Andrews v. Martin

• Decision Date: 27 January 1969
• Docket Number: No. 5--4777,5--4777
• Citation: 436 S.W.2d 285,245 Ark. 1010
• Parties: John Henry ANDREWS et al., Appellants, v. Buford MARTIN et al., Appellees.
• Court: Arkansas Supreme Court

Page 285

436 S.W.2d 285

245 Ark. 1010

John Henry ANDREWS et al., Appellants, v. Buford MARTIN et al., Appellees.

No. 5--4777.

Supreme Court of Arkansas.

Jan. 27, 1969.

Lee Ward, Jonesboro, for appellants.

Frierson, Walker & Snellgrove, Jonesboro, for appellees.

HARRIS, Chief Justice.

In the latter part of 1964, appellee John Shipp contacted appellants, a negro couple of Jonesboro, relative to making certain improvements on their home. The terms of the agreement are very much in dispute, but it is established that two separate contracts were entered into between Shipp and the Andrewses. ¹ The first contract provided for the installation of white wood grain aluminum siding on the entire exterior of the home, the installation of two aluminum storm doors, the placing of aluminum screens on windows, and some other items, at an agreed price of $2,250.00. Soon after the job was commenced, it was decided that additional work should be done, including a carport, a concrete driveway, the front porch being replaced with aluminum roof, a concrete floor, and certain other repairs, which, according to Shipp, totaled $1,250.00. The total cost of the entire job, according to this appellee, was $3,500.00. Shipp testified that appellants desired that a debt owed a Jonesboro bank on the property be added to the indebtedness, although the exact amount due was not known by the Andrewses. Shipp said he then contacted Buford Martin, the other appellee herein, relative to whether the latter would 'finance' the transaction. On December 22, 1964, appellants and Shipp executed a contract calling for an expenditure of $2,250.00. Shipp testified that shortly thereafter, the second contract, calling for the expenditure of $1,250.00, was executed. ² Shipp thereafter took the two contracts to a Blytheville attorney who regularly represented Martin, ³ and directed that attorney to prepare a note and mortgage in the total amount of the two contracts, plus the indebtedness due the bank, plus the fee for abstract work, the fee for preparing the instrument, and the cost of recording the deed of trust. The attorney complied with these directions, and prepared a note in the amount of $4,306.15; a deed of trust was executed to secure that amount. The note and deed of trust were dated January 20, 1965, and bore interest at the rate of 10% per annum, payments to be made in monthly installments. On the next day, the instruments were assigned to Martin. In February, 1967, Martin filed suit, seeking judgment for the alleged balance due, and asking for foreclosure if it were not paid. The Andrewses answered, asserting that Shipp had been guilty of fraud; that they executed the papers (contract) given them by Shipp in blank, and that he had inserted as the price an amount not agreed upon; that he had altered the documents signed, and they denied that Martin was a holder in due course. Usury was pleaded, and appellants filed a cross-complaint against Shipp, asking for relief against him in case Martin was given judgment against them. He answered, denying any fraud or misrepresentation. Martin then replied to the Andrewses by asserting that he was a holder in due course of the note and deed of trust; that he had no notice of any defect, nor of any alleged usury in the original transaction. On trial, the court rendered judgment for Martin in the sum of $5,797.38, representing the balance due on the principal, ⁴ interest accrued to the date of hearing, abstract and insurance premium paid by Martin, and an attorney's fee of $510.00, allowed under the provisions of the note. It was directed that, if the sum be not paid within 10 days, the property be sold by the commissioner of the court. From the decree so entered, appellants bring this appeal.

Three points are relied upon for reversal, but since we have concluded that the note was void because of usury, there is no need to discuss the other two contentions. The finding of usury is based upon the following facts:

Shipp testified that the first contract called for an expenditure of $2,250.00. He also definitely stated that the second contract called for an expenditure of $1,250.00. The evidence established that the pay-off of the indebtedness due the bank amounted to $705.69. ⁵ The abstracting amounted to $22.00, legal services (in preparing the note and deed of trust), $20.00, and the charge for the recording of the deed of trust was $2.50. These items total $4,250.19. It is immediately apparent that this total is $55.96 less than the $4,306.15 called for by the note. The note itself provides for interest at 10% per annum from date until paid. Consequently, if all amounts mentioned are correct, a prima facie case of usury is made. The first contract was offered in evidence, and the amount of $2,250.00 is correct. There is no question but that the amount of the indebtedness to the bank was $705.69; nor is there any question but that the amounts listed for abstracting, legal services, and the...