Court Opinion

ID: 9674358
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:27:26.008862+00
Date Added: 2024-06-11T18:16:26.776407
License: Public Domain

J. Fred Jones, Justice, dissenting. I do not agree with the majority opinion in this case. As I read the constitutional prohibition against usurious interest and the cases of this court applying the constitutional penalty for usurious exaction, I am persuaded that the majority opinion, under the facts of this case, goes further than we have previously gone and further than I am willing to go. Article 19, § 13, of the state Constitution provides as follows: “All contracts for a greater rate of interest than ten percent per annum shall be void, as to principal and interest, and the General Assembly shall prohibit the same by law; but when no rate of interest is agreed upon, the rate shall be six per centum per annum.” (My emphasis). In the case of Briggs v. Steele, 91 Ark. 458, 121 S.W. 754, this court said: “To constitute usury, there must either be an agreement between the parties by which the borrower promises to pay, and the lender knowingly receives, a higher rate of interest than the statute allows for the loan or forebearance of money; or such greater rate of interest must be knowingly and intentionally ‘reserved, taken or secured’ for such loan or forebearance. It is essential, in order to establish the plea of usury, that there was a loan or forebearance of money, and that for such forebearance there was an intent or agreement to take unlawful interest, and that such unlawful interest was actually taken or reserved. The wrongful act of usury will never be imputed to the parties, and it will not be inferred when the opposite conclusion can be reasonably and fairly reached.” This same rule was reiterated in the case of Briant v. Carl-Lee Brothers, 158 Ark. 62, 249 S.W. 577. I am not unmindful of such cases as Wilson v. Whitworth, 197 Ark. 675, 125 S.W. 2d 112, and Brittian v. McKim, 204 Ark. 647, 164 S.W. 2d 435, where we held that it is not essential that both parties must agree to the usurious rate of interest before the contract may be void, but in those cases the usurious rate of interest and the charges relate back to the inception of the contract. In Wilson the debtor signed a blank note which turned out to be usurious. He borrowed and received $150 but the note was for $259.11 secured by life insurance on which the lender received commission. In the case at bar the Bradshaws purchased chemicals, fertilizers and seeds from Redbarn on open account over a period of approximately five years. When the suit was filed, Redbarn claimed that the Bradshaws owed $11,-479.91 on the open account. The invoices on purchases went out from the commission agent’s office in Arkansas and statements were mailed out from Redbarn’s home office in Oklahoma. Mr. Lawrence, the commission agent, admitted, and it was also stipulated, that there was one invoice in the running account for merchandise delivered to the Bradshaws which indicated a service charge of 1% per month but he testified that he knew nothing about this charge until the suit was filed in this case and I am satisfied with Redbarn’s explanation of this one invoice as hereafter indicated. This entire case comes down to the proposition that the Bradshaws purchased merchandise from Redbarn on an open account with no contract agreement or understanding as to interest. Redbarn sent out periodic statements to its credit customers and if the account was not paid within 50. to 90 days, Redbarn unilaterally started charging a service charge on all unpaid balances amounting to 1% per month on the unpaid balances in all states except Arkansas. The Arkansas accounts were computerized on the basis of .79% to stay within the 10% limitation, and this amount was charged on, and added to, the unpaid balances of the delinquent accounts in Arkansas beginning with the third monthly statement after the original purchase.' Mr. Bradshaw testified that the difficulty arose over his account when Redbarn delivered more seed and chemicals than he needed and refused to take the excess back as they had agreed to do. He said that he used about $12,000 worth of the seed and that the excess seed and chemicals he could not use, amounted to between $700 and $1,000. He said that Redbarn agreed to pick these items up and give credit for same but failed and refused to do so. He said that Mr. Wheatly and Mr. Dodson came to see him about the account and he told them of the agreement he had with their commission agent, Mr. Lawrence, as to picking up and giving credit for the excess seed and chemicals, and that he told them he thought they should square the account up before they could expect full payment. Mr. Bradshaw then testified as follows: “Q. All right. Now, did you have other conversations with this Mr. Wheatly? A. Yes, Mr. Wheatly called on me several times. On one occasion, Mr. Wheatly told me I should pay the account, and I told him that we were still at odds on it, and he told me that the company was going to charge me one percent per month on it, on the thing, if you didn’t pay it. And, then Mr. Wheatly after our conversation, left.” (My emphasis). Mr. Bradshaw said that after he had this conversation with Mr. Wheatly he started receiving statements with additional interest designated. It is my opinion that Redbarn made a logical explanation of an honest error in computerizing the one invoice on which the charge of 1% per month was made; but, I would reverse this case simply because this was a suit on a running open account in which Mr. Bradshaw owed no interest and agreed to pay none, and on which no interest was charged to him until the unpaid account was 90 days old. He failed and refused to pay the account simply because he contended that Redbarn had breached the contract made between him and Redbarn’s commission agent when he purchased some seed and chemicals in connection therewith. It was while Mr. Bradshaw was withholding payment of approximately $12,000 he admits owing on the account, that Redbarn’s representative threatened to charge him 1% interest per month if he did not pay the full account. In the case of Mitchell v. Duncan, 190 Ark. 598, 79 S.W. 2d 997, Duncan purchased furniture from Mitchell in the amount of $274.26 and executed a note for that sum. Three payments were endorsed on the note but Duncan insisted that a $70 payment was made and only $50 was credited on the note. A subsequent agreement was endorsed on the note which recited: “By agreement the balance on this note with interest to date is one hundred and ninety dollars ($190).” This memorandum was signed by Mrs. Duncan and her mother. On a suit to collect the note the defense of usury was interposed. This court held that there was no testimony warranting the submission of the question of usury to the jury. A statement was sent to Mrs. Duncan and her mother showing the balance due on the note less the credits thereon to the date of its renewal, and the statement also showed the alleged balance on renewal with interest compounded at ten per cent. In that case we said: “There was no authority to compound the interest; neither was there any agreement to pay compound interest. A wrongful demand for excessive interest would not constitute usury where there had been no agreement to pay it.” In Blalock v. Blalock, 226 Ark. 75, 288 S.W. 2d 327, it was stated: “Usury consists in contracting for payment of interest greater than the law allows. Usury is not to be inferred when neither the borrower promised to pay a greater rate of interest than the law permits, nor the lender knowingly entered into a usurious contract.” It is my opinion that Mr. Bradshaw had a right to withhold payment until his rights under the alleged breach of contract could be determined; and, having agreed to pay no interest when he entered into the contract for the seed and chemicals, he should have simply tendered to Redbarn’s agent or into court the amount he admitted he owed, and should have refused to pay interest, certainly in an amount more than 6% per annum, on the account Redbarn claimed was delinquent. I would reverse this case and remand for a new trial for a determination of the amount Mr. Bradshaw owes under his claim of breach of contract, with any interest to which Redbarn may be entitled limited to the legal rate of six per cent.