Foster v. Universal C.I.T. Credit Corp.
| Decision Date | 16 November 1959 |
| Docket Number | No. 5-1947,5-1947 |
| Parties | , 75 A.L.R.2d 1260 James H. FOSTER, Appellant, v. UNIVERSAL C.I.T. CREDIT CORP., a Corporation, and The Augusta Motor Company, Inc., Appellee. |
| Court | Arkansas Supreme Court |
John D. Eldridge, Jr., and George P. Eldridge, Augusta, for appellant.
Wright, Harrison, Lindsey & Upton, Little Rock, for appellee.
This is an appeal from a Chancery decree in which a conditional sales contract between appellant, James H. Foster, and appellees, Universal C. I. T. Credit Corporation, and The Augusta Motor Company, Incorporated, was held not to be usurious. The facts, being stipulated, are not in dispute.
Appellant purchased from appellee, Augusta Motor Company, an automobile and agreed to the issuance of certain insurance policies. The conditional sales contract covered the cost of the policies. The contract was later assigned to appellee, Universal C. I. T. Credit Corporation. Subsequent to this transaction the insurance carrier cancelled a collision insurance policy against the automobile thereby causing appellant to be entitled to a pro rata return premium in the amount of $172.44. The contract allowed the appellee to purchase a single interest policy to protect its interest, which was done at a cost of $41.09, leaving a net amount of $131.35 due appellant. The appellee advised appellant of its action in a letter in which it also advised that the difference had been credited to the last installment of appellant's account, and further, that if appellant within the next 30 days obtained another policy to protect both of their interests they would cancel the single interest policy and credit appellant's account with the full return premium. Soon thereafter, appellant notified appellee by letter that he felt he was entitled to a reduction in his monthly payments. Appellee advised appellant that it could not revise the contract to change the monthly installments. Appellant then brought this suit to cancel the contract for usury alleging that he was overcharged by the amount of interest that would have been due on the return premium.
Among other points relied on by appellant for reversal, there is this one, which we find to possess merit: The contract is usurious in that the portion of the payments representing interest charges demanded by appellee exceed 10 per cent of the principal balance due after the cancellation of the insurance policy, and it is the intention of the appellee to take and receive more than the legal rate of interest.
The appellant shows that the contract at its inception had in it the seeds of usury, because it allowed the appellee--under the circumstances that came into existence in this case--to retain some of appellant's money without promptly crediting such amounts on the maturing payments due on the contract.
To support his contention, appellant introduced the affidavit of Mr. Elbert R. Miller, Public Accountant, which stated that taking into consideration the cancelled insurance premium, the appellant would have been required to pay $1,383.22 under the contract, and that if the indebtedness had been recalculated as requested, the appellant would have owed twenty-one payments of $62.25, and one payment of $62.41, or a total of $1,369.66. Therefore, the contract with the appellee is usurious to the extent of $13.56. A calculation prepared electronically by Finance Publishing Company of Boston, Mass., also introduced by the appellant, differs from that of the accountant by only two cents.
The appellee, on the other hand, contends that the contract is not usurious, since the contract was not modified, and the refund of the unearned insurance premium represented merely a prepayment on the contract.
It must be conceded that appellee is correct when it states that the premium represents a prepayment on the contract since there was a provision in...
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