A-1 Finance Co. v. Nelson

Decision Date25 October 1957
Docket NumberNo. 34206,A-1,34206
Citation85 N.W.2d 687,165 Neb. 296
PartiesFINANCE COMPANY, Inc., Crete, Nebraska, a corporation, Appellant, v. Charles A. NELSON and Hattie Nelson, husband and wife, Appellees.
CourtNebraska Supreme Court

Syllabus by the Court

1. A general demurrer admits all the allegations of fact in the pleading to which it is addressed, which are issuable, relevant, and material, and which are well pleaded; but does not admit the conclusions of the pleader, except when they are supported by, and necessarily result from, the facts stated inthe pleading. It does not admit inferences of the pleader from the facts alleged, nor mere expressions of opinion, nor theories of the pleader, as to the effect of the facts, nor allegations of what will happen in the future, nor arguments, nor allegations contrary to the facts of which judicial notice is taken, or which are contrary to law.

2. In passing on a demurrer to a petition, the court must consider exhibits attached thereto and made a part thereof, if the allegations stated therein either aid the petition in stating a cause of action or charge facts going to avoid liability on the part of the defendant.

3. The design of the installment loan law is to license and control the business of making installment loans and to restrict the enforcement of collection of illegal loans once they have been made.

4. The note is the principal or primary contract or obligation. The mortgage is an incident. In case of conflict, the terms of the note prevail.

5. The parol evidence rule is one of substantive law as well as of evidence and as a rule of substantive law it renders ineffective proof of an oral prior or contemporaneous agreement the effect of which would be to vary, alter, or contradict the terms of a written agreement.

6. Any loan made by a licensee under the installment loan law in excess of $1,000 wherein an interest rate in excess of 9 percent per annum is contracted for is void and the licensee shall have no right to collect or receive any principal or collect any interest on such loan.

7. A loan made by a licensee under the installment loan law which is not secured by a real estate mortgage and is not due or payable within the period of 21 months as provided for in section 45-138, R.R.S.1943, is violative of said section and void.

8. Section 45-138, R.R.S.1943, provides in part: 'Every loan contract shall provide for repayment of principal and charges in installments which shall be payable at approximately equal periodic intervals of time and so arranged that no installment is substantially greater in amount than any preceding installment.' Any loan made by a licensee under the installment loan law which fails to conform to this part of the above section is violative thereof and void.

9. If the language of a statute is clear and unambiguous, courts will not by interpretation or construction usurp the function of the lawmaking body and give it a meaning not intended or expressed by the Legislature.

Dredla & Dredla, Crete, Crosby, Pansing & Guenzel, Lincoln, for appellant.

Gerald J. Hallstead, Crete, Nelson & Harding, Lincoln, for appellees.

Heard before CARTER, MESSMORE, YEAGER, CHAPPELL, WENKE, and BOSLAUGH, JJ.

MESSMORE, Justice.

This is an action brought by the A-1 Finance Company, Incorporated, a licensee under the installment loan law, as plaintiff, against Charles A. Nelson and Hattie Nelson, defendants, in the district court for Saline County, to foreclose a chattel mortgage executed by the defendants in the sum of $5,200, dated February 14, 1953, to secure a promissory note in the same amount executed and delivered to the plaintiff by the defendants on the same date. Defendants filed a general demurrer to the plaintiff's amended petition which was sustained by the court. The plaintiff elected to stand upon its amended petition. The court entered an order dismissing the plaintiff's action. From this order the plaintiff appealed.

The material allegations of the plaintiff's amended petition may be summarized as follows: The plaintiff is a corporation duly organized and existing by virtue of the laws of the State of Nebraska, with its principal place of business at Crete, Nebraska; that on or about February 14, 1953, the defendants, Charles A. Nelson and Hattie Nelson, husband and wife, for a valuable consideration made, executed, and delivered to the plaintiff a promissory note in the amount of $5,200, a true copy of which is attached to the petition and made a part thereof; that said note is on a printed form used by the plaintiff in connection with its installment loan business under sections 45-114 to 45-155, R.R.S.1943; that originally it was attached to the chattel mortgage which is attached to the petition and made a part thereof; that at the time the defendants executed said note and chattel mortgage it was agreed by and between the parties that the loan should bear interest at the rate of 6 percent per annum, and the chattel mortgage was altered to carry out that agreement; and that the promissory note provided for the repayment of said loan of $5,200 in 24 equal installments of $221.33 each, the first installment being due March 14, 1953, and the final installment being due February 14, 1955.

The plaintiff further alleged that the agreed and proper rate of interest was 6 percent per annum on the unpaid balance of the principal amount of said loan, and 9 percent per annum upon the balances that were due and delinquent; that on February 14, 1953, defendants made, executed, and delivered to the plaintiff a chattel mortgage as security for the promissory note pledging one 1 1/2-ton Dodge truck and a milk route knownas 'Roberts Dairy No. 5100' which mortgage was duly recorded in the proper office on December 23, 1954; that under the terms of the said note and mortgage there was due and payable on the 14th day of March 1953, $221.33, and a like amount was due and payable each 14th day of the months succeeding March 14, 1953, to and including February 14, 1955; that the defendants had failed, neglected, and refused to pay the amount due on said mortgage; that the balance after all credits were allowed, was $5,192.31; that under the terms of the said chattel mortgage the plaintiff elected to declare the full amount of the said note and mortgage and interest due and payable at once; and that the plaintiff was the owner and holder of the mortgage and the debt secured thereby and was entitled to foreclose the same for the satisfaction of the debt. The prayer was in the usual and proper form.

The assignments of error made by the plaintiff which are pertinent to a determination of this appeal may be stated as follows: (1) The trial court erred in sustaining the demurrer filed by the defendants and entering judgment in their favor; (2) the court erred in finding the loan contract to be usurious or tained with usury; (3) the court erred in the interpretation given the installment loan law and in particular section 45-138, R.R.S.1943; and (4) the court erred in finding said loan contract void under section 45-138, R.R.S.1943.

The function of a general demurrer to an amended petition is as follows. In Gottula v. Standard Reliance Ins. Co., 165 Neb. 1, 84 N.W.2d 179, 181, this court said: 'A general demurrer admits all the allegations of fact in the pleading to which it is addressed, which are issuable, relevant, and material, and which are well pleaded; but does not admit the conclusions of the pleader, except when they are supported by, and necessarily result from, the facts stated in the pleading. It does not admit inferences of the pleader from the facts alleged, nor more expressions of opinion, nor theories of the pleader, as to the effect of the facts, nor allegations of what will happen in the future, nor arguments, nor allegations contrary to the facts of which judicial notice is taken, or which are contrary to law.' See, also, Brunson v. Ranks Army Store, 161 Neb. 519, 73 N.W.2d 803; Richter v. City of Lincoln, 136 Neb. 289, 285 N.W. 593.

In passing on a demurrer to a petition, the court must consider the exhibits attached thereto and made a part thereof, if the allegations stated therein either aid the petition in stating a cause of action or charge facts going to avoid liability on the part of the defendant, Gottula v. Standard Reliance Ins. Co., supra; Buller v. City of Omaha, 164 Neb. 435, 82 N.W.2d 578; Cacek v. Munson, 160 Neb. 187, 69 N.W.2d 692.

With the foregoing in mind we examine the plaintiff's amended petition with exhibits, true copies of the promissory note and chattel mortgage, attached thereto and made a part thereof, to determine whether or not the trial court erred in sustaining the defendants' demurrer to the plaintiff's amended petition as contended for by the plaintiff.

The note is designated a negotiable note. It is dated February 14, 1953, and is in the amount of $5,200. It recites in part: 'FOR VALUE RECEIVED, the undersigned * * * promise to pay to the order of A-1 FINANCE COMPANY INC (Licensee), * * * the principal sum of ..... Fifty Two Hundred and no/100 ..... Dollars, together with charges thereon, from the date hereof, until fully paid, at the rate of 3% per month on that part of the unpaid principal balance not in excess of $150.00 and 2 1/2% per month on that part of the unpaid principal balance in excess of $150.00 and not in excess of $300.00 and 3/4 of 1% per month on any remainder of such unpaid principal balance, which aggregate amount shall be payable in installments as follows: $221.33 on the 14th day of March, 1953, and a like amount on the 14th day of each succeeding month thereafter, and a final installment of the unpaid principal balance and unpaid charges on Febr. 14, 1955. * * * The lender hereunder is licensed under the laws of the State of Nebraska and the construction, validity and effect of this Note shall be governed by the laws of the State of Nebraska. * * * This Note...

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