First Nat. Bank of ADA v. Phares

• Decision Date: 23 July 1918
• Docket Number: 9088.
• Citation: 174 P. 519,70 Okla. 255,1918 OK 413
• Parties: FIRST NAT. BANK OF ADA. v. PHARES.
• Court: Oklahoma Supreme Court

174 P. 519

70 Okla. 255, 1918 OK 413

FIRST NAT. BANK OF ADA. v. PHARES.

No. 9088.

Supreme Court of Oklahoma

July 23, 1918

Syllabus by the Court.

A borrower by contract, either expressed or implied, may agree to pay certain expenses necessary for the preparation of papers and documents, examination of title, and inspection of property in order to procure a loan, and a reasonable charge therefor will not make the contract usurious; but, in the absence of an agreement or an understanding to that effect, a borrower cannot be held to pay such expenses, and, if he is compelled to do so, the contract is thereby rendered usurious.

Evidence in this case examined, and the same fails to disclose any contract, agreement, understanding, or knowledge upon the part of the borrower to pay for the extra services charged and in the absence thereof the contract was usurious.

Commissioners' Opinion, Division No. 3. Error from District Court, Pontotoc County; J. W. Bolen, Judge.

Action by W. R. Phares against the First National Bank of Ada, a corporation. Judgment for plaintiff, and defendant brings error. Affirmed.

Robt. Wimbish and W. C. Duncan, both of Ada, for plaintiff in error.

B. C and A. W. Wadlington, of Ada, for defendant in error.

HOOKER C.

This suit was instituted in October, 1915, in the lower court by Phares against the bank to recover the penalty prescribed by section 5198, Rev. Statutes of United States (U. S. Comp. St 1916, § 9759), and in the petition filed in this cause it is alleged that on the 27th day of November, 1912, the bank entered into a corrupt agreement with Phares, whereby the said bank received and charged a greater sum for the loan of money than 10 per cent. per annum, in that, on said date said bank loaned to him the sum of $400 as evidenced by his promissory note of that date, whereby on the 15th day of October, 1913, he agreed to obligate himself to pay to said bank the sum of $448 with interest from maturity, with the further proviso therein that if the principal and interest were not paid when due same shall bear interest at the rate of 10 per cent. per annum, and which note he did pay in the month of November, 1913, and as a result of this transaction said bank did charge and receive usury, that is, interest in excess of 10 per cent., and by reason thereof became liable to him for the sum of $96, being the penalty provided for by the statute above quoted.

The answer of the bank consisted of a general denial, and, answering further, the bank claimed that whatever amount there was in said note in excess of the amount loaned and 10 per cent. per annum interest thereon was for charges for preparing said note and mortgage, filing the same, and for inspecting the personal property mortgaged to the bank to secure the payment of said note, and that said charges and expenses reasonably amounted to the sum of $10.

Upon the trial of this cause the bank sought to establish by evidence what a reasonable charge for the services of preparing the mortgage, paying for filing the same, and sending a man to inspect the property, would be. The court sustained an objection thereto for the reason that the evidence failed to show that the borrower, the defendant in error here, had ever agreed or promised to pay for the same.

At the conclusion of all of the evidence, the plaintiff in error requested the court to instruct the jury as follows:

"You are instructed that the defendant would have the right to charge reasonable fees for preparing and filing chattel mortgage and reasonable fees for inspecting stock and other property given to secure payment of notes, and you further find that the charges made for use of said money included not only interest, but also said expenses, and that when said reasonable expenses were deducted from said charges that then the interest charged was less than the legal rate, then you will find for the defendant.

You are instructed that if you believe from the evidence that it was contemplated when said notes and chattel mortgage given to secure same were executed, it was contemplated that the defendant should charge, and the plaintiff should pay, reasonable fees for preparing and filing said chattel mortgage and reasonable expenses for inspecting the stock, then the said charges so made and expense so incurred should not be considered as an interest charged, and if the charges made the plaintiff after deducting such reasonable expenses for the use of said money was the legal rate less than the legal rate, then said transaction would not be usurious, and you will find for the defendant"

-which the court refused to do, and thereupon, upon motion of the plaintiff below, the court instructed the jury to return a verdict in favor of the plaintiff below in the sum of $96, which the jury did.

The bank has appealed here, and it is urged that this cause should be reversed for the reason that the pleadings and evidence presented a question of fact which should have been submitted to the jury, and numerous authorities are cited by the plaintiff in error therein.

The defendant in error contends, however, that the action of the court was proper in...