Carper v. Kanawha Banking & Trust Co.

• Decision Date: 30 July 1974
• Docket Number: No. 13074,13074
• Citation: 207 S.E.2d 897,157 W.Va. 477
• Court: West Virginia Supreme Court
• Parties: Roy Gene CARPER v. KANAWHA BANKING & TRUST COMPANY, a corporation, and Fairmont Mobile Homes, Inc., a corporation.

Page 897

207 S.E.2d 897

157 W.Va. 477

Roy Gene CARPER v. KANAWHA BANKING & TRUST COMPANY, a corporation, and Fairmont Mobile Homes, Inc., a corporation.

No. 13074.

Supreme Court of Appeals of West Virginia.

Submitted Sept. 12, 1972.

Decided Feb. 5, 1974.

Concurring Opinion July 30, 1974.

Syllabus by the Court

1. Usury is the exaction of a greater sum for the use of money than the highest rate of interest allowed by law.

2. An exception to the application of the usury laws may be found in the 'time-price' doctrine: in a commercial transaction involving the sale of property by credit arrangement, if the negotiation between the seller and the buyer involves a bona fide quotation of both a cash price and a credit price, the transaction does not involve usury, even though the quoted credit price is such as to exceed the cash price plus lawful interest thereon.

3. It is also recognized that, in the proper case, the time-price doctrine may apply where the credit instrument, the sales contract, is assigned by the seller to a lending institution and, also, where a note is given for the balance of the price.

4. The usury statute contemplates that a search for usury shall not stop at the mere form of the bargains and contracts relative to such loan, but that all shifts and devices intended to cover a usurious loan or forbearance shall be pushed aside, and the transaction shall be dealt with as usurious if it be such in fact. Crim v. Post, 41 W.Va. 397, 23 S.E. 613 (1895).

5. A contract though it may be couched in the form of a time-price doctrine is not presumed to be exempt from the application of the usury laws. If a transaction is actually a device to evade usury laws, it is not saved by any attempted differential between a claimed 'cash price' and a claimed 'credit price.' Thus, if the sale of personal property is really made on a cash estimate, and time is given to pay the price, and an amount is assumed to be paid greater than the cash price with legal interest, the transaction may be, in fact, usurious.

6. Whether a sale of personal property is bona fide and thus without the protections of the usury statute, or part of a plan or device to evade the application of the usury laws, is a question of fact for the jury.

7. The trier of fact in a case charging usury in a commercial transaction involving the sale of property may legitimately consider the following to indicate the existence or absence of usury in the questioned transaction: (1) was the buyer-borrower given a realistic opportunity to choose between a cash and a credit price before becoming bound to a contract, i.e., was there adequate and seasonable disclosure of both prices? (2) in a tripartite relationship, did the vendor-creditor through conduct and course of dealing or contractual relationship purport to act as agent of the lending institution in the commercial transaction which bound the buyer-borrower to the obligation for payment of the time-credit price? (3) were the credit terms expressed to the buyer-borrower couched and calculated in terms of 'interest' or 'percentage' in the course of dealing which resulted in the buyer-borrower becoming bound to the contract? (4) did the contract binding the parties contain charges ambiguously designated as 'time-price differential,' 'finance charge,' 'add-on rate,' or the like, and were such expressions a cover for the calculation of interest at a greater sum than the highest rate permitted by law?

8. A contract is made at the time when the last act necessary for its formation is done, and at the place where the final act is done. Restatement, Contracts § 74. The time when parties to a contract, partially executed on previous occasions, intend to become bound may be a question of fact for the jury.

9. Negotiability of a commercial instrument is always determined by what appears on the face of the instrument itself. Usurious charges and conditions appearing on the face of an instrument deny that instrument negotiability under the Uniform Commercial Code, and one who holds a non-negotiable instrument is not a holder in due course.

10. One who holds an instrument with notice of its usurious character is subject to the strictures of the usury law. Code 1931, 47-6-6, as amended.

11. A motion to dismiss the case of a party or to enter a directed verdict against a party based upon statements made by him in his opening to the jury is addressed to the sound discretion of the trial court.

12. Dismissal or directed verdict at the conclusion of an opening statement should be granted only where the party making the statement, if given the opportunity to amend or explain, cannot recover under any circumstances.

13. The burden of proof necessary to sustain a charge of usury where the party charging usury bases his cause of action on a contract containing charges which do not exceed lawful interest under the usury statute, must be by a clear and satisfactory preponderance of the evidence. Where, however, a party charges usury on a contract which on its face contains charges greater than the maximum rate of interest allowable by law, he may prove his case by the accepted standard in civil litigations generally: a preponderance of the evidence.

14. Though a court may improperly charge a jury with conflicting instructions, if the conflict does not prejudice the party asserting error, the error is harmless. Code 1931, 58-1-2.

15. In absence of statutory requirement, whether a jury shall be compelled to answer special interrogatories before arriving at a general verdict, is a matter resting in the sound discretion of the trial court.

16. Where not required by statute, special interrogatories in aid of a general verdict should be used cautiously and only to clarify rather than to obfuscate the issues involved.

17. A complaint in a civil action charging usury and demanding relief in words substantially similar to the language of the statute providing the cause of action, which resulted in a verdict and judgment less than the monetary amount demanded as damages, satisfies the requirements of Rule 8 of the West Virginia Rules of Civil Procedure, and the Due Process clause of the West Virginia Constitution; a denial of motions attacking the pleading, verdict and judgment on these grounds is a proper exercise of discretion by the trial court.

18. Where the statute prohibiting charges in a contract at a greater rate of interest than permitted by law also provides that charges found to be usurious 'shall be void as to all interest provided for . . .', a court, entering judgment on a jury verdict for the party claiming to be damaged by usury, which amends the verdict to avoid usurious interest, executes the law and does not thereby invade the province of the jury who are to determine factual matters only.

19. Amendment of a verdict by a court after discharge of the jury to execute the positive command of a statute declaring public policy is a lawful and required exercise of judicial responsibility.

20. Because of the frequent inaccurate usage of the disjunctive 'or' and the conjunctive 'and' in statutory enactments, courts have the power to change and will change 'and' to 'or' and vice versa, whenever such conversion is necessary to effectuate the intention of the Legislature and give effect to the overall provisions of a statute.

21. In that the expressed intention of the Legislature is to condemn usury and penalize all those who knowingly accept the benefits of a usurious instrument, the statute providing recovery of the penalty against the 'original lender or creditor or other holder not in due course,' must be read as providing for, in the proper case, a recovery against each and all of those named; consequently, a jury verdict, supported by this construction, is not erroneous because it found against the original creditor and the holder not in due course. Code 1931, 47-6-6, as amended.

22. The deposition of an agent of a party, taken pursuant to Rule 26 of the West Virginia Rules of Civil Procedure, may be used by an adversary for any purpose in trial against any party having a joint interest with the deponent in the subject matter of the action, provided the party against whom the deposition is employed had notice of the taking of the deposition and the consequent opportunity to respond or defend against the substance of the evidence elicited therein.

Spilman, Thomas, Battle & Klostermeyer, Frederick L. Thomas, Jr., Charleston, Thornhill, Kennedy & Vaughan, W. A. Thornhill, III, Beckley, for appellants.

Bowers, File, Hodson & Payne, James M. Henderson, II, Donald D. Hodson, Beckley, for appellee.

HADEN, Justice:

This is an appeal by Fairmont Mobile Homes, Inc., a corporation, and Kanawha Banking & Trust Company, a corporation, from a jury verdict and an adverse judgment rendered by the Circuit Court of Raleigh County, in the amount of $2,500.00 against Fairmont, and $2,500.00 against Bank. After the jury had been discharged the trial court also amended the judgment order and avoided all interest or finance charges said to be due the Bank and Fairmont under the terms of a conditional sales contract. This instrument provides a documentary foundation for most of the evidentiary and legal matters involved in this appeal.

The judgment favoring Carper resulted from the jury trial of a civil action brought by Carper in which he alleged violation of the usury laws by Fairmont and the Bank in a commercial transaction through which Carper had purchased a mobile home from Fairmont and then financed it with Fairmont and the Bank, an assignee of the subject conditional sales contract.

Factually, this transaction began in the summer of 1968. Roy Gene Carper, in anticipation of marriage and establishing a separate home for himself and his affianced, shopped several places for a mobile home. On July 22, 1968, Roy Gene Carper, accompanied by his fiance, apparently settled on a mobile home offered for sale...