Court Opinion

ID: 9714051
Source: CourtListenerOpinion
Date Created: 2023-08-26 05:29:33.565066+00
Date Added: 2024-06-11T18:23:23.014798
License: Public Domain

Brower, J.,
concurring.
I concur in the result reached by the court in its decision herein. The opinion holds that the difference between the cash price and time price of merchandise is interest and if the time price differential is more than 9 percent it is a usurious transaction. With this conclusion I agree.
The original reason for the exclusion of the time differential from the operation of the usury statute is discussed in an article appearing in 55 Northwestern University Law Review, p. 303, stating: “This view has traditionally been justified on the theory that a person finding it necessary to borrow money is in a disadvantageous bargaining position and deserving of statutory protection, whereas a purchaser’s position is not analogous since should he find the price unsatisfactory he can always refrain from making the purchase.
“This distinction appeared before the advent of large scale credit buying in a period in which the interests *786of the merchant .class were' considered paramount. It. is subject to attack for disregarding .the facts of presr ent day economic life. It is difficult to understand, why a consumer should be granted the protection of the1 usury statute when he makes a loan to facilitate a purchase, but is denied that protection when he makes the same purchase on credit granted by the dealer.”
To my mind the person without adequate funds to buy an automobile or household furniture or appliances, radios, or a television set, or many other items for cash who must have one for his business or family is in about the same position as far as being able to walk away from the dealer and go elsewhere as a debtor is to go from one finance company to another. I can see little difference in the two situations.
The rule that a time sale of goods or merchandise did not involve interest which grew up long before its ádoption in this state appeared to be sound reasoning at the time it originated. At that time such dealings were quite simple and modern commercial transactions based on time sale credit were not in vogue. There were in such a transaction other risks and factors.
Since then installment sales have increased by leaps, and bounds. The rapidity of their increase and the volume of such sales can be seen from the tables in the discussion in the article on Retail Installment Sales in 45 Marquette Law Review (1962) 555.
I am convinced that the seller of merchandise and the buyer think of the amount paid to effect a time sale as interest. Even though the buyer is totally unable .to appreciate the rate of interest he is paying I think he knows that some interest is being paid and wouldn’t know anything about a “time differential” unless it was explained to him. The dealer must buy other goods to sell in turn and in many cases must pay interest himself. In most cases I believe he would consider the difference between the cash and time *787price as interest if it were not carefully explained to him by the finance company or his lawyer.
In short I think today it is interest received for' forbearance of the dealer to collect the cash price and that the same law of usury should be applied to the time differential as to interest on a loan.
To my mind however this is a new rule of law in conflict with our previous holdings.
Beginning with the case of Grand Island Finance Co. v. Fowler, 124 Neb. 514, 247 N. W. 429, this court held: “A dealer in automobiles may in good faith sell a car on time for a price in excess of the cash price without tainting the transaction with usury, though the difference in prices may exceed lawful interest for a loan.”
A long line of cases followed, always giving lip service to this rule and asserting that a sale of property by an owner on time if made in good faith was not usurious regardless of the amount that the time price exceeded the cash price. In most all subsequent cases this court discussed numerous situations between seller and buyer' with generally a finance company involved to determine whether the transaction was a loan or a time sale. This was because the difference between the cash and time-price generally exceeded the interest which would have been allowed under the various interest statutes. After looking through “form to substance” the transaction was generally held to be a loan involving interest.
In my opinion this court in changing the rule should clearly overrule Grand Island Finance Co. v. Fowler, supra, by name. and the long line of cases stemming' from it. That would avoid confusion and lend clarity to the opinion.
However, in such a case a great number of important financial transactions have' been consummated relying on the faith of these decisions of this court. We should not in my opinion endanger their validity by á decision acting retroactively.
*788I have never hitherto favored prospective decisions. I am sure courts do not favor them except in cases in which great numbers of persons have acted on important matters, relying on such decisions. I feel however that the present situation is such a case.
This has been done in cases of importance in other states. Knecht v. St. Mary’s Hospital, 392 Pa. 75, 140 A. 2d 30; Spanel v. Mounds View School Dist., 264 Minn. 279, 118 N. W. 2d 795. It has been approved by the Supreme Court of the United States in Great Northern Ry. Co. v. Sunburst Oil & Refining Co., 287 U. S. 358, 53 S. Ct. 145, 77 L. Ed. 360, 85 A. L. R. 254. In at least one decision this court has done so. Fielding v. Publix Cars, 133 Neb. 818, 277 N. W. 331. Finally it has been applied to its rules in distinguishing time sale transactions from usurious loans by the Arkansas court in Hare v. General Contract Purchase Corp.. 220 Ark. 601, 249 S. W. 2d 973. I would have applied the rule announced in our opinion prospectively.
There is a discussion in 60 Harvard Law Review 437 on the prospective operation of decisions holding statutes unconstitutional. From this note it is apparent that many courts have made their decisions prospective only when setting aside a statute upon which many persons have relied and important transactions taken place. I would have applied our decision in Elder v. Doerr, ante p. 483, 122 N. W. 2d 528, prospectively also.