Deming Inv. Co. v. Giddens
| Decision Date | 18 June 1930 |
| Docket Number | No. 4426.,4426. |
| Citation | 30 S.W.2d 287 |
| Parties | DEMING INV. CO. v. GIDDENS et ux. |
| Court | Texas Supreme Court |
Read, Lowrance & Bates and Cockrell, McBride, O'Donnell & Hamilton, all of Dallas, and Earl Bohannon, of Oswego, Kan., for appellant.
W. F. Moore, of Paris, for appellees.
Certified question from the honorable Court of Civil Appeals of the Fifth Supreme Judicial district of Texas, in an appeal from the district court of Dallas county.
The facts to be considered in determining the question certified, as gathered from the certificate of the Court of Civil Appeals, aided by uncontested statements in written arguments, may be briefly stated as follows:
Joe D. Giddens secured a loan of $13,000 from the Deming Investment Company in February, 1921. The loan was secured by a note, dated February 16, 1921, due January 1, 1931, for $12,000, with interest at the rate of 6 per cent. per annum, as evidenced by the coupon notes attached, due on January 1st of each year, the first for $616 and the other nine for $720 each. By the terms of the note and coupons it was provided for the maturity date to be accelerated and advanced so as to mature the note on the nonpayment of any interest coupon, and for interest to be computed after the note became due at the rate of 10 per cent. per annum. At the same time, and as a part of the loan transaction, Giddens executed to the investment company a series of five notes, dated February 16, 1921, the remaining $1,000 of the principal of the loan being included in notes numbered 1 and 2, $500 being included in each of these two notes. Besides the $500 principal, note No. 1 of this series included the sum of $831.35, being for $1,331.35, due January 1, 1922, and note No. 2 included besides the $500 principal the sum of $810, being for $1,310, due January 1, 1923. Each of the remaining three notes was for $780, due respectively January 1, 1924, January 1, 1925, and January 1, 1926. Provision was made for the holder of the series of five notes to declare all due and payable at his election on default of payment of any note of the series, and after same matured interest was to run at the rate of 10 per cent. per annum.
The note for $12,000 with accrued interest according to its terms was secured by a first lien created by a deed of trust given by Giddens and wife on 600 acres of land in Red River county. The series of five notes was likewise secured by a second lien deed of trust on said 600 acres of land.
The series of five notes purported to represent commissions to the investment company for negotiating the loan, but the Court of Civil Appeals certifies that the evidence is deemed sufficient to support a finding of the district court that the Deming Investment Company was the lender of the money, and that the charges for commissions must be treated as interest.
The $12,000 note was sold by the Deming Investment Company to the Rutland Trust Company some five months after the execution of the note. The first interest coupon on the $12,000 note and note No. 1 of the series of five notes were paid by Giddens in February, 1922. The second coupon for $720 on the $12,000 note and note No. 2 of the series of five notes were not paid when due on January 1, 1923. The Deming Investment Company paid to the Rutland Trust Company the $720 coupon interest note after it was due. The Deming Investment Company, under its option, declared the three other series notes matured, after January 1, 1923, and sued Giddens and wife to recover $4,370, with 10 per cent. per annum interest thereon from January 1, 1923, said $4,370 representing the following items:
Coupon on $12,000 note...................$ 720.00
Note No. 2 of Series..................... 1310.00
Note No. 3 of Series..................... 780.00
Note No. 4 of Series..................... 780.00
Note No. 5 of Series..................... 780.00
________
$4370.00
The investment company also sought foreclosure of the deed of trust on the 600 acres of land subject to the first lien securing the $12,000 note.
Giddens and wife defended under a plea of usury and also sought to recover by crossaction the statutory penalty which they claimed had accrued by reason of their payments of usurious interest.
The case was tried by the district court without a jury, and judgment was rendered in favor of Giddens and wife, decreeing the contract usurious, and awarding them a recovery on their cross-action.
The Court of Civil Appeals, considering the contract valid, "If the question of usury is determined under the rule announced in the case of Seymour Opera House Co. v. Thurston, 18 Tex. Civ. App. 417, 45 S. W. 815," and considering the contract usurious under the "rule announced in Shear Co. v. Hall (Tex. Com. App.) 235 S. W. 195," certified the following question for the Supreme Court's decision, viz.: "Is the contract entered into by the Deming Investment Company, the lender, with Joe D. Giddens, the borrower, one which stipulates a greater rate of interest than ten per cent. per annum for the use of money during the time the use of the same by borrower was contemplated in the contract?" The certified question was heretofore referred to section B of the Commission of Appeals, who recommended, in an opinion of Presiding Judge Short, that the question be answered so as to adjudge the contract usurious. Judge Speer filed a memorandum of dissent, concluding there could be no usury in the contract because the debtors could perform it by promptly paying each promised installment at maturity, such installments aggregating less than the principal and the...
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