Bishop v. Linkway Stores, Inc., 83-119

• Decision Date: 11 July 1983
• Docket Number: No. 83-119,83-119
• Citation: 655 S.W.2d 426,280 Ark. 106
• Parties: Richard C. BISHOP, Appellant, v. LINKWAY STORES, INC., Arkansas Credit Council, S.T. (Ros) Smith, Bob Wimberley, and Arkansas Retail Merchants Association, Appellees.
• Court: Arkansas Supreme Court

Page 426

655 S.W.2d 426

280 Ark. 106

Richard C. BISHOP, Appellant, v. LINKWAY STORES, INC., Arkansas Credit Council, S.T. (Ros)

Smith, Bob Wimberley, and Arkansas Retail

Merchants Association, Appellees.

No. 83-119.

Supreme Court of Arkansas.

July 11, 1983.

Supplemental Opinion July 18, 1983.

Rehearing Denied Sept. 12, 1983.

[280 Ark. 107] J.H. Cottrell, Little Rock, for appellant.

Laser, Sharp, Haley, Young & Huckabay by Jack Young, Little Rock, for Linkway Stores, Inc.

Owens, McHaney & Calhoun by James M. McHaney and James M. McHaney, Jr., Little Rock, for Arkansas Credit Council.

Mitchell, Williams, Selig, Jackson & Tucker by Jim Guy Tucker, Little Rock, for Ark. Retail Merchants Assn.

ADKISSON, Chief Justice.

This case questions the amount of interest that can be charged on consumer loans and credit sales under Section 13, Article XIX of the Arkansas Constitution as recently amended by Amendment 60. Appellant, Richard C. Bishop, purchased from appellee, Linkway Stores, Inc., certain items of furniture for his home, executing in part payment a conditional sales contract providing for an interest rate of 15 percent per annum on the unpaid balance. Appellant later filed suit, alleging that the contract was usurious. Appellant contended that since the Federal Discount Rate was 8.5 percent on the date of the transaction, the maximum allowable rate of interest on the contract was 5 percent over the Federal Discount Rate, or 13.5 percent. Appellees, Arkansas Credit Council and Arkansas Retail Merchants Association, intervened and after a trial the Pulaski County Chancery Court held that the conditional sales contract was not usurious and that Section 13(a) was not applicable to consumer loans and credit sales. On appeal we reverse.

As approved by the electorate, Amendment 60 provides:

BE IT RESOLVED BY THE HOUSE OF REPRESENTATIVES, AND BY THE SENATE, OF THE SEVENTY-THIRD GENERAL ASSEMBLY OF THE STATE OF ARKANSAS, A MAJORITY OF ALL MEMBERS ELECTED TO EACH HOUSE AGREEING THERETO:

THAT the following is hereby proposed as an amendment to the Constitution of the State of Arkansas, and upon being submitted to the electors of the State for approval or rejection at the next general election for Representatives and Senators, if a majority of the electors voting thereon at such election adopt such amendment, the same shall become a part of the Constitution of the State of Arkansas, to wit:

SECTION 1. Section 13, Article XIX, of the Arkansas Constitution of 1874, is hereby amended to read as follows:

'Section 13. (a) General Loans:

(i) The maximum lawful rate of interest on any contract entered into after the effective date hereof shall not exceed five percent (5%) per annum above the Federal Reserve Discount Rate at the time of the contract.

(ii) All such contracts having a rate of interest in excess of the maximum lawful rate shall be void as to the unpaid interest. A person who has paid interest in excess of the maximum lawful rate may recover, within the time provided by law, twice the amount of interest paid. It is unlawful for any person to knowingly charge a rate of interest in excess of the maximum lawful rate in effect at the time of the contract, and any person who does so shall be subject to such punishment as may be provided by law.

(b) Consumer Loans and Credit Sales: All contracts for consumer loans and credit sales having a greater rate of interest than seventeen percent (17%) per annum shall be void as to principal and interest and the General Assembly shall prohibit the same by law.

(c) Definitions: As used herein, the term:

(i) 'Consumer loans and credit sales' means credit extended to a natural person in which the money, property, or service which is the subject of the transaction is primarily for personal, family, or household purposes.

(ii) 'Federal Reserve Discount Rate' means the Federal Reserve Discount Rate on ninety-day commercial paper in effect in the Federal Reserve Bank in the Federal Reserve District in which Arkansas is located.

(d) Miscellaneous:

(i) The rate of interest for contracts in which no rate of interest is agreed upon shall be six percent (6%) per annum.

(ii) The provisions hereof are not intended and shall not be deemed to supersede or otherwise invalidate any provisions of federal law applicable to loans or interest rates including loans secured by residential real property.

(iii) The provisions hereof revoke all provisions of State law which establish the maximum rate of interest chargeable in the State or which are otherwise inconsistent herewith.'

SECTION 2. The ballot title for this amendment shall be:

An Amendment to Section 13 of Article XIX of the Constitution of the State of Arkansas to Control Interest Rates and Set the Penalty for Violations Thereof.

SECTION 3. The popular name for this amendment shall be:

The 1982 Interest Rate Control Amendment.

It is well settled that when a constitutional amendment or a statute is plain and unambiguous, there is no room left for judicial construction, and neither the exigencies of a case, nor a resort to extrinsic facts will be permitted to alter the meaning of the language used in the statute. Cunningham v. Keeshan, 110 Ark. 99, 161 S.W. 170 (1913); Berry v. Sale, 184 Ark. 655, 43 S.W.2d 225 (1931). As here, where the meaning of an act or constitutional amendment is clear and unambiguous, this Court is primarily concerned with what the document says, rather than what its drafters The language used in Amendment 60 is clear and unambiguous, and we have no authority to construe the amendment to mean anything other than what it says. Section 13(a)(i) provides that the "maximum lawful rate of interest on any contract" (emphasis ours) shall not exceed 5 percent per annum above the Federal Reserve Discount Rate at the time of the contract. The word "any" means exactly what it says, and a consumer loan certainly falls within the category of "any contract."

may have [280 Ark. 110] intended. See City of Little Rock v. Arkansas Corp. Commission, 209 Ark. 18, 189 S.W.2d 382 (1945).

Section 13(b), when read in conjunction with Section 13(a), provides for a further limitation on interest rates but is applicable only to consumer loans and credit sales. Section 13(b) specifically limits the maximum interest rate on such loans to 17 percent. These separate subsections are in no way conflicting and each has its own penalty for violations.

It is clear, therefore, that the provisions of Amendment 60 have a two-fold limitation on the maximum amount of interest a lender can charge on a consumer loan or credit sale--the lesser of 17 percent or 5 percent over the Federal Reserve Discount Rate. Here, since this contract has a rate of interest in excess of the lawful rate provided for under Section 13(a), it is void as to the unpaid interest as provided by Section 13(a)(ii).

Reversed.

HOLT and HAYS, JJ., not participating.

RICHARD F. HATFIELD and JAMES R. RHODES, III, Special Justices.

HICKMAN, J., and HATFIELD and RHODES, Special Justices, dissent.

RICHARD F. HATFIELD, Special Justice.

I would affirm the Trial Court's decision, since its interpretation is in keeping with the wording and intent of Article XIX, Section 13, of the Constitution of Arkansas as amended by Amendment 60.

Since the opinion of Judge Bullion, the Trial Judge, expresses so well the proper construction we should give to the Amendment, it is attached verbatim as an addendum to this opinion.

In summary, I feel that the majority errs in two respects:

1. It fails to properly consider the entire document and give meaning to each word by concentrating on the wording of Section 13(a)(i), and,

2. It views Amendment 60 too strictly and, in a sense, in a vacuum. Since it finds no ambiguity in the document, it does not consider the history of the times and voters' intent in passing Amendment 60. Furthermore, their construction does not, in my judgment, follow the plain meaning of Amendment 60 when this history is examined.

Confronted with the proffer of voluminous evidence, the Trial Court held:

"When the history our times leading up to and during the formation and adoption of Amendment 60 is noticed and when the spirit of this law is given credence, the answer falls into place so solidly there can be no doubt of this answer. With this full consideration, it is plain that the resulting absurdities, conflicts and contradictions of the acceptance of Plaintiff's argument would defeat the plain purpose of Amendment 60. And, to reach such an obviously required result, it is proper to modify, reject and/or substitute words and phrases in Amendment 60 to give it this intended meaning."

Amendment 60 is susceptible of more than one interpretation and, thus, should not be interpreted in a vacuum. To properly construe it requires careful analysis of the relevant evidence of the problem it was meant to solve, the process by which it was drafted, the declaration of its meaning to the voters through the media when, as reflected by the record, only one interpretation was presented and the logical effects of the construction given. Amendment 60 was The proper interpretation of Amendment 60 should be determined by the following rules of statutory construction:

passed by voters who wanted a sound economic climate which had, due to economic conditions and the harsh penalties of our usury law, diminished greatly. They were clearly voting for better economic times. It is difficult to conceive that they voted for more uncertainty as to interest rates, more litigation as to this area of law and more complex credit arrangements. Extrinsic evidence revealed this clearly and was necessary for proper construction, which I feel the Trial Court made.

1. Viewing the document in its entirety;

2. Considering the history of the times, voter intent and the objective to be accomplished by it;

3. If Amendment 60 is ambiguous, admitting extrinsic evidence to assist in its...