Court Opinion

ID: 9647519
Source: CourtListenerOpinion
Date Created: 2023-08-23 13:38:54.490582+00
Date Added: 2024-06-11T18:11:50.397810
License: Public Domain

WHITHAM, Justice,
dissenting.
I respectfully dissent. In my view, the late payments are interest, the interest charged was usurious and the trial court erred in failing to render judgment accordingly. Consequently, I would sustain Ty-grett’s three points of error and reverse and render judgment in favor of Tygrett.
TEX.REV.CIV.STAT.ANN. art. 5069-1.-01(a) (Vernon 1971), defines interest as “the compensation allowed by law for the use or forbearance or detention of money.” The detention of money arises in a case when a debt has become due, and the debt- or withholds its payment without a new contract giving him the right to do so. Parks v. Lubbock, 92 Tex. 635, 51 S.W. 322 (1899). In my view, a debt has become due in the present case and the debtor has withheld its payment without a new contract giving him the right to do so. Therefore, I disagree with the majority’s holding that there has been no detention of money in the present case.
I cannot agree with the majority that, by virtue of the assessments, Tygrett was paying his own obligations; hence, no debt to the other owners can exist to be detained. The majority’s interpretation disregards the provisions of article twenty-two of the Condominium Declaration for University Gardens providing for interest on past due assessments. Article twenty-two reads:
The amount of common expenses assessed against each condominium shall be the personal and individual debt of the owner thereof. No owner may exempt himself from liability for his contribution toward the common expenses by waiver of the use or enjoyment of any of the common elements or by abandonment of his unit. The Board of Managers or Managing Agent shall have the responsibility to take prompt action to collect any unpaid assessment which remains unpaid more than fifteen (15) days from the due date for payment thereof. In the event of a default by an owner in the payment of the assessment, such owner shall be obligated to pay interest at the rate of ten percent (10%) per annum on the amount of the assessment from due date thereof, together with all expenses, including attorney’s fees, incurred to collect such assessment together with late charges as provided by the By-Laws of the Association.
Furthermore, the majority’s interpretation disregards the provisions of article 4, (3)(f) of the by-laws of the association reading:
*486To collect delinquent assessments by suit or otherwise and to enjoin or seek damages from an owner who may be in default as is provided in the Declaration and these By-Laws. To enforce a per diem late charge of FIVE and 00/100 DOLLARS ($5.00) and to collect interest at the rate of ten percent (10%) per an-num in connection with assessments remaining unpaid more than fifteen (15) days from due date for payment thereof, together with all expenses, including attorney’s fees incurred.
To my mind, the provision for ten percent (10%) interest per annum payable to the other owners contemplates a debt due the other owners. In my view, the provision for a late charge so immediately tied to provisions for the stated interest of ten percent is nothing other than a provision for additional compensation cast in the terminology of a “late charge.” Thus, the compensation to be paid is the stated interest of ten percent (10%) of the principal per annum plus the five dollars a day late charge fixed by the by-laws of the University Gardens Condominium Association.
Furthermore, my view that there is a debt due the other owners is reinforced by the fact that article twenty-three of the condominium declaration goes on to impose a lien upon the debtor’s property to secure the payment of the debt. In the language of article twenty-three:
All sums assessed but unpaid for the share of common expenses chargeable to any condominium unit shall constitute a lien on such unit superior to all other liens and encumbrances, except only for tax and special assessment liens on the unit in favor of any assessing unit, and all sums unpaid on a first mortgage or first deed of trust of record, including all unpaid obligatory sums as may be provided by such encumbrance.
In the present case, all of the owners paid into a cooperative pool (the association) various common expenses incurred in managing and maintaining the property. As stipulated by the parties, “[t]he revenue generated by the collection of assessments from homeowners is applied by the Association principally to pay for the cost of maintenance of the condominium properties, the payment of utility charges and taxes, premiums for required insurance coverages and administrative expense.” To facilitate payment of these expenses, assessments were collected of and from all the owners collectively through the vehicle of the association, an unincorporated nonprofit entity comprised of all owners, including Tygrett. The creation and operation of the association cannot change the fact that all of the owners were to pay the various common expenses. It is inconceivable that when, for example, utility charges were payable that Tygrett’s proportionate part went unpaid. Therefore, if one owner failed to pay his proportionate share, then other owners had to pay his share on his behalf. Thus, Tygrett’s debt to the other owners was created when he defaulted in the payment of an assessment.
To negate the existence of this debt owed the other owners, the majority places great reliance upon portions of a letter to the owners from the association. I quote the letter in full and underscore the close interrelationship between the stated interest of ten percent (10%) per annum and the late charges as compensation for the detention of money.
Section 21 of our Declaration provides that payment of your maintenance assessment is due monthly in advance on the first day of each month. Under Article IV. 3.(f) of our By-laws the Board of Managers is authorized to collect a $5.00 late charge for each day your assessment is not paid after the first of the month. The same provision authorizes the Board to collect interest at the rate of 10% per annum if your assessment remains unpaid for more than 15 days, (emphasis in original).
Effective April 1, 1978, the foregoing provisions will be put into effect, as follows:
(1) If payment of your assessment is not received in the Association’s office by 5:00 p.m. on the second business day of *487the month for which it is due, a late charge of $5.00 a day will be made for each day during which the assessment remains unpaid after the first of the month.
(2) If your assessment remains unpaid for more than 15 days, in addition to the late charges described above, you will be charged interest at the rate of 10% per annum until the assessment is paid, (emphasis added).
(3) Several homeowners are seriously delinquent in the payment of maintenance assessments — some going back to the date of closing on their individual units. These owners will have until 5:00 p.m. on April 3, 1978, to pay all amounts due, in full. After that time, late charges and interest will be added to their accounts. Obviously, this could amount to quite a lot of money in some cases, (emphasis added).
The Association is a non-profit organization and has no source of income except from your assessments. If you don’t pay, there is nothing with which to pay the costs of running the complex. If you don’t pay on time, we are forced to put off paying bills, risking loss of discounts and our credit rating. I am sure you don’t want University Gardens operated in that fashion.
I also urge you to make suré your assessments are paid on time simply to avoid the additional operating costs necessary to collect delinquent assessments. In my opinion, the money could be better spent.
If you pay your assessments on time regularly, we thank you. Obviously, this letter is not directed at you.
Contrary to the interpretation placed on the letter by the majority to negate debt, I read the letter as a plea that owners pay on time, otherwise their fellow owners will have to pay their share for them; and that if payment is not timely that steps will be taken to collect the resulting debt.
When Tygrett failed to pay, the other owners had to “lend” him his part of the common expenses. Therefore, I cannot agree with the majority that the association was merely a conduit “through which Ty-grett paid his own individual debts as a member of the Association.” To my mind, the present case is one in which a debt has become due to the other owners and Ty-grett has withheld its payment without a new contract giving him the right to do so. Consequently, I would hold that there has been a detention of money within the meaning of article 5069-1.01(a). Moreover, in my view, the late charges are compensation for that detention of money, as is the stated interest of ten percent (10%) per annum. It follows, and I would further hold, that the late charges are interest.
Having concluded that the late charges are interest, it must next be determined whether the late charges are usurious. 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. Shropshire v. Commerce Farm Credit Co., 120 Tex. 400, 30 S.W.2d 282 (1930). The stated interest of ten percent (10%) per annum was the maximum amount allowed by law in the present case. TEX. REV.CIV.STAT.ANN. art. 5069-1.02 (Vernon 1971). Therefore, provision for the late charges was the contingency by which the association may receive more than the lawful rate of interest. Consequently, I would hold that the late charges are usurious.
Accordingly, I would reverse the judgment of the trial court and render judgment that the association take nothing against Tygrett. I would render judgment in favor of Tygrett and against the association in an amount calculated under TEX. REV.CIV.STAT.ANN. art. 5069-1.06 (Vernon 1971 & Vernon Supp.1984), together with interest on that amount at the rate of nine percent (9%) per annum from the 15th day of July 1983, the date of the trial court’s judgment.