Court Opinion

ID: 9682817
Source: CourtListenerOpinion
Date Created: 2023-08-24 13:17:30.566594+00
Date Added: 2024-06-11T18:17:41.969812
License: Public Domain

*846NORVELL, Justice
(dissenting).
This case involves a construction of Article 5073, Vernon’s Ann.Tex. Stats. The petitioner, Marvin G. Stacks, owed bills totaling $652.90 to East Dallas Hospital and East Dallas Clinic. He managed to discharge this indebtedness in a series of transactions involving the hospital, the clinic, the Republic National Bank and one W. H. (Joe) Bailey, a “go between” in the various negotiations and agreements of the parties. All this is set out in the court’s opinion. In addition to the principal of the debt, Stacks has paid over money in excess of ten per cent per annum of the principal. This excess amounted to $152.55 and the trial court rendered judgment for double that amount, namely, $305.10. Among the numerous papers and documents executed by Stacks there was a request that Joe Bailey arrange a loan for him, but Stacks did not agree to pay Bailey a sum certain in money for services to be rendered in securing a loan. He testified that he did not know that Bailey “had anything to do with the money part” of the transactions. However, Mr. Benson representing the clinic and the hospital testified that he collected a “charge” in connection with the obtaining of a loan for Stacks, the proceeds of which were used to pay the hospital and clinic bills owed by Stacks. Stacks gave Benson checks for $32.50 and $32.79, payable to clinic and hospital respectively, and later, Stacks paid another “charge” of $81.61 in connection with a loan renewal negotiation.
The court holds that the respondent clinic and hospital cannot be held liable under Article 5073 because shortly after receiving the money called for by these checks, they paid the same over to Joe Bailey. This holding is primarily based upon Commerce Trust Co. v. Best, 124 Tex. 583, 80 S.W.2d 942 (1935).
Article 5073 says that: “[T]he person paying the same [interest at greater rate than ten per cent] or his legal representative may by an action of debt recover double the amount of such interest from the person, firm, or corporation receiving the same”.
Here the evidence is undisputed that the clinic and hospital received the items of $32.50, $32.79 and $81.61 above mentioned. However in Best, this court refused to give the statute its literal meaning. From the report of the case, it appears that while Commerce Trust Co. had received interest payments from Best, it had accepted the same on behalf of California State Life Insurance, the holder of the note which was the basis of the usury claim. The court rejected the theory that Commerce Trust Company was a joint tort-feasor with its principal, California State Life Insurance Company, and held that where the principal holds a usurious obligation, an agent or employee of the principal is not liable for payments received by him as agent and thereafter transmitted to his principal.
This court said:
“It is true that plaintiff in error received these interest payments in the sense that they came into its hands and passed from them when it transmitted them to its principal, but the language of the statute is not to be given a mere literal construction. If it were, then any employee of a corporation who accepted and deposited to the credit of the corporation money paid in settlement of usurious interest notes belonging to it would be personally liable for double the amount of the interest so collected.”
Deming Investment Company v. Giddens, 41 S.W.2d 260 (Tex.Civ.App.1931, writ dism’d) was referred to in Best. Deming Investment Company had transferred a usurious note to Rutland Trust Co. and thereafter received and transmitted certain interest payments received by it to Rutland. Here, Deming was obviously acting for and on behalf of Rutland and the holding of the Court of Civil Appeals is in accord with the later holding of this court in Best.
*847When the court attempts to apply the principle of the Best and Giddens cases to the one now before us, some difficulty is encountered. The rule of the Best case is a narrow one, namely, that one acting merely as an agent in collecting interest on a usurious note and forwarding the same to the holder of the note is not liable under the penalty prescribed in Article 5073. The rule stated has no application to this case. The hospital and clinic collected the $32.50, $32.79 and $81.61 items, totaling $146.90, and turned the same over to Joe Bailey. Stacks had never agreed to pay Bailey anything. I can find no contractual basis which would authorize the hospital and clinic to pay over Stacks’ money to Bailey.
To support the court’s judgment in this case, the rule in Best must be extended to apply to any transaction wherein one collects money from a debtor and turns it over to some person to whom the debtor is in no way legally obligated, thus ridding himself of the taint of “benefit” from the transaction.
When we look to substance, this is what happened: Stacks went along with a well designed plan whereby he could obtain a loan, discharge his hospital and clinic bills, but at a cost to him of more than ten per cent per annum. In order to accomplish this, Joe Bailey as a “go between” was employed. He may be a legitimate loan broker but strange to say, no one in this lawsuit pleaded that he was or that the money paid to him was a legitimate brokerage charge, and certainly Stacks did not agree to pay him $146.90 for brokerage services. He thought these advance charges ultimately paid over to Bailey were interest charges. It seems that the East Dallas Clinic may have been under a similar impression as it transmitted the $32.50 to Joe Bailey by means of a check signed by Benson which bore the notation, “Note Interest, Marvin G. Stacks $32.50”. Mr. Benson spoke of the items which were paid to Bailey as interest charges. There is no basis in the present record for saying that the money paid to Bailey was for services rendered to Stacks. When this fact is accepted, and respondents do not dispute it, there is no escape from the conclusion that Mr. Stacks has paid more than the statutory limit for the use of money.
The plan of financing adopted in this case was the result of a three way agreement between the hospital and clinic, the bank and Joe Bailey. It appears that Bailey received money as interest, that the bank received money as interest and that the hospital and clinic received payment for the bills owed by Stacks. In the process, Stacks paid some 19% per annum for the money he obtained to discharge his bills. From a creditor’s standpoint there is a difference between an unpaid bill and one that is paid. By joining with the bank and Bailey, the hospital and clinic certainly received a “benefit”, that is, an advantage or profit. The fact that the payments made (other than those applicable to the principal of the debt) went to more than one person or entity should not obscure the situation. Too much was here paid for the use of money.
I fear that the decision of the court in this case will provide in effect an unfortunate breach in our anti-usury laws. Much time and ingenuity has been expended in attempts to circumvent these statutes, and we need to be ever alert to this situation. If a borrower is to employ and pay a person in connection with the securing of a loan, he is entitled to know about it. He should also be entitled to know the rate of interest he is required to pay.
I respectfully dissent. I would reverse the judgment of the Court of Civil Appeals and affirm the judgment of the trial court.
SMITH, STEAKLEY and POPE, JJ., join in this dissent.