Court Opinion

ID: 5597986
Source: CourtListenerOpinion
Date Created: 2022-01-11 02:47:16.378957+00
Date Added: 2024-06-11T08:36:39.324599
License: Public Domain

Hill, Chief Justice,
dissenting.
The majority correctly decides that OCGA § 7-3-17, applicable to prepayment, is not applicable to refinancing. Otherwise, the majority could simply cite OCGA § 7-3-17, which allows use of the Rule of 78’s, and that would be the end of the matter.
Instead, the majority makes several observations regarding the Rule of 78’s, and the benefits to the borrower by use of the pro rata method of refunding unearned interest as opposed to use of the Rule of 78’s. After these observations, the majority suddenly concludes that the ILA authorizes the lender to use the Rule of 78’s to compute interest rebates when refinancing. No authority for this conclusion is cited.
The lenders urge that OCGA § 7-3-17, supra, applicable to prepayment, is applicable to refinancing because when a loan is refinanced the lender marks the original loan “paid” and a new loan is made by the lender. The majority is correct in not adopting this argument because the original loan is not in fact paid by refinancing, as every lender and debtor who refinance know. The original unpaid debt (plus another one) is still owed. Only the evidence of the original debt is changed. A loan is prepaid only when the debtor’s obligation to the lender is discharged and satisfied prior to the due date. Refinancing clearly does not discharge or satisfy the debtor’s obligation to the lender, and hence refinancing is not prepayment.
Deductions of unearned interest upon prepayment may be calculated by the Rule of 78’s because the act says they may. OCGA § 7-3-17. The act does not authorize use of the Rule of 78’s upon refinancing, a transaction which is distinct from prepayment as the majority silently acknowledges. The teaching of Garrett v. G.A.C. Finance *30Corp., 129 Ga. App. 96 (198 SE2d 717) (1973), cited by the majority, is that the Rule of 78’s may only be used where the act expressly authorizes its use.
My disagreement with the majority is that, in answering the certified questions, the majority states that there is nothing inherent in the Rule of 78’s that contravenes our established law, and then the majority excludes the question of whether the use of the Rule of 78’s results in a violation of our laws prohibiting usury. In my view we should not approve the use of the Rule of 78’s in refinancing where the result is a violation of our usury laws. Instead, we should consider the intent of the General Assembly to prohibit usury as an aid in our interpretation and find that the General Assembly did not intend to allow use of the Rule of 78’s in refinancing. I therefore would answer the first certified question in the negative.
The majority has said, as I read the opinion, that the act authorizes the lender to use the Rule of 78’s to compute interest rebates in refinancing, but the majority does not decide whether use of that Rule results in a violation of our laws prohibiting usury. I would not leave this issue undecided, and I therefore must dissent.
I am authorized to state that Justice Weltner joins in this dissent.