Curtis v. Securities Acceptance Corp.

• Decision Date: 13 June 1958
• Docket Number: No. 34349,34349
• Citation: 166 Neb. 815,91 N.W.2d 19
• Court: Nebraska Supreme Court
• Parties: Robert (Bob) CURTIS, Appellee-Cross-Appellant, v. SECURITIES ACCEPTANCE CORPORATION, a corporation, Appellant-Cross-Appellee, Ray Mahoney, Appellee.

Page 19

91 N.W.2d 19

166 Neb. 815

Robert (Bob) CURTIS, Appellee-Cross-Appellant, v. SECURITIES ACCEPTANCE CORPORATION, a corporation, Appellant-Cross-Appellee Ray Mahoney, Appellee.

No. 34349.

Supreme Court of Nebraska.

June 13, 1958.

Syllabus by the Court

1. Actions in equity appealed to this court are triable de novo upon the record.

2. The permissive provisions of sections 45-114 to 45-158, R.R.S.1943, apply to licensees, but every inhibitory provision contained therein applies alike to licensees and nonlicensees and the officers and employees of either or both, and the violation thereof by such persons in connection with any indebtedness, however acquired by them, renders such indebtedness void and uncollectible.

3. Since usury is generally accompanied by device, subterfuge, scheme, and circumvention of one kind or another to present the color of legality, it is the duty of the court to examine the substance of the transaction as well as its form, and the right to relief will not be denied because parol proof of the usurious character of the transaction contradicts a written instrument.

4. A dealer in farm implements may in good faith sell same on time for a price in excess of the cash price without tainting the transaction with usury, though the difference in the two prices may exceed lawful interest for a loan.

5. In such cases, however, the transaction between the buyer and the seller must be a completed bona fide time price sale agreement, and the foregoing rule does not apply where it is proved that the transaction was not made in good faith but was a device and subterfuge pursued to evade the operation against it of usury statutes.

6. The usurious character of a transaction is determined as of the time of its inception, and if a contract is usurious in its inception, no subsequent transaction will cure it. Hence, when a usurious contract is renewed by the giving of a renewal or substituted contract, the usury follows into and becomes a part of the latter contract, making it subject to the defense of usury to the same extent as was the original obligation. Further, any compensation paid or to be paid for any extension or forbearance of a loan may not exceed the permissible statutory maximum.

7. A borrower coming under the statutes relating to installment loans is not regarded as being in pari delicto but rather as being in vinculus to the lender, to whom he therefore owes no duty in equity.

8. A time sale made in good faith at a price in excess of a cash price, which time price is arrived at by schedules furnished by a finance company which solicits contracts so entered into between a purchaser and a dealer, may not be regarded as being tainted with usury, even though the difference exceeds the lawful interest for a loan.

9. In order to have the foregoing principles apply it must appear that the buyer actually was informed of and had the opportunity to choose between a time sale price and a cash sale price. It is not enough to merely show that the instruments signed evidencing the indebtedness refer to a time price or time differential when, in fact, the buyer was never quoted a time sale price as such.

William Keeshan, Albion, Matthews, Kelley & Stone, Omaha, for appellant.

Wagner, Wagner & Conrad, Columbus, for appellees.

Heard before SIMMONS, C. J., and CARTER, MESSMORE, YEAGER, CHAPPELL, WENKE, and BOSLAUGH, JJ.

CHAPPELL, Justice.

Plaintiff, Robert Curtis, brought this action in equity against defendants, Securities Acceptance Corporation, and Ray Mahoney, its alleged agent who carried on a business of selling farm implements in the name of 'Mahoney Sales & Service' in St. Edward. Plaintiff's action sought to have a certain promissory note and chattel mortgage upon a described tractor cancelled upon the ground that they were given for a loan which was null and void ab initio as usurious and in violation of sections 45-114 to 45-162, R.R.S.1943, inclusive, which are known as the Installment Loan Act. Plaintiff also sought to recover from defendants all payments made on the note and mortgage with interest thereon, and equitable relief. As far as important here, the effect of defendant Ray Mahoney's answer was to deny generally, as was also the effect of defendant Securities Acceptance Corporation's answer. However, such defendant also filed a cross-petition, seeking an accounting of the amount due it from plaintiff upon the note and mortgage, together with a judgment therefor with interest at 9 percent; that in default of payment thereof by plaintiff for 20 days, the tractor should be ordered sold on execution as in foreclosure for satisfaction of the judgment; and the granting of equitable relief. As far as important here, plaintiff's reply to defendant Mahoney's answer denied generally as did his reply and answer to the answer and cross-petition of defendant Securities Acceptance Corporation.

Hereinafter defendant Ray Mahoney will be called Mahoney, and defendant Securities Acceptance Corporation will be called defendant. In speaking of both, they will be called defendants.

On December 20, 1956, the issues were heard on the merits by the trial court at Columbus, Platte County, whereat the cause was taken under advisement, pending the filing of briefs by respective counsel, and it was stipulated that decree entered in Platte County should be transmitted by the court to the clerk of the district court for Boone County and such judgment should be binding on the parties as if the cause had been decided in Boone County.

Briefs were subsequently filed, and the trial court prepared a 'memorandum opinion,' reviewing therein some of the evidence and discussing and distinguishing certain cases upon which he intended to predicate his findings and conclusions in a judgment to be subsequently rendered. Evidently that opinion was sent to counsel for the parties, and on January 21, 1957, someone, the inference being that it was counsel for defendants, filed it with the clerk of the district court for Boone County, where it was journalized. Thereafter, on February 19, 1957, a stipulation signed by counsel for all the parties was entered into and filed in the district court for Boone County on February 25, 1957. Such stipulation provided in effect that the decree, bearing the approval as to form by counsel for the respective parties, might be signed and entered by the trial judge at chambers in the courthouse at Columbus, Platte County, without further notice to the parties, and then transmitted to the clerk of the district court for Boone County, together with such stipulation for filing and entry of record in that court.

Also, on February 25, 1957, there was filed in the district court for Boone County a final judgment dated February 23, 1957, which found that defendant Mahoney sold the described tractor to plaintiff on September 24, 1954, for an agreed price of $2,950, whereupon plaintiff paid $1,180 thereon by cash and trade-in allowance upon an old tractor, leaving a balance of $1,770 unpaid upon the sale price. That on or about the same date, plaintiff executed and delivered to Mahoney a note and chattel mortgage on the new tractor for $2,161.84, payable in two amounts of $1,080.92, each respectively payable 1 and 2 years after date. That the amount by which the note exceeded the unpaid balance of $1,770 on the sale price of the tractor was the sum of $391.84, which represented interest charges exceeding the legal rate for forbearance of the unpaid balance of $1,770. That by reason thereof, plaintiff was entitled to have all payments made upon said note and mortgage credited against the unpaid balance of the purchase price of $1,770. That plaintiff had paid to defendant, after its purchase of the note and mortgage, the sum of $126.60 on or about September 29, 1955; $350 on or about November 30, 1955; and $12.60 on or about January 23, 1956. That after crediting such payments upon the unpaid balance of $1,770, there remained $1,280.80 still owing by plaintiff on such purchase price. That it was fair and equitable that plaintiff should pay to defendant said sum of $1,280.80 as a condition of cancellation of the note and mortgage in the principal amount of $2,161.84, and dated September 24, 1954.

Judgment accordingly was rendered in favor of defendant and against plaintiff for $1,280.80 upon payment of which the note and mortgage were ordered cancelled and released of record. It also ordered that upon failure of plaintiff to pay said judgment into the office of the clerk of the district court within 20 days, said farm tractor should be sold as upon execution to satisfy the judgment.

On February 25, 1957, plaintiff filed a motion for rehearing, and a motion to vacate the judgment and findings and render a judgment in favor of plaintiff and against defendants as prayed, and in favor of plaintiff and against defendant Mahoney for $50, an additional amount allegedly paid him by plaintiff.

By stipulation of counsel for all the parties, dated April 2, 1957, and filed in the district court for Boone County April 27, 1957, they agreed to the manner of submission of plaintiff's motions aforesaid to the trial court, and that the entry of an appropriate order thereon should be transmitted to the clerk of the district court for Boone County for filing and entry of record.

Thereafter, on August 24, 1957, the trial court sustained plaintiff's motions aforesaid and rendered a judgment which was filed in the district court for Boone County on August 26, 1957. Therein the court found that on or about September 24, 1954, Mahoney sold plaintiff the described farm tractor for an agreed sale price of $2,950, and plaintiff traded in his tractor as part-payment, receiving $1,180 credit therefor, thereby leaving a balance of $1,770 of the purchase price unpaid. That there was no time price noted or involved in said transaction, but Mahoney agreed to obtain a loan for the blance of the purchase...