Court Opinion

ID: 3922350
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:49:13.685036+00
Date Added: 2024-06-11T14:16:25.189761
License: Public Domain

I can see no escape from the conclusion that the $8,000 note for recovery upon which, and for foreclosure of a lien securing which, the suit was brought, is part of a usurious contract under the authority of Shropshire v. Commerce Farm Credit Co., 120 Tex. 400, 30 S.W.2d 282,39 S.W.2d 11, 84 A. L. R. 1269; Deming Inv. Co. v. Giddens, 120 Tex. 9,30 S.W.2d 287; Dallas Trust  Sav. Bank v. Brashear (Tex.Com.App.) 65 S.W.2d 288; Commerce Trust Co. v. Best (Tex.Com.App.) 80 S.W.2d 942.
The total amount of the loan was $8,000. The shortest term of the loan under any contingency provided in the contract was one year. There were express promises, in the form of notes and coupons, to *Page 820 
pay at stated times, and in specified amounts, a total sum, embracing only interest upon the loan, greatly in excess of a rate of 10 per cent. per annum upon the $8,000 note for the shortest term of the loan contingently possible, i. e., one year. Aside from the coupon notes representing interest upon the $8,000 note at the rate of 5 1/2 per cent. per annum based upon a term of 10 years, there was a separate note for $868.92, promising to pay said sum in annual installments as a part of the interest upon the $8,000 loan. The last-named obligation alone was more than 10 per cent. per annum, for the shortest term of the loan contract — one year. The contract contained no provision for abating or canceling any part of the promised payments of interest. Such promises are all and equally unconditional in form. As to the $868.92 installment note, representing only interest to be paid on the loan, it was provided in the contract as follows: "But if default should be made in the payment of the notes secured hereby or any of them * * * then the whole sum of money hereby secured shall become due and payable at the election of the holder thereof," etc. This provision for acceleration of installments of the $868.92 note being all for interest did not, and could not, alone have the effect of making the contract usurious if it otherwise was not usurious. The time at which interest is promised to be paid is immaterial in testing whether or not a given contract is usurious.
Promises to pay interest calculated upon a long-term loan which standing alone would make the contract usurious because of an omission in the contract to provide for an abatement or cancellation of the promised interest payments to correspond with a contingent shortening of the term of the loan may, of course, be controlled by a provision for such pro tanto abatement and cancellation. The contract in question expresses no such provision. No such agreement can be implied because to do so would produce a conflict between the implied agreement and the express provisions to pay the several amounts at the stated times. Another and independent reason why no such agreement can be implied is furnished by the above-quoted provision for acceleration of the interest payments. While, as said before, provisions for such acceleration could not have the effect of making the contract usurious if it was not otherwise so, the provision here does exclude any implied agreement for abatement and cancellation of a part of the promised interest payments. It has that effect because it expresses an intention inconsistent therewith. The implied agreement, if it existed, would be to the effect that upon a shortening of the term of the loan there should be a corresponding abatement or cancellation of promised interest payments so that the promises not canceled would not exceed a rate of 10 per cent. per annum upon the loan for the shortened term. But said acceleration provision is expressly to the effect that, upon the same contingency upon which the term of the loan would be shortened, all the promised interest payments should at once become due and payable. Although the acceleration of the interest payments would not make the contract usurious, it so plainly expresses the intention that they were not to be canceled as necessarily to exclude any implication that they were to be canceled. For a fuller statement of my views upon which these conclusions are based, see dissenting opinion in Wellfare v. Realty Trust Co. (Tex.Civ.App.)85 S.W.2d 1067, this day decided.