Brown v. Pilini

• Decision Date: 03 February 1970
• Docket Number: No. 39-68,39-68
• Citation: 128 Vt. 324,262 A.2d 479
• Parties: Robert BROWN v. Emanuele PILINI and Harold Wilson.
• Court: Vermont Supreme Court

Page 479

262 A.2d 479

128 Vt. 324

Robert BROWN v. Emanuele PILINI and Harold Wilson.

No. 39-68.

Supreme Court of Vermont.

Feb. 3, 1970.

Gelsie J. Monti, Montpelier, for plaintiff.

Davis, Martin & Free, Barre, for defendant.

Before HOLDEN, C. J., and SHANGRAW, BARNEY, SMITH and KEYSER, JJ.

SMITH, Justice.

This is an appeal from the final decree of the Washington County Court of Chancery by the defendant, Pilini, which ordered the defendant to pay to the plaintiff, Brown, the sum of $32,620.26. The decree was issued by Robert W. Larrow, Chancellor, and dated September 9, 1968. Harold Wilson, a deputy sheriff, is no longer a defendant in the action.

In December, 1955, the plaintiff Brown was a dealer in used cars and the defendant Pilini was engaged in the collection, brokerage insurance and financing business. Both were domiciled in Washington County. At this time the parties became business acquaintances and entered into a business arrangement regarding the used car business of Brown.

In general terms, this arrangement involved notes and mortgages, conditional sales contracts and floor planning arrangements. Brown would sell cars to customers and take back notes and/or conditional sales contracts to secure the unpaid balance. It was agreed between the parties that the conditional sales contracts and other similar papers would be endorsed by Brown to Pilini. In certain instances, the papers that Brown endorsed to Pilini were placed by the latter with the Barre Trust Company, which Bank loaned money thereon so long as it was additionally secured by Pilini's endorsement. In or about 1958 the parties could not agree upon what the business arrangement was between them and a complaint in chancery was brought by the plaintiff against the defendant in the Washington County Court of Chancery in April, 1958. For one reason or another, the case was not brought to hearing until September 11, 1967, when a series of hearings were conducted before Howard E. Armstrong, Esq., Special Master in Chancery. The hearing, which concerned some 117 different transactions between the parties, accounting of various kinds, a multitude of exhibits and the lengthy testimony of a number of witnesses, consumed some nine different days. However, it is not necessary to burden this opinion with any detailed account of the matters presented before the Master in view of the limited questions presented here.

Findings of Fact were filed by the Special Master on May 6, 1968. Such Findings of Fact were expressly approved and accepted by the Chancellor as the basis for the Decree, which was dated September 9, 1968.

The defendant's brief in this Court sets forth one claim of error: 'The Master's Findings of Fact are in error, and a reversal of the decree is warranted and necessary. The thrust of the defendant's exception is directed to two monetary elements in the mathematical calculations used by the chancellor in calculating the amounts due from the defendant to the plaintiff, as found in No. 4 of the decree now quoted below:

'The said Emanuele Pilini is liable to the Plaintiff and is hereby ordered to pay to the Plaintiff, Robert Brown, forthwith the following sums, to wit:

It is obvious that items (b) and (d) are merely respective interest additions to items (a) and (c) and it is to the latter two items that we now turn our attention. Item (a) is the balance left in a so-called reserve account which the parties set up as part of their business arrangement. it is undisputed that this amount was paid by Brown to Pilini from his share of the proceeds of the sales made of used automobiles. It was to be held by Pilini in Brown's name, to be used for reimbursement in the event that any of the used car purchasers failed to meet their obligations to pay the money due in the amounts, and at the times that were specified in their various obligations.

The Master, in his Finding 35, set up an accounting between the parties based on the evidence received by him relative to the reserve account. Without burdening this opinion with the full details of such accounting, the Master fully considered the debits and credits due from one party to the other in this controversy, as disclosed by the evidence before him, and found that the money due Brown from Pilini on the reserve account was $7,637.61. Defendant's claim of error is that in making such accounting the Master took one of plaintiff's exhibits at face value, but did not give the same belief to an exhibit to the contrary offered by the defendant in the case, or to put it another way, that the evidence was conflicting on the matter. As defendant admits, the credibility and weight of the evidence was for the Master to decide, for it was he who was the trier of the facts. 'As we have often said the weight of the evidence and the credibility of the witnesses is for the trier of the fact to determine, and all conflicts in evidence are to be resolved against the excepting party.' Vermont Shopping Center v. Pettengill, et al., 125 Vt. 145, 152, 211 A.2d 183, 188. What defendant is saying in his brief relative to Finding No. 35 of the Master's Findings of Fact is that the Master chose to believe the evidence offered by the plaintiff rather than the defendant. But, as we have already stated, this was a matter that was entirely within the province of the trier of facts to determine.

The principal briefed exception of the defendant is to that part of the decree which orders him to pay to the plaintiff the sum of $12,728.77 as usury.

In his decree the Chancellor refers to Findings Nos. 9 and 10 of the Master as the reason for his legal conclusion that the defendant made a usurious loan of money to the plaintiff.

'9 Except for the first few transactions, it was the agreed procedure between the parties, i. e. the financing by Pilini of the car sales by Brown, that when a customer signed a Time Payment Agreement, Brown, at Pilini's request, has the customer also sign a Conditional Sale Lien Note covering the same car sale, and then he (Brown) brought both to Pilini and signed the Conditional Sale Lien Note on the back as collateral security for a loan, and left both with Pilini. Pilini next gave Brown a 'half sheet' showing amount due Brown from Pilini as a loan which was the amount of the Time balance entered in Time Payment Agreement form issued by Brown, less 10% or 20% of such amount, labeled 'Reserve'.

10. The total amount of the Conditional Sale Lien Notes signed by Brown's customers, on which Pilini made such loans to Brown and which Brown endorsed and delivered to Pilini, was $127,287.75.'

References to other findings made in the above Findings 9 and 10 by the Master have been omitted in the above quotation.

The legal rate of interest in Vermont at the time of this transaction was declared in 9 VSA Sec. 31:

'The rate of interest, or the sum allowed for forbearance or use of money, shall be $6.00 for $100.00 for one year, at the same rate for a greater or less sum and for a longer or shorter time, and a higher rate shall not be allowed except in cases specially provided for by law.' (Subsequently amended, No. 377 Public Acts. 1967 Adjourned Session.)

We agree with the defendant that there is no evidence in any of the transactions between the parties of a pre-existing or presently due debt, and that forbearance is not for consideration in this case. It was necessary, therefore, for the Master to be correct in his findings, upon which the Decree is based, that the usury found must have been predicated upon a loan from Pilini to Brown.

Defendant's position on this matter, as we understand it, is that the 117 transactions entered into between the plaintiff and the defendant were absolute assignments of such negotiable instruments from Brown to Pilini and that Pilini was a buyer of such property from Brown. The contention is that Pilini purchased the notes, and the mere fact that he purchased them at discount beyond the legal rate of interest does not constitute the transaction an usurious one. A further contention of the defendant is that the Master by the admission of oral evidence on the issue of whether the transactions between the parties were loans secured by conditional sales agreements, or were outright sales of such conditional loan agreement from Brown to Pillini, permitted the legal effect of the instruments to be varied and changed. Defendant claims this was in error under the parol evidence rule.

The complaint of the plaintiff set forth that he borrowed from the defendant varying amounts of money and that he had paid interest to the defendant on said loans the sum of 16% interest instead of the legal rate of 6% as set by the statute. In his action the plaintiff sought, among other things, the recovery of the usurious interest for the use of the money that Brown alleged had been loanged to him by Pilini, as well as an accounting between the parties.

In determining the question of usury, the transaction is not to be determined from the standpoint of form. The whole transaction and the interest of the parties, particularly the lender, must be gathered from all the circumstances and events which preceded and accompanied their dealings. Farnsworth v. Cochran, 125 Vt. 174, 181, 212 A.2d 818; State v. Bosworth, 124 Vt. 3, 7, 197 A.2d 477.

The action of the plaintiff against the defendant was not based upon the various writing received in evidence, namely, the conditional sales contracts, and the negotiable instruments, which were exhibits in the case. These writings were collateral to the issue involved, and the action was not based on such writings. Therefore, the parol evidence rule did not apply. Lunnie v. Gadapee, 116 Vt. 261, 263, 73 A.2d 312.

The transcript of the hearing before the chancellor discloses that both Mr. Brown, as well as Mrs. Brown, who served as his bookkeeper, testified that the transactions between Mr. Pilini and Mr. Brown involved the loaning of money from the...