Concrete Const. Supply, Inc. v. M. F. C., Inc.
| Decision Date | 21 May 1982 |
| Docket Number | No. 20958,20958 |
| Citation | 636 S.W.2d 475 |
| Parties | CONCRETE CONSTRUCTION SUPPLY, INC., Appellant, v. M. F. C., INC., Appellee. |
| Court | Texas Court of Appeals |
Kenneth A. Herridge, May, Herridge & McRae, Dallas, for appellant.
Robert F. Henderson, Allen, Knuths & Cassell, Dallas, for appellee.
Before AKIN, SPARLING and FISH, JJ.
In this usury case, suit was brought by Concrete Construction Supply, Inc., a supplier, to recover for materials sold on open account to M.F.C., Inc., a contractor. A short time later, M.F.C. instituted suit against Concrete to obtain usury penalties for interest charges on the same account. The two suits were consolidated for a non-jury trial. Judgment was rendered in favor of M.F.C. for $4,533.96 (three times the amount of usurious interest charged), plus attorney's fees of $4000 for services in the trial court and additional amounts in the event of an appeal. The judgment also forfeited all principal, interest and other charges on Concrete's open account in the amount of $10,593.60. We agree with the court's assessment of penalties, but modify the judgment by limiting the recovery to the amount prayed for by M.F.C.
In considering the seven points of error advanced by Concrete, we must decide (1) whether, under the facts of this case, M.F.C. was an obligor; (2) whether federal law has pre-empted the Texas law of usury that would otherwise control this case; (3) what difference there is, if any, between the amount of interest Concrete charged and the amount of interest allowed by law; and (4) whether M.F.C.'s recovery is limited to the amount prayed for in its pleadings. After determination of these issues, all of Concrete's other contentions are resolved by formulas set out in the applicable usury laws.
I. WAS M.F.C. AN OBLIGOR?
In its first point of error Concrete contends that M.F.C. could not have been an obligor entitled to recover usury penalties because M.F.C. denied owing any debt to Concrete on the open account. Article 5069-1.06(1) of the Texas Revised Civil Statutes provides that:
"(A)ny person who contracts for, charges or receives interest which is greater than the amount authorized by this Subtitle, shall forfeit to the obligor three times the amount of usurious interest contracted for, charged or received...." (Vernon Supp. 1982) (emphasis added).
To recover under this statute, M.F.C. had to show that it was an obligor of Concrete. Patterson v. Neel, 610 S.W.2d 154, 156 (Tex.Civ.App.-Houston (1st Dist.) 1980, no writ).
So long as one is an immediate party to the transaction, see Childs v. Taylor Cotton Oil Co., 612 S.W.2d 245, 251 (Tex.Civ.App.-Tyler 1981, writ ref'd n.r.e.), and there is a binding obligation existing between those immediate parties, an obligor is a person who pays, is charged, or has contracted to pay interest at a rate in excess of that allowed by law. Patterson v. Neel, supra, at 156. There is no doubt that M.F.C. was an immediate party to the transaction or that M.F.C. was "charged" interest. 1 Our question, then, is whether there was a binding obligation between the parties. Concrete contends that the following testimony by one of M.F.C.'s corporate officers conclusively established that there was no binding obligation:
A fact judicially admitted does not require evidence; rather, it is established conclusively as a matter of law and precludes the trial court from finding any facts to the contrary. See Gevinson v. Manhattan Construction Co. of Okl., 449 S.W.2d 458, 466 (Tex.1969); Hagar v. Williams, 593 S.W.2d 783, 787 (Tex.Civ.App.-Amarillo 1979, no writ); 1A Ray, Texas Practice, Law of Evidence § 1127 (3rd ed. 1980). Consequently, the stipulation that a sum was due and owing constituted M.F.C. an obligor as a matter of law.
II. IS M.F.C.'S USURY CLAIM PRE-EMPTED BY FEDERAL LAW?
In its sixth point of error, Concrete maintains that article 5069-1.03 of the Texas Revised Civil Statutes has been pre-empted in this case by Title 12, United States Code § 86(a). 2 Concrete reasons that because M.F.C.'s open account had not been paid in full, all transactions in the account, dating back to its inception on July 31, 1978 and continuing to the last transaction on July 26, 1979, have been pre-empted by this federal statute. We do not agree. Without deciding what effect this statute might have had on those transactions if they had occurred after April 1, 1980 (the effective date of the statute), we hold that, because each item on the open account was a separate transaction between the parties Watson v. Cargill, Inc., Nutrena Division, 573 S.W.2d 35, 39 (Tex.Civ.App.-Waco 1978, writ ref'd n.r.e.), and because all of M.F.C.'s obligations on the open account were incurred before April 1, 1980, the transactions in this case are governed by article 5069-1.03.
This conclusion is compelled by the very language of the preemption statute. In defining the period to be covered by the preemption, Congress chose to include certain obligations incurred prior to April 1, 1980, but none of those obligations are involved in the present case. See Sec. 512(b). Because M.F.C.'s obligations were all incurred under state law prior to April 1, 1980, we overrule Concrete's sixth point of error.
III. WHAT IS THE DIFFERENCE BETWEEN THE AMOUNT OF INTEREST
Concrete's third point urges that the trial court erred in ordering forfeiture of all principal and other charges on the open account. The usury statute, art. 5069-1.06(2), authorizes such a penalty only when the interest charged exceeds twice the interest allowed by law, and Concrete argues that the trial court should have found the charges of interest here did not exceed that threshold. To decide this point, we must compare the amount of interest Concrete charged M.F.C. with the amount the law allowed Concrete to charge. See Houston Sash and Door Co., Inc. v. Heaner, 577 S.W.2d 217, 221 (Tex.1979); Hagar v. Williams, supra, at 787-88.
The record reveals that Concrete first charged interest on the account by sending to M.F.C. invoice 35126 and a letter dated September 15, 1979. Omitting salutation and signature, the letter states:
Attached is invoice no. 35126 covering past due charges on the following invoices:
CHARGED DURING: MONTHS PAST DUE: RATE: AMOUNT
----------------- ------------------ ------ -------
MARCH $2503.31 4 6 % $150.20
APRIL 3796.46 3 4 1/2% 770.84
(sic)
MAY 2358.43 2 3 % 70.75
JUNE 26.78 1 1 1/2% .40
JULY 119.99
Total Amount Due .......... $392.19
Invoice 35126, referred to in this letter, billed M.F.C. for the amount of $392.19 as "a special charge to charge interest on past due balances per attached." Concrete added the amount shown on this invoice to the account and included it in all statements rendered to M.F.C. after November 30, 1979. In addition, beginning with the statement dated November 30, 1979, Concrete included a further charge of $136.40 with the description "Our S/C." A like amount was added as a "current charge" on each subsequent statement through the last one dated September 24, 1980. In the eleven statements from November, 1979 through September 1980, Concrete made eleven monthly charges of $136.40, plus the September, 1979 charge of $392.19, for a total of $1,892.59. The trial court found in its judgment that, as of the date of the September, 1980 statement, Concrete charged M.F.C. interest on its open account in the amount of $1,892.59.
The trial court found in its judgment that the amount of interest Concrete was allowed to collect by law was $381.27. 3 We have been unable to determine how the trial court computed that figure, which Concrete challenges as unsupported in the evidence.
It was established at trial that M.F.C. never agreed to pay interest on its open account with Concrete. Consequently, an obligation to pay interest at the rate of 6% per annum arose by implication of law under article 5069-1.03. Preston Farm & Ranch Supply v. Bio-Zyme Ent., 625 S.W.2d 295, 297 (Tex.1981); Windhorst v....
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