Court Opinion

ID: 9681123
Source: CourtListenerOpinion
Date Created: 2023-08-24 07:44:13.948131+00
Date Added: 2024-06-11T13:39:20.419547
License: Public Domain

JONES, Justice,
concurring and dissenting.
I fully concur with that portion of the majority’s opinion which overrules appellant’s points of error, and which overrules appellee’s cross-points regarding the DTPA and delay damages. I am unable to agree, however, with that portion which sustains appellee’s cross-point regarding usury, and I respectfully dissent therefrom.
In 1980, appellee bought a tract of real property from appellant, giving appellant a promissory note in the amount of $160,000. The note, which was secured by a deed of trust on the property, provided for interest at the rate of 10% per annum. It provided for monthly payments of $1,334.12, with a balloon payment due at the end of five years. The note further provided that upon default in the punctual payment of the note or any part thereof, the borrower would pay, as attorney’s fees, an additional 10% of the principal and interest then owing, if the note were placed in the hands of an attorney or collected through judicial proceedings, or if suit were brought thereon. After about four years of making the monthly payments, appellee sought to sell the property and pay off the remaining balance on the note. During this period of time, however, appellee did not make its August 1, 1984, payment timely. Whether appellant gave permission to delay that payment until the closing of the sale was a disputed issue. In any event, appellant demanded additional moneys, presumably under the provision cited above, before he would give appellee a release so the property could be sold. Fearing that it would lose its purchaser, appellee agreed to pay, and did pay, an additional $5,000. Appellee then sued and recovered its $5,000, plus $5,000 attorney’s fees.
Article 5069-1.06, Tex.Rev.Civ.Stat.Ann. (1987), provides that, “Any person who contracts for, charges or receives interest which is greater than the amount authorized by this Subtitle, shall forfeit to the obligor three times the amount of usurious interest contracted for, charged or re-ceived_” (Emphasis added.) It is undisputed that the note was not usurious on its face. Accordingly, the relevant statute is that in force at the time of the alleged charging of interest, August 1984.
In August 1984, the maximum legal (i.e., authorized) rate of interest was at least 18%, whether under article 5069-1.04, Tex. Rev.Civ.Stat.Ann. (1987), article 1302-2.09, Tex.Rev.Civ.Stat.Ann. (1980), or article 1302-2.09A, Tex.Rev.Civ.Stat.Ann. (Supp. 1989). The act which amended article 5069-1.04 and added article 1302-2.09A in 1981 specifically provided that it was applicable “to all claims of forfeiture made after the effective date of this Act....” 1981 Tex.Gen.Laws, ch. Ill, § 27, at 286.
Therefore, the total interest authorized by the above statutes on a $160,000 loan over a four year period was at least $115,-200. At the 10% rate applicable to its note, appellee would have paid $64,000. Assuming that the additional $5,000 paid constituted interest, the total interest paid was $69,000. After spreading this amount over the four year period, as I believe we must under article 5069-1.07, the effective interest rate was approximately 10.78%.
Although the authorized legal rate under any of the above statutes was at least 18%, the majority is of the view that those statutes do not apply because appellee did not *447agree to more than 10%. Under this view, the charging or receiving of even a penny of interest beyond what was specified in the parties’ contract would be not merely a breach of contract, but usury. It would become virtually impossible for a creditor to charge any type of late charge, even in the utmost good faith, since a subsequent jury finding that the technical wording of the contract did not entitle them to recover the late charge would subject them to usury penalties in every instance.
This view finds apparent support in Carr Well Service, Inc. v. Skytop Rig Co., 582 S.W.2d 500 (Tex.Civ.App.1979, writ ref’d n.r.e.), and Engineering Technology Analysts, Inc. v. Robray Offshore Drilling Co., Ltd,., 611 F.2d 540 (5th Cir.1980). In those cases, however, no specified rate of interest whatsoever was agreed to by the parties, thereby bringing into play the six percent maximum rate mandated by article 5069-1.03, Tex.Rev.Civ.Stat.Ann. (1987). Accordingly, the statements in those cases regarding the necessity of an agreement to trigger the application of article 1302-2.09 are dicta. On the other side of the ledger are cases such as Butler v. Holt Machinery Co., 741 S.W.2d 169 (Tex.App.1987, writ denied), in which a corporation agreed to pay eleven percent interest per annum but did not agree to pay additional fees for late payments. The court held:
While the [trial] court treated the late payment fees as interest, it properly did not find them to be usurious. At maximum, the fees would have increased the total interest rate on each contract by five percent per annum. Even with the increase, the contracts would not have exceeded the maximum legal rate allowed.
Id. at 176. Thus, there appears to be a conflict on this point between at least two courts of appeals. Nor, in my opinion, did the supreme court address this precise question in Lawler v. Lomas & Nettleton Mortgage Investors, 691 S.W.2d 593 (Tex. 1985). There, the supreme court determined that the debtor had in fact agreed to pay a rate of interest up to 18%, so the question of whether it constituted usury to charge interest to a corporation at an effective rate of 10.139% when the contract specified a lower rate was not addressed. Accordingly, I do not believe this question has yet been settled in Texas.
Usury statutes are penal in nature and must be strictly construed. Steves Sash & Door Co. v. Ceco Corp., 751 S.W.2d 473, 476 (Tex.1988). In my opinion, the idea that a rate of 18% is not “authorized by law” because the parties’ written agreement states a lower rate is a strained reading of the language in articles 5069-1.04, 1302-2.09, and 1302-2.09A. It may comport with a liberal reading of the language, but it does not comport with the strict reading I believe we are required to give it.
Having reached the conclusion stated above, it is of no great moment that appellant did not present this specific argument to this Court or apparently to the trial court. We must affirm a correct lower court judgment on any legal theory before it, even if the court gives an incorrect reason for its judgment. Guaranty County Mutual Ins. Co. v. Reyna, 709 S.W.2d 647 (Tex.1986). Since appellant’s pleading contained not only a general denial, but also a special denial “[t]hat Defendant charged, contracted for or received interest at a usurious rate from the Plaintiff ...,” the whole issue of usury, with the exception of any affirmative defenses that may not have been pleaded, was before the trial court. It was, after all, appellee’s burden to prove that appellant had contracted for, charged, or received usurious interest.
There is, in addition, an alternative ground on which I would affirm the trial court’s judgment as to usury. As appellee concedes in its brief, “The trial court did not make findings of fact or conclusions of law with respect to Austin Gallery’s claim for penalties under Article 5069-1.06(1).” Appellee did not request any additional findings or conclusions. Accordingly, under Rule 299, Tex.R.Civ.P.Ann. (1977), ap-pellee waived that ground of recovery. Pinnacle Homes, Inc. v. R.C.L. Offshore Engineering Co., 640 S.W.2d 629 (Tex.App. 1982, writ ref’d n.r.e.).
*448I would affirm the judgment of the trial court in its entirety.