Hogan v. Thompson

• Decision Date: 14 November 1932
• Docket Number: 4-2735
• Citation: 54 S.W.2d 303,186 Ark. 497
• Parties: HOGAN v. THOMPSON
• Court: Arkansas Supreme Court

54 S.W.2d 303

186 Ark. 497

HOGAN v. THOMPSON

4-2735

Supreme Court of Arkansas

November 14, 1932

Appeal from Pulaski Circuit Court, Second Division; S. S. Jefferies Special Judge; affirmed.

Affirmed.

J. Roy Howard, for appellant.

Fred A Isgrig and Harry Robinson, for appellee.

OPINION

BUTLER, J.

Suit was instituted by the appellee in the court below to recover on a promissory note executed by the appellant, due six months after date, with interest thereon at the rate of 10 per cent. per annum from date until paid. The answer admitted the execution of the note, but set up usury as a defense thereto. The case was submitted to the court sitting as a jury on the following agreed facts:

"That on November 17, 1931, the defendant, J. P. Hogan, applied to the plaintiff, Anne Thompson, for a loan of $ 100. That the plaintiff was engaged in the loan business in Little Rock, Arkansas, and that she was also the agent of the Merchants' Coupon Service Company of New York, a large firm dealing in all kinds of jewelry, radios, washing machines, and other merchandise.

"That the plaintiff agreed to make the defendant a loan of $ 100 if he would purchase a $ 10 coupon at the cost of $ 7.50, which he could use for $ 10 cash in the purchase of $ 40 or more merchandise from the Merchants' Coupon Service Company.

"That the defendant agreed to purchase said coupon, and gave his note for $ 100, due six months after date and bearing interest at the rate of 10 per cent. per annum, as evidenced by the note filed with the complaint. That defendant received $ 92.50 cash and a $ 10 coupon.

"Defendant admits that the coupon may be used for $ 10 cash upon the purchase of any article of $ 40 or more, but states that he has not used, or does not intend to use, said coupon, and that he agreed to purchase it in order to obtain the loan.

"It is further agreed that the plaintiff did not know at the time the loan was made that the defendant did not intend to use the coupon in the purchase of merchandise."

The conventional rate of interest in this State is 10 per cent., and, by § 13 of article 19 of the Constitution, all contracts for a greater rate of interest are declared to be void. This constitutional inhibition cannot be avoided by any trick or device, and the courts will closely scrutinize every suspicious transaction in order to ascertain its real nature; and if it appears that the contract is merely one for the loan of money with the intention on the part of the lender to exact more than the lawful rate of interest, the contract will be declared usurious and void. Ellenbogen v. Griffey, 55 Ark. 268, 18 S.W. 126; Reeve v. Ladies' Building Ass'n, 56 Ark. 335, 19 S.W. 917; Dickinson-Reed, etc., Co. v. Stroupe, 169 Ark. 277, 275 S.W. 520.

The principles by which the usury laws are to be applied in any given case are well settled. The burden rests upon the party pleading usury to establish it by a fair preponderance of the testimony, and it must appear that there was an intent by the lender to exact more than the lawful rate of interest, and usury will not be inferred where the opposite conclusion can be reasonably reached. Citizens' Bank v. Murphy, 83 Ark. 31, 102 S.W. 697; Bauer v. Wade, 170 Ark. 1020, 282 S.W. 359; Cammack v. Runyan Creamery Co., 175 Ark 601, 299 S.W. 1023. Collateral...