Court Opinion

ID: 7820328
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:52:05.237133+00
Date Added: 2024-06-11T16:30:43.355434
License: Public Domain

Carleton Harris, Chief Justice, dissenting. I cannot agree with the result reached by the majority in this case. The majority affirm the chancellor, but hold that he erred in a finding that I consider to be pertinent in the litigation. I do not accept the view that the first monthly payment was due to be paid 30 days after the June 26th date, rather than 45 dayd later. While it is true that the space for the commencement date was left blank in the printed contract (which would normally indicate that the first installment was due one month later), a coupon book, denoting the time for the payments, was sent to the Websters reflecting that the first payment was due 45 days later.1 Furthermore, the computer was set to make its calculations on a 45-day basis and unless this constituted the general practice of the company, certainly the computer would not have been set for that period of time. In fact, the testimony of Mrs. Webster makes clear that this payment was not made until 45 days after the execution of the contract: “Q. Well, did you get a coupon book? A. Yes. I did. Q. Did you make your first payment from the coupon book? A. Yes, sir. Q. Okay, And would it have been around August the 10th? A. Yes, sir. I believe so.” Thereafter, the payments were made on the 10th of each month. Accordingly, I think it is entirely clear that the chancellor’s finding that the first payment was due 45 days from the signing of the contract was entirely correct; let it be remembered that the contract was executed on June 26th and Mrs. Webster herself said that the payment was sent in “around August the 10th.” Therefore, I am firmly convinced that in calculating the interest, the 45 day interval for the first payment was the proper time element involved. To me, the facts mentioned have a distinct bearing on another finding by the chancellor, viz, that there was no intent to charge in excess of 10% annual interest. In support of this finding is the fact that the company had just commenced, approximately a month before the contract in question was entered into, the use of the Wang computer. Marvin Poole, the owner of Southland, certainly took steps to ascertain that the calculations of this machine complied with the Arkansas usury law by preparing two sample computations (one with a 30 day interval and the other with a 45 day initial interval, involving 96 monthly payments) and submitting the computations to a reputable Arkansas law firm for its opinion, and thereafter, as stated by the majority, the firm approved the machine. In Sammons-Pennington Co. v. Norton, 241 Ark. 341, 408 S.W. 2d 487, we reversed the chancellor’s finding that a certain contract was usurious. The opinion reflects that an earlier contract had been entered into, but Norton advised the company that the payments exceeded the sum of $100 per week and he did not desire to pay more than that amount, including interest. The company then prepared a new contract and note to be used in lieu of the first, and the opinion then recites the following facts: “George W. Sammons, President of SammonsPennington Company, and who resides in Memphis, testified that he knew that the legal rate of interest in Arkansas was 10% simple interest, but he did not know how to figure the amount under the new contract; accordingly, he called the Walter Heller Company to ascertain the correct amount to be charged as interest. The finance company, using ‘Lake’s Monthly Installment and Interest Tables,’ gave him the figure of $3,-182.64 for interest, which was added to the principal sum of $15,943.05.” It developed on trial that the amount of interest called for under the latter contract was usurious and the contract was cancelled by the chancery court. We reversed, stating: “Actually, it would seem that we have two lines of cases, the line of demarcation between usurious and non-usurious contracts being rather slight. It appears that, in determining whether a usurious charge has been made, all attendant circumstances must be taken into consideration. [My emphasis.] When this is done, we think it is plain that the overcharge in the instant litigation was the result of an error, made in good faith, rather than being based on an intent to violate the usury law.” The court further commented that “it seems rather ridiculous that any concern would risk cancellation of a principal debt of nearly $16,000 (not counting interest), in order to receive ‘approximately $57 to $60’ excess interest.” Likewise, in Davidson v. Commercial Credit Equipment Corporation, 255 Ark. 127, 499 S.W. 2d 68, we found that the maximum overcharge would amount to five cents per month or $3.00 over the five-year term in which the indebtedness was to be retired. Commercial Credit, in computing the finance charge, used a chart prepared by Financial Publishing Company of Boston, Massachusetts, and the opinion reflects that slight variations in results could be reached by use of other methods, and we again commented that “it would be ludicrous to think one would risk $20,000 in an effort to collect $3.00 or $4.00 more.” That opinion also points out, “the use of usury will not be presumed, or imputed to the parties, and will not be inferred if the opposite conclusion can be fairly and reasonably reached.” (My emphasis.) Several cases are cited in support of this statement. I am certainly in accord with enforcing the constitutional prohibition against usury and have written several opinions myself where we have found the transaction to be usurious, but the penalty of cancelling the entire indebtedness is so great that I feel that the statement in Davidson, heretofore quoted, that usury should not be inferred if the opposite conclusion can be fairly and reasonably reached, should be given close consideration. Here, as stated, I am convinced that the first payment was due 45 days later. Taking the computation of appellees’ expert that an excessive charge on the August 10th date would be $5.25 over a six-year period, we have an excessive interest charge averaging approximately 87 1/2 cents per year. Even if we take the July 26th date, with excess total interest of $21.34 (which the majority say is the proper finding and with which I very much disagree), we still have an excess average interest charge of only approximately $3.50 per yaar. Other evidence offered reflected 19 cents overcharge for the six-year period. Be that as it may, I am aware that any amount over 10% is an improper charge, but the cases cited (and there are numerous others) denote that the matter of intent has a great effect upon whether a transaction is held to be usurious. Even in the field of criminal law, the penalty for unintentional crimes is much less than for intentional crimes, but here the Court majority is subjecting appellant to the same penalty that a “loan shark,” who set out to charge 40% interest, would receive. Earlier I quoted from Sammons-Pennington to the effect that in determining whether a usurious charge has been made all attendant circumstances must be taken into consideration. Here, we have a company using a new machine, with which it lacked experience or familiarity. The company obtained an opinion as a matter of trying to comply with the constitutional provision in issue; the amount of interest exceeding 10% is so minimal that one would have to be an utter and comple simpleton to jeopardize a contract involving several thousand dollars by intentionally collecting such an amount of interest. It is little wonder that the trial court found that there was no intent to violate the usury laws. I would reverse.  A coupon book is sent to borrowers showing .the date for payments, and the proper coupon is sent in with each payment to the company.