.288810
License: Public Domain

Robert H. Dudley, Justice. The appellant asks us to overrule our case interpreting the usury amendment to the Constitution of Arkansas. We decline the invitation. The appellant sold the appellee a television satellite dish on January 27,1987, and a television and videocassette recorder on February 17,1987. The purchases were to be paid for through the use of a revolving charge agreement with an interest rate of 12.5 % per annum. At the time the federal reserve discount rate was 5.5 %; thus, the interest rate was more than 5 % above the federal reserve discount rate. After making two payments the appellee filed suit alleging that he had been charged an usurious rate of interest. The appellant counterclaimed, alleging that the entire debt was due and that it was entitled to foreclosure. The chancellor decreed that the revolving charge agreement was void as to all unpaid interest and that the appellee was entitled to double recovery of the interest paid. We affirm. In 1982, Article 19, Section 13 of the Constitution of Arkansas was amended by the passage of Amendment 60 to read in part as follows: § 13. Maximum lawful rates of interest. (a) General Loans: (i) The maximum lawful rate of interest on any contract entered into after the effective date hereof shall not exceed five percent (5 %) per annum above the Federal Reserve Discount Rate at the time of the contract. (ii) All such contracts having a rate of interest in excess of the maximum lawful rate shall be void as to the unpaid interest. A person who has paid interest in excess of the maximum lawful rate may recover, within the time provided by law, twice the amount of interest paid. It is unlawful for any person to knowingly charge a rate of interest in excess of the maximum lawful rate in effect at the time of the contract, and any person who does so shall be subject to such punishment as may be provided by law. (b) Consumer Loans and Credit Sales: All contracts for consumer loans and credit sales having a greater rate of interest than seventeen percent (17 % ) per annum shall be void as to principal and interest and the General Assembly shall prohibit the same by law. The following year, in July 1983, this court was called upon to interpret the amendment’s provisions in Bishop v. Linkway Stores, Inc., 280 Ark. 106, 655 S.W.2d 426 (1983). At issue in Bishop was the interest that could be charged on consumer loans and credit sales under Amendment 60. Utilizing the plain meaning rule, this Court held: The language used in Amendment 60 is clear and unambiguous, and we have no authority to construe the amendment to mean anything other than what it says. Section 13(a)(i) provides that the “maximum lawful rate of interest on any contract” (emphasis ours) shall not exceed 5 percent per annum above the Federal Reserve Discount Rate at the time of the contract. The word “any” means exactly what it says, and a consumer loan certainly falls within the category of “any contract.” Section 13(b), when read in conjunction with Section 13(a), provides for a further limitation on interest rates but is applicable only to consumer loans and credit sales. Section 13(b) specifically limits the maximum interest rate on such loans to 17 percent. These separate subsections are in no way conflicting and each has its own penalty for violations. It is clear, therefore, that the provisions of Amendment 60 have a two-fold limitation on the maximum amount of interest a lender can charge on a consumer loan or credit sale — the lesser of 17 percent or 5 percent over the Federal Reserve Discount Rate. Here, since this contract has a rate of interest in excess of the lawful rate provided for under Section 13(a), it is void as to the unpaid interest as provided by Section 13(a)(ii). Id. at 110, 655 S.W.2d at 429. In summary, we held that subsections (a) and (b) are to be read together, with the purpose of subsection (b) being a further limitation on consumer loans and credit sales. In asking us to overrule Bishop the appellant argues four formal points of appeal. However, those four points can be, in substance, summarized as two alternative arguments: First, the meaning of the amendment is plain but is contrary to the interpretation given it by this court; that the amendment plainly indicates that subsections (a) and (b) are not to be read together; that under subsection (b), consumer loans and credit sales are to have a fixed ceiling of 17 % without regard to the federal reserve discount rate; that the federal reserve discount rate is applicable only to “general loans,” which are something less than all loans since the term does not include consumer loans or credit sales. Second, if appellant’s first argument cannot be gleaned from the amendment’s language, the amendment is ambiguous; that if there is an ambiguity, this court must look to rules of construction and extrinsic evidence to discover legislative intent; and these rules and the evidence support appellant’s asserted interpretation. These arguments are the same arguments which we considered and rejected in Bishop. There, we clearly held that the meaning of the amendment was plain and contrary to the interpretation advanced by the appellant. We held there was no ambiguity and, therefore, no need to resort to rules of construction or to extrinsic evidence. Even if the majority of the present court thought that the amendment were ambiguous, we would not adopt the appellant’s argument concerning the intent of the voters in adopting the amendment. The only reason for including a usury provision in the constitution is for the protection of the consumer. The ballot title on this amendment provided that it was “to control interest rates and set the penalty for violations thereof.” A voter most likely would have intended that he should have the protection of an interest rate which floats with the economic demand of the time, that is, 5 % above the federal reserve discount rate for all credit users, yet, at the same time, protects the small borrower on consumer loans and credit sales from an aberration of rates, such as existed in 1981, with a ceiling of 17%. In addition, this has been our interpretation since we decided Bishop in 1983. We have stated: A cardinal rule in dealing with constitutional provisions is that they should receive a consistent and uniform interpretation so that they shall not be taken to mean one thing at one time, and a different thing at another time. Certainly, when a constitutional provision or a statute has been construed, and that construction consistently followed for many years, such construction should not be changed. O’Daniel v. Brunswick Balke Collender Co., 195 Ark. 669, 674, 113 S.W.2d 717, 719 (1938). Our interpretation of Amendment 60 has been a part of the law of this State for almost five years, and we will not change it without sufficient reason. However, our concern for stare decisis is not our only reason for rejecting the appellant’s arguments. We continue to feel that in Bishop we correctly interpreted the amendment, and we take this opportunity to reaffirm our commitment to that decision. Affirmed. Holt, C.J., Hickman, and Hays, JJ., dissent. Glaze, J., concurs.