Associates Inv. Co. v. Ligon

• Decision Date: 18 February 1948
• Docket Number: No. 9697.,9697.
• Citation: 209 S.W.2d 218
• Parties: ASSOCIATES INV. CO. v. LIGON.
• Court: Texas Court of Appeals

209 S.W.2d 218

ASSOCIATES INV. CO. v. LIGON.

No. 9697.

Court of Civil Appeals of Texas. Austin.

February 18, 1948.

Appeal from County Court at Law, Travis County; Jack Sparks, Judge.

Action by Louis Ligon against the Associates Investment Company to recover the amount of usurious interest paid for the loan of an amount due on the purchase price of an automobile. Judgment for plaintiff, and defendant appeals.

Affirmed.

Smith and Pollard, of Austin, for appellant.

Wm. Yelderman, of Austin, for appellee.

HUGHES, Justice.

This is a usury case arising from the sale of an automobile.

Baxter Used Cars of Austin, Texas, sold the car to appellee, Louis Ligon. Appellant, Associates Investment Company financed a portion of the sale price.

Appellee orally agreed to pay Baxter $1,300 for the car and of this amount he paid Baxter $740 cash, leaving $560 owing, which amount the parties understood was to be obtained from a finance company. Before the car was delivered or the sale completed, Baxter and appellee went to the office of appellant where a conditional sales contract was entered into which recited that appellee was the Buyer, Baxter the Seller; that the "cash price" of the car was $848, the "down payment" $288; the cash, "deferred", balance, was $560; the "total finance charge and insurance premium for which credit is extended" was $197.50; and the "time balance" was $757.50.

Included in this contract was appellee's note payable to Baxter for $757.50, payable in fifteen equal monthly installments of $50.50, with interest after maturity only.

This note was immediately endorsed without recourse by Baxter to appellant for a consideration of $560. Appellee has paid appellant the full amount of this note, except for a rebate of $3.79.

Fifty-three dollars and twenty-one cents of the $197.50 finance charge was for insurance, the balance was for "carrying the loan." If the difference between $197.50 and $53.21 — $144.29 — is interest, the loan is plainly usurious.

Appellant seeks to overcome this interpretation of the transaction on the theory that there was a difference between the "cash price" for the car and its "credit price," this difference being the amount which the finance company charged for carrying the loan, which "credit price," appellant says, is fixed in the conditional sales contract.

From this premise, appellant argues that it is permissible for a merchant to have a cash and credit price for his merchandise, and to sell at the credit price without being subject to the pains and penalties of usury, citing Graham v. Universal Credit Co., Tex.Civ.App., 63 S.W.2d 727; Rattan v. Commercial Credit Co., Tex.Civ.App. 131 S.W.2d 399, writ ref.; Standard Supply & Hardware Co. v. Christian-Carpenter Drilling Co., Tex.Civ.App., 183 S.W.2d 657, writ ref., and Bond Auto Loan Co. v. Burch, Tex.Civ.App., 171 S.W.2d 154.

We cannot agree with appellant that the finance charge is a part of the credit price. It would be most unusual for a cash sale contract to specify the credit price or for a credit sale contract to specify the cash price. The contract would be for one price or the other, unless the buyer is given an option which usually is in the form of a discount, if paid within a certain time. The contract here specifies but one sale price and whether it be a cash or credit price is not material. The amount...