Court Opinion

ID: 9600783
Source: CourtListenerOpinion
Date Created: 2023-08-22 01:31:13.284124+00
Date Added: 2024-06-11T09:39:35.439050
License: Public Domain

Alexander, J.
(dissenting) — I respectfully dissent. I do *397so because I am satisfied, as was the trial court, that Filtercorp is permitted by statute to assert a usury defense in its answer to Paulman’s action to enforce the loan agreement with which we are here concerned. This conclusion is compelled, I believe, by these uncontested facts: (1) the loan from Paulman was to Filtercorp, a corporation, and was for a business purpose; (2) the loan agreement created liability on the part of natural persons; and (3) the interest rate called for in the loan agreement exceeded the rate permitted by RCW 19.52.020, the statute which establishes the highest permissible rate of interest. That being the case, Filtercorp was justified in invoking the proviso to RCW 19.52.030(1) as a defense to Paulman’s effort to obtain interest that was higher than that permitted by law, and as a means of obtaining statutory penalties.
Although the majority acknowledges the existence of the provisions of RCW 19.52.030(1), it concludes that the usury defense is not available to Filtercorp. It reaches that determination by holding that the Legislature expressed its intention to "trump” the proviso to RCW 19.52.030(1) when it enacted RCW 19.52.080, a statute that provides that profit corporations, as well as other entities, "may not plead the defense of usury nor maintain any action thereon or therefor if the transaction was primarily for . . . business purposes”. Although the latter statute seemingly contradicts the proviso to RCW 19.52.030(1), I cannot agree with the majority’s conclusion that the Legislature intended to essentially repeal the proviso to RCW 19.52.030(1) when it enacted RCW 19.52.080. The Legislature certainly did not expressly state such an intention. Furthermore, we are obliged to indulge the presumption that the Legislature "enact[s] laws with full knowledge of existing laws”. Thurston County v. Gorton, 85 Wn.2d 133, 138, 530 P.2d 309 (1975); see also In re Marriage of Little, 96 Wn.2d 183, 189, 634 P.2d 498 (1981).
The majority decision runs contrary to the principle that the Legislature is presumed to not repeal prior laws *398by implication. 1A Norman J. Singer, Statutory Construction § 23.10, at 353-54 (5th ed. 1992). Indeed, in Tollycraft Yachts Corp. v. McCoy, 122 Wn.2d 426, 439, 858 P.2d 503 (1993), this court stated "[t]he implicit repeal of statutes is strongly disfavored. Where, as here, an amendment may be harmonized with the existing provisions and purposes of a statutory scheme, there is no implicit repeal”. (Citations omitted.) In addition, "no part of a statute should be deemed inoperative or superfluous unless it is the result of obvious mistake or error. This requires that every word, clause, and sentence of a statute be given effect, if possible”. (Citations omitted.) Klein v. Pyrodyne Corp., 117 Wn.2d 1, 13, 810 P.2d 917, amended 817 P.2d 1359 (1991).
In my judgment, these statutes, although to a great extent overlapping, may be read together to achieve a " 'harmonious total statutory scheme . . . which maintains the integrity of the respective statutes.’ ” See Employco Personnel Servs., Inc. v. Seattle, 117 Wn.2d 606, 614, 817 P.2d 1373 (1991) (quoting State v. O’Neill, 103 Wn.2d 853, 862, 700 P.2d 711 (1985)). A combined reading of them makes it apparent that the statutes can be blended so as to define a narrow type of business loan transaction that is afforded protection by the usury statute. Under this harmonious reading, the proviso to RCW 19.52.030(1) is an exception to the general rule, established by RCW 19.52.080, that a claim or defense of usury is generally unavailable to a party to a business loan. This exception allows a party to a business loan that creates liability on the part of a natural person to assert a usury defense and to seek the remedies specified in the main body of RCW 19.52.030(1). This is a transaction to which the proviso applies.
Unfortunately, the majority accords the proviso to RCW 19.52.030(1) absolutely no meaning, which is tantamount to destroying the integrity of the entire section of the statute. It does this by concluding that the Legislature’s intent in enacting RCW 19.52.080 was "clear and unambiguous” and that it would be an "act of sedition” to give life to the words the Legislature used in RCW 19.52.030(1). Majority, *399at 394, 392. As noted above, it is not at all clear that the Legislature intended to repeal part of RCW 19.52.030(1) when it enacted RCW 19.52.080. It seems to me, therefore, that it is more defiant of legislative prerogatives to blithely ignore a statute that has not been expressly repealed. I must confess that there is some merit to the majority’s observation that it makes little sense to have a legislative scheme which allows a corporate debtor to raise the usury defense when the corporate debt is guaranteed by a natural person, but does not permit a natural person who borrowed money for a business purpose to raise the defense. Nevertheless, it cannot be said that a blending of the statutes creates an absurd result. Pasco v. Napier, 109 Wn.2d 769, 773, 755 P.2d 170 (1988) ("a statute is to be interpreted so as to give effect to its purpose while avoiding absurd or pointless consequences”). This court, therefore, should resist the temptation to act legislatively, and thereby make policy decisions that are properly left to the Legislature.
The majority suggests that Filtercorp relies too heavily on Topline Equip., Inc. v. Stan Witty Land, Inc., 31 Wn. App. 86, 639 P.2d 825, review denied, 97 Wn.2d 1015 (1982). It discounts Topline, indicating that it fails to support Filtercorp’s position because, in that case, the Court of Appeals invoked RCW 19.52.030(1) as a basis for denying the debtor penalties, and not as a basis for allowing the debtor to raise a usury defense. While the majority is technically correct, it is worth noting that in Topline the Court of Appeals did direct its attention to RCW 19.52.030(1) and indicated indirectly, if not directly, that the usury defense was available in situations where there was a loan to a corporation for business purposes, the loan transaction created liability on the part of a natural person, and the interest rate charged exceeded the applicable statutory maximum.
We, of course, are not obliged to follow the Topline decision, even if the portion of the holding that Filtercorp highlights is not dicta. We are obliged, though, to follow *400statutes passed by the Legislature. It seems obvious to me, as it must have to the Topline court, that the language of RCW 19.52.030(1) is clear, has not been repealed, and can be read in harmony with RCW 19.52.080. In short, it provides a defense to Filtercorp, and the Court of Appeals incorrectly concluded otherwise in this case.
This is a case where the amount of interest charged not only is usurious, it is outrageous. The writer of the concurring opinion described the transaction as one that would "make a loan shark proud”. Concurrence, at 399. I am tempted to add my own characterization of the transaction, but I think it is unnecessary for me to do so. The facts speak for themselves. The agreement in question provided that Paulman could extract interest of five percent per month. That translates to 60 percent per annum, and it was in addition to substantial loan and consulting fees.1 One could argue that this transaction is so outrageous as to be unconscionable and against public policy. We needn’t address those issues because they have not been presented, and it is unnecessary to do so because, for reasons stated above, Filtercorp should have been able to maintain the usury defense. In my opinion, the Court of Appeals erred in reversing the trial court’s decision that allowed Filtercorp to raise the usury defense.
Johnson, J., concurs with Alexander, J.

Aetna Fin. Co. v. Darwin, 38 Wn. App. 921, 926, 691 P.2d 581 (1984) (set up charge on loan for more than $500 is interest), review denied, 103 Wn.2d 1019 (1985).