Court Opinion

ID: 5065409
Source: CourtListenerOpinion
Date Created: 2021-10-01 09:50:26.700475+00
Date Added: 2024-06-11T08:19:36.309891
License: Public Domain

I respectfully dissent. The statement of the nature of the case and proceedings are correctly set forth in the majority opinion. I would hold that usury does appear on the face of the record and would reverse and remand to the trial court in order to address appellant's usury contention.
The retail installment contract, which was attached to appellee's pleadings, requires buyer "to pay the amount designated as Total of Payments to Seller . . . in 24 consecutive monthly installments . . . All installments shall be in the amount of $128.00." [emphasis ours] Appellants were to make twenty-four monthly payments in the amount of $128.00 per month. Upon making the last payment, the appellants would have paid a total amount of $3,072.00 in principal and interest.
Assuming a beginning principal balance of $2,402.26 as stipulated in the contract, and highest permissible interest rate of 24% per annum1 for twenty-four (24) months, the maximum finance charge appellee could legally "contract for, charge or receive" from appellants would be $645.97.2
Thus, using the maximum finance charge allowable, the total amount which could be paid by appellants would be $3,048.23. The total payable under the terms of the installment contract was $3,072.00. Therefore, the installment contract by its terms appears to be usurious in the amount of $33.77.
It is quite obvious to me that an instrument which contracts for or charges a usurious interest rate is not going to state in unequivocal terms that it is doing so. Any court in determining whether usury appears of record,3 must therefore make some sort of mathematical calculation. Generally the cases which have declared a contract to be usurious have not actually set forth their calculations.4
They have set out the terms of the note and then concluded that it is usurious. Nevertheless, it is apparent that some calculations were made but omitted from the text of the opinions. For instance, in Pickrell, a borrower sued a lender claiming that a certain note charged a usurious rate of interest. A loan of $5700.00 was made and $6700.00 collected in repayment over a six month period. After setting forth the terms of the note and discussing a point not germaine to the question before us here, the court summarily stated: ". . . the summary judgment record . . . shows appellant collected interest far above the ten per cent allowed for appellee's use of his money." Pickrell v. Alpha Pipe Steel, Inc.,
406 S.W.2d at 959. In order to have reached this conclusion, the court had to determine the annual percentage rate charged in order to know it was "far above the ten per cent allowed."
 *Page 335 
The majority opinion attempts to distinguish Wall v. EastTexas Teachers Credit Union, 526 S.W.2d 148 (Tex.Civ.App. — Texarkana 1975), rev'd on other grounds, 533 S.W.2d 119
(Tex. 1976) from this case. In Wall the Court stated, "[b]y simple mathmatical calculation it can be seen that the note is usurious. . . ." The note sued upon stated that the principal was $19,896.01, to be repaid in three monthly installments of $7,000.00, $7,000.00 and $6,803.48. The note also provided that each installment "includes principal and interest." The total amount of principal and interest to be repaid was $20,803.48 for the four-month term of the note. This allowed a finance charge of $907.47 for four months. The Court concluded, also without setting forth its calculations, that "[t]he note therefore showed on its face to provide for interest in excess of that allowed by law . . . [i]ts usurious nature was thus shown of record, and a plea of usury was unnecessary." Id. at 152. I do not see such distinction.
The majority opinion also states "the trial court's fourteenth finding of fact stated that the parties intended the final payment to be in the amount of the remaining balance due and no more, since the contract provided that the total of payments due was $3,056.16." The contract does not reveal that the parties intended for the final payment to be any less than $128.00, although it would have been a simple matter to have done so. I feel that appellants herein, as well as the average consumer, would have been under the impression that they were to make twenty-four payments of $128.00 each. I feel that this finding is immaterial to the question before us. The question before us is whether usury appears of record.
It could be argued that this contract is ambiguous. Although it is true that if an alleged usurious contract is susceptible to more than one meaning, the court will adopt the construction which comports with legality, this question is not before us either. Dixon v. Brooks, 678 S.W.2d 728
(Tex.App. — Houston [14th Dist.] 1984, writ ref'd. n.r.e.). Before reaching this point, the trial court must first make a determination that the contract can be construed as usurious. The rule is that a contract is usurious as a matter of law if there is any contingency by which the lender may receive more than the lawful rate of interest. Smart v.Tower Land and Investment Co., 597 S.W.2d 333 (Tex. 1980);Dixon v. Brooks, 678 S.W.2d at 729.
The fact that the contract provides for an interest rate of 23.99% per annum does not save it from being a usurious agreement. As the Pickrell Court said:
 It is true the note shows upon its face ten per cent interest, but: 'The transaction is to be tested by its substance, not its form, and, if from all the facts its essence is found to be the receiving or contracting for a greater rate of interest than is allowed by law, the statutory consequences must be visited upon it.' [citation omitted].
Pickrell v. Alpha Pipe Steel, Inc., 406 S.W.2d at 959.
Looking through form to substance, the contract reveals on its face that it contracts for and charges an interest rate in excess of that allowed by law.
Furthermore, the record reveals that appellants were given a credit of $114.00 for vinyl floor covering which they were dissatisfied with. Although appellants did not plead for an offset of this amount, it was tried by consent. The trial court's judgment reflects that credit was given for this amount. However, the record is void of any evidence showing that the interest to be paid on the amount financed was reduced accordingly and their monthly payments adjusted to compensate for this credit. This should have been considered in determining whether usury appeared of record. The trial court and the majority opinion failed to address this point and failed to allow appellants a credit for interest paid or to be paid on the account.
I would REVERSE the judgment and REMAND this cause for new trial where appellants should be permitted to present evidence of usury.
1 7 Tex.Reg. 33 (Jan. 1, 1982). The trial court is authorized to take judicial notice of interest rate ceilings issued by the Consumer Credit Commission. WhiteheadUtilities, Inc. v. Emery Financial Corp., 697 S.W.2d 460
(Tex.App. — Beaumont 1985).
2 Lake's Monthly Installment and Interest Tables, (6th Edition 1970).
3 Rule 93 of the Texas Rules of Civil Procedure states: "A pleading setting up any of the following matters, unlessthe truth of such matters appears of record, shall be verified by affidavit. . . . (11) That a contract sued upon is usurious. Unless such plea is filed, no evidence of usurious interest as a defense shall be received." [Emphasis ours].
4 See Wall v. East Texas Teachers Credit Union,526 S.W.2d 148 (Tex.Civ.App. — Texarkana 1975), rev'd. on othergrounds, 533 S.W.2d 119 (Tex. 1976); Maxwell v. Estate of Bankston,433 S.W.2d 229 (Tex.Civ.App. — Texarkana 1968, no writ); Pickrellv. Alpha Pipe Steel, Inc., 406 S.W.2d 956 (Tex.Civ.App. — Amarillo 1966, writ ref'd. n.r.e.). *Page 336