American Physicians Ins. Co. v. Hruska

• Decision Date: 03 June 1968
• Docket Number: No. 5--4583,5--4583
• Parties: The AMERICAN PHYSICIANS INSURANCE CO., Appellant, v. Robert HRUSKA and Theodore Menas, Appellees.
• Court: Arkansas Supreme Court

Page 622

428 S.W.2d 622

244 Ark. 1176

The AMERICAN PHYSICIANS INSURANCE CO., Appellant, v. Robert HRUSKA and Theodore Menas, Appellees.

No. 5--4583.

Supreme Court of Arkansas.

June 3, 1968.

Thomas B. Tinnon, Mt. Home, and Donald Joe Adams, Yellville, for appellant.

Roy E. Danuser, Mt. Home, and Bruce G. Heavner & Clifford N. Jarrett, Kansas City, Mo., for appellees.

FOGLEMAN, Justice.

Appellant seeks reversal of a judgment in favor of appellees for an alleged excessive amount exacted of appellees by it in connection with a transaction which appellees had contended was a usurious loan. Appellees contend that they borrowed $65,000 from appellant to enable them to purchase certain stock of Management Investment Corporation, a Missouri corporation of which they were the president and secretary respectively, and that this corporation, in turn, owned all of the stock of Liberty Reserve Life Insurance Company. Appellees contend that the loan was made on December 2, 1959, and by the terms of the loan agreement, they were required to repay $82,400 six months later which sum, they say, they borrowed from one Harold R. Smith in order to obtain release of the collateral. On the other hand, appellant contends that it purchased from appellee Hruska a negotiable note of Management Investment Corporation for $80,000 at a discount. Appellant further contends that Harold R. Smith purchased the note from it on June 2, 1960, along with collateral therefor, consisting of all of the stock of Management Investment Corporation and of Liberty Reserve Life Insurance Company, for a consideration of $82,400.

Suit was filed by appellee Hruska against appellant for the recovery of $17,400, alleged to be the interest he was required to pay in excess of the rate permitted by law. Eventually the case was tried, and upon a jury verdict on September 18, 1967, the court rendered its judgment in favor of appellees ¹ for the sum of $14,800 with interest thereon from June 9, 1960.

In the interim between the filing of the complaint and trial, appellant filed a request for admissions, which was answered by appellees. They admitted that the note involved was for $80,000 and was executed by Management Investment Corporation and appellee Hruska; that it was not payable to appellant; and that it was the obligation of the corporation, along with appellees.

Subsequent to the filing of the response to the request for admissions, appellant filed a motion for summary judgment. This motion was based upon the pleadings and the answers to its request for admissions. Appellant contended that it was clear that it had purchased a note of Management Investment Corporation from Hruska at a discount and that the transaction did not constitute a loan and was not usurious. On the same date this motion was filed, appellees were granted leave to amend their complaint and filed a copy of the note. This copy revealed that the note bore a dateline at Baton Rouge, Louisiana, and was payable to 'itself.' The name of the corporation was signed by Robert J. Hruska, president. On the reverse side, endorsements of the corporation by Hruska as president and by Hruska individually appeared under a printed guaranty in favor of Fidelity National Bank of Baton Rouge, upon whose form the note was prepared and whose name as payee was stricken out. In the amended complaint, on which the case was ultimately tried, appellees alleged: that Management Investment Corporation owned all the stock of Liberty Reserve Life Insurance Company; that appellees owned a large portion of the capital stock of Management Investment and desired to purchase the balance of the outstanding stock; that on November 24, 1959, appellant obtained a Louisiana bank cashier's check for $65,000 payable to the order of appellees and one Earl Shelton; that on December 2, 1959, in Kansas City, Missouri, appellant agreed to loan this amount to appellees on condition that they pledge all of the stock of Management Investment Corporation as security and that a note for $80,000 bearing 6% interest and endorsed by this corporation and Hruska individually be executed; that appellees paid appellant $82,400 on this note on June 1, 1960; that this amount was $14,800 in excess of the legal rate of interest. Thereafter, the cause was transferred to the Chancery Court of Baxter County, where the motion for summary judgment was denied and appellant required to plead to the amended complaint. The cause was then retransferred to Baxter Circuit Court where the motion for summary judgment was renewed and denied.

In response to interrogatories by appellees, appellant stated that on December 2, 1959, it purchased this note, which it claimed was alleged to be the property of Hruska, and paid $65,000 for it in Baton Rouge, Louisiana, with a check payable to appellees and Earl Shelton.

When the case was called for trial, appellant again renewed its motion for a summary judgment which was again denied. After the verdict, appellant moved for judgment notwithstanding the verdict, on the grounds that it was not supported by sufficient evidence.

Appellant lists four points for reversal which we will treat in the order asserted.

I.

THE TRIAL COURT ERRED IN OVERRULING APPELLANT'S MOTION FOR

SUMMARY JUDGMENT.

Appellant cites no authority in support of its position that it was entitled to judgment as a matter of law. We do not consider this point meritorious, however, because a trial on the merits was had after the repeated denials of the motion. It has been held that the denial of a summary judgment is not reviewable where the denial is followed by a trial on the merits. See Bell v. Harmon, 284 S.W.2d 812 (Ky.1955). We deem this to be an appropriate rule. We have pointed out that, in some respects at least, treatment of motions for summary judgment should be similar to that accorded motions for directed verdicts. Russell v. City of Rogers, 236 Ark. 713, 368 S.W.2d 89. See, also, 6 Moore's Federal Practice § 56.04(2) p. 2006. A motion for directed verdict at the conclusion of a plaintiff's proof will not be considered on appeal where the defendant has thereafter offered evidence. Lytal v. Crank, 240 Ark. 433, 399 S.W.2d 670. The obvious reason for this rule is that deficiencies in the evidence at that stage of the proceedings may well be supplied by evidence. Grooms v. Neff Harness Co., 79 Ark. 401, 407, 96 S.W. 135, 137; Fort Smith Cotton Oil Co. v. Swift & Company, 197 Ark. 594, 124 S.W.2d 1. For the same reason, a final judgment should be tested upon the record as it exists at the time it is rendered rather than at the time the motion for summary judgment is denied.

II.

THE TRIAL COURT ERRED IN ADMISSION OF TESTIMONY WHICH WAS

IRRELEVANT AND IMMATERIAL AND TENDED TO PREJUDICE

THE JURY AGAINST THE APPELLANT.

Appellant contends that testimony of appellees, concerning an automobile driven by an officer of appellant and attendance of appellees at a football game as guests of officers of appellant, was irrelevant and immaterial and prejudicial in that the jury was led thereby to believe that appellant was a large, affluent company that 'broke appellees' company.'

Upon being asked if they were met in New Orleans by one Robert Love, prior to the transaction between the parties, Hruska replied that they were 'with Mr. Moore's Continental Lincoln.' He described the car as being equipped with a television. No objection was made to this testimony. Later appellant's own attorney examined Menas about the type of automobile and the outcome of the football game. After Hruska had told of being taken to a country club where they met company officials for lunch and later of being taken by them to a football game, an objection that this testimony was immaterial and irrelevant was overruled. Hruska then testified that discussions about the transaction were carried on intermittently during lunch and at the football game and thereafter at dinner at the country club. Inasmuch as the principal issue in the case was whether appellant made a loan to appellees secured by Mortgage Investment Corporation's note and the pledge of stock, or whether appellant simply bought a note of Mortgage Investment at a discount, any and all negotiations leading up to the transaction were proper subjects of inquiry. Appellant suggests that since there was a written instrument, i.e., the note, this testimony was neither relevant nor material. We have long held that parol evidence is admissible for the purpose of showing the usurious nature of a transaction even though it might have a tendency to vary a written document. Tillar v. Cleveland, 47 Ark. 287, 1 S.W. 516; Heidelberg Southern Sales Co. v. Tudor, 229 Ark. 500, 316 S.W.2d 716. This court has long taken the position that any evidence tending to show that the substance of a transaction was a scheme to evade usury laws, regardless of the form thereof, should be admitted. Home Building & Savings Association v. Shotwell, 183 Ark. 750, 38 S.W.2d 552. In 1886, in the case of Tillar v. Cleveland, supra, this court said:

'* * * It would be strange if, upon the trial of such an issue, a court could not hear proof of all matters which throw light upon the situation and conduct of the parties, and the motives which influenced them.'

There has been no deviation from that idea since that time. We find no error here.

III.

THE VERDICT OF THE JURY IS CONTRARY TO A PREPONDERANCE OF

THE EVIDENCE.

Appellant argues that there is no substantial evidence to support the theory that the transaction between the parties was actually a loan of $65,000 by appellant to appellees instead of a sale of a note by Hruska to appellant. Hruska testified substantially as follows: Menas brought Earl Shelton to discuss their need for money. Shelton claimed to be an actuary and consultant for American Physician's Insurance Company and said he was in Missouri looking for a company for reinsurance and for the purpose of getting appellant into...