Benoit v. United Companies Mortg. of Mississippi, Inc.

• Decision Date: 04 March 1987
• Docket Number: No. 56875,56875
• Citation: Benoit v. United Companies Mortg. of Mississippi, Inc., 504 So.2d 196 (Miss. 1987)
• Parties: Michael M. BENOIT and Julia A. Benoit v. UNITED COMPANIES MORTGAGE OF MISSISSIPPI, INC.
• Court: Mississippi Supreme Court

Page 196

504 So.2d 196

Michael M. BENOIT and Julia A. Benoit v.UNITED COMPANIES MORTGAGE OF MISSISSIPPI, INC.

No. 56875.

Supreme Court of Mississippi.

March 4, 1987.

Dennis L. Horn, Horn & Payne, Hazlehurst, for appellant.

Robert L. Rogers, Jr., Gillespie & Rogers, Hattiesburg, for appellee.

Before ROY NOBLE LEE, P.J., and ROBERTSON and ANDERSON, JJ.

ROBERTSON, Justice, for the Court:

This appeal presents the question whether, in the case of prepayment of a loan made by a licensee under the Small Loan Privilege Tax Act and where the amount prepaid has been computed wholly in conformity with the provisions of the Small Loan Regulatory Act, the prepayment is nevertheless subject to scrutiny under restrictions on prepayment penalties found in our general usury statute.In the context of today's facts, we answer the question in the negative and affirm the judgment below.

Michael M. Benoit and Julia A. Benoit, prior to June 27, 1983, had an outstanding first mortgage loan with United Companies Mortgage of Mississippi, Inc., a corporation licensed under the Small Loan Privilege Tax Act.Miss.Code Ann. Secs. 75-67-201, et seq.(Supp.1986).The Benoits advised United's McComb, Mississippi office that they wished to pay off the loan and requested a payoff figure.They were advised that the amount necessary to pay in full the indebtedness covered by their note, after credit for unearned interest, was $41,073.23.This payoff amount was calculated on the rule of the sum of the digits, commonly known as the Rule of 78ths.The Benoits in fact paid this amount to United on June 27, 1983.

On January 20, 1984, the Benoits commenced this civil action in the Circuit Court of Pike County alleging that United had charged them a prepayment penalty in excess of that allowed by our then general usury statute, Miss.Code Ann. Sec. 75-17-1(12)(b)(Supp.1983)¹.That statute, according to the Benoits, holds that the prepayment penalty on a loan prepaid during its second year cannot exceed four percent of the unpaid principal balance.The parties did not dispute below, nor do they here, that if the Rule of 78ths is controlling, the payoff amount of $41,073.23 was correct and lawful.The Benoits claimed however, that, if Section 75-17-1(12)(b)[75-17-31] applies, they paid $3,034.32 too much.

On May 15, 1985, the Circuit Court entered final judgment for United dismissing the complaint.The Benoits perfected the present appeal.

Happily we are presented no dispute regarding the mathematics of the matter; only a question of law is at issue.The operative section of the Small Loan Regulatory Act, Miss.Code Ann. Sec. 75-67-127(1)(c)(Supp.1986), at all relevant times provided:

Every licensee shall ... when loans made or handled by a licensee under the provisions of the Small Loan Privilege Tax Law are paid in full prior to maturity, after July 1, 1974, whether by cash, renewal or otherwise, refund to the borrower the finance charge exceeding one dollar ($1.00) calculated on the rule of the sum of the digits, commonly known as the "Rule of 78ths".The refund shall be based and calculated on the number of days by which the loan is paid in advance, less twenty (20) days.

As indicated above, the Benoits do not dispute that, when that statute is applied, the amount necessary to pay off their loan was $41,073.23.

The Benoits' argument that the prepayment restrictions of Miss.Code Ann. Sec. 75-17-1(12)(b)[75-17-31](Supp.1986), apply proceeds on the premise that the phrase "no lender or other person," as used in that statute, includes parties such as United licensed under the Small Loan Privilege Tax Law.The argument founders, however, when it is realized that the four percent prepayment penalty limitation applicable to loans generally, originates in the exact same legislative enactment as authorizes small loan prepayment computation according to Rule of 78ths.SeeMiss.Laws Ch. 564(1974), originally House BillNo. 819, which became law on July 1, 1974.Specifically, Section 1 of Chapter 564at page 801 contains the now codified statutory language here invoked providing the limitation on prepayment penalty, while Section 4at page 803 contains the language quoted above providing for the Rule of 78ths method of computation where prepayment is made on a loan from one licensed under the Small Loan Privilege Tax Act.

At least two other portions of Chapter 564, Laws of 1974, expressly contain exemptions from provisions of the general usury statute for loans or extensions of credit made by a licensee under the Small Loan Regulatory Act, etc.SeeChapter 564, Sec. 1, amendingSec. 75-17-1(7) and (9).Perhaps it would have been better if Section 4 of Chapter 564, which amends code section 75-67-127(1) would have contained a similar provision, but taking the enactment, Chapter 564, as a whole and proceeding on the here reasonable assumption that the legislature devised a rational and noncontradictory scheme, it appears without serious doubt, that the Rule of 78ths method of computation applies and is all sufficient in the case at bar.SeeMcCaffrey's Food Market, Inc. v. Mississippi Milk Commission, 227 So.2d 459, 463(Miss.1969);Bridges v. Barr, 245 Miss. 137, 141-42, 146 So.2d 544, 545(1962);Kellum v. Johnson, 237 Miss. 580, 586, 115 So.2d 147, 150(1959).

Moreover, we have recognized as a principle of statutory construction that, in the event of apparent conflicts,...