Deming Inv. Co. v. Giddens

• Decision Date: 27 June 1931
• Docket Number: No. 9398.,9398.
• Citation: 41 S.W.2d 260
• Parties: DEMING INV. CO. v. GIDDENS et ux.
• Court: Texas Court of Appeals

41 S.W.2d 260

DEMING INV. CO. v. GIDDENS et ux.

No. 9398.

Court of Civil Appeals of Texas. Dallas.

June 27, 1931.

Rehearing Denied July 20, 1931.

Appeal from District Court, Dallas County; Towne Young, Judge.

Suit by the Deming Investment Company against Joe D. Giddens and wife, in which defendants filed a cross-action. From the judgment, plaintiff appeals and defendants cross-appeal.

Reformed and affirmed.

See also (Tex. Sup.) 30 S.W.(2d) 287.

Read, Lowrance & Bates, of Dallas, for appellant.

Moore & Moore, of Paris, for appellees.

JONES, C. J.

Appellees, Joe D. Giddens and wife, Ethel Giddens, secured a loan of $13,000 from appellant, Deming Investment Company, a corporation incorporated under the laws of the state of Kansas and legally doing business in this state. This loan was secured on February 16 1921, and is evidenced by a note of that date executed by appellees to appellant in the sum of $12,000, with interest at the rate of 6 per cent. per annum payable annually on January 1st of each year until the maturity of the note on January 1, 1931, as evidenced by the coupon notes. The first of these notes is for the sum of $616, and the remaining nine of such notes is for the sum of $720 each. The principal note, as well as the coupon notes, provide for the acceleration of maturity if default should be made in the payment of any coupon note when it became due, and provided for 10 per cent. interest on all unpaid notes from the time of the default.

Appellees, on the same date (February 16, 1921) and as a part of the same transaction, executed to appellant five other notes; the remaining $1,000 of the principal of the loan was included in the first and second of this series of notes. Note No. 1 of this series, which included $500 of the principal, was in the principal sum of $1,331.35, and matured January 1, 1922; note No. 2 was for the sum of $1,310, which included the remaining $500 of the principal, and matured January 1, 1923. Each of the remaining three notes of this series was for $780, maturing respectively January 1, 1924, January 1, 1925, and January 1, 1926. By their terms and by the terms of the trust deed securing them, the holder of the series of five notes was empowered to declare all of said notes due and payable at his election on default of payment of any note of the series, and after their maturity was so declared, each unpaid note was to bear interest, from the date of the accelerated maturity, at the rate of 10 per cent. per annum.

The first note of $12,000, with its interest coupon notes, under its terms was secured by a first lien created by a deed of trust given by appellees on 600 acres of land in Red River county, Tex. The series of five notes was likewise secured by a deed of trust lien on the same land, but this lien was made secondary to the one securing the $12,000 note. The series of five notes purported to represent earned commissions due to appellant for negotiating the loan, and the written application to appellant by appellees for the loan contained a clause appointing appellant their agent to procure the loan, and to forward to the holder of notes the interest money as the same became due under the terms of the loan.

The second deed of trust, securing the series of five notes, contained this clause: "* * * And it is understood that the Deming Investment Company, while advancing the money to the first party (appellees) on said loan, is acting merely as the agent of the first party for the negotiation of the same in the market, and the notes secured by this deed of trust represent the earned commission which the party of the first part agreed to pay to the third party for the negotiations of said loan, regardless of any payment on the first lien note prior to its maturity." Appellees paid the coupon note for $616 and note No. 1 in the sum of $1,331.35 on February 28, 1922, together with $32.45 as interest after the maturity of these said notes. This payment was made to appellant and it receipted appellees therefor, sending the $616 to the holder of the $12,000 note.

When the second note for $720, and the second note of the series of five notes, in the sum of $1,310, became due on January 1, 1923, appellees defaulted as to both notes and appellant, after paying to the holder with its own funds the amount of the coupon note, availed itself of its option to declare the remaining three notes of this series due and instituted this suit to recover the $720 advanced on the coupon note and the amount of the remaining four notes of the series of five, together with the 10 per cent. attorney fees and interest at the rate of 10 per cent. from the date of default, and for a foreclosure of the deed of trust lien securing these notes. The first note for $12,000 was only incidentally involved in this suit. About five months after the execution of said note, it and the ten coupon interest notes attached thereto were sold and transferred by appellant to the Rutland Trust Company.

Appellees defended this suit under a plea of usury and by cross-action sought to recover the statutory penalty alleged to have accrued in their favor, by reason of the payment of usurious interest. The allegations in the pleadings of both appellant and appellees are full and are sufficient to raise the issues herein discussed.

The case was tried to the court without a jury, and judgment was rendered in favor of appellees, decreeing the contract usurious, and awarding them a part only of the relief sought by their cross-action. Appellant has duly perfected its appeal to this court, and appellees have duly filed cross-assignments of error because of the denial by the trial court of the entire relief for which they prayed in their cross-action.

Appellant presents two main questions: (a) That under the terms of the contract, as shown by the application for the loan and by the notes and deeds of trust executed, it was not in fact the lender of the money to appellees, but was only the agent of appellees to procure for them the loan for which they applied, and that the clear terms of the instruments describing them as such agent are not changed because appellant advanced to appellees, from its own funds, the full amount of the loan, before they negotiated the said $12,000 note, and that the series of five notes, except as to $500 of the principal of the loan in each of notes Nos. 1 and 2, represent the earned commission coming to them, and do not represent interest on the loan. (b) If, however, notes Nos. 1 and 2, less the $1,000 of the principal represented in said two notes, and notes Nos. 3, 4, and 5, be considered a part of the interest, the contract nevertheless is not usurious, because the loan was to run for ten years and these sums of money, together with the aggregate of the interest coupon notes on the $12,000 note, represent an amount less than the maximum rate of 10 per cent. per annum allowed by law, and hence the contract is not usurious. In their answer and cross-action, appellees do not contest their liability for the unpaid balance of $500, in the second note of the series of commission notes, but claim that the contract is usurious on its face, in that it appears that the series of five notes, except as to...