Huchingson v. Republic Finance Co., 5-3038

• Decision Date: 09 September 1963
• Docket Number: No. 5-3038,5-3038
• Citation: 370 S.W.2d 185,236 Ark. 832
• Parties: Gordon HUCHINGSON and Amanda Huchingson, Appellants, v. REPUBLIC FINANCE COMPANY, Inc., Appellee.
• Court: Arkansas Supreme Court

Page 185

370 S.W.2d 185

236 Ark. 832

Gordon HUCHINGSON and Amanda Huchingson, Appellants, v. REPUBLIC FINANCE COMPANY, Inc., Appellee.

No. 5-3038.

Supreme Court of Arkansas.

Sept. 9, 1963.

Ben M. McCray, Benton, for appellants.

Hall, Purcell & Boswell, Benton, for appellee.

HARRIS, Chief Justice.

This litigation involves a conflict of laws, the question being whether a certain contract (hereinafter discussed) is governed by the law of Arkansas or by the law of Iowa.

According to a stipulation entered into between the parties, Carl J. Cardamon, an agent of Builders' Supply Company of Des Moines, Iowa, on May 11, 1960, contacted the appellants, Gordon Huchingson and wife, Amanda E. Huchingson, at their residence near Benton, Arkansas, and proposed to install aluminum siding on the Huchingson home. A contract was prepared authorizing Builders' Supply to do this work for the total sum of $1,600.00, $400.00 to be paid upon the completion of the work, and the balance of $1,200.00 to be paid in 36 monthly installments of $41.85 each. The contract provided 'carrying charges,' in the amount of $306.60. Appellants and Cardamon executed the contract in Saline County, and Hilary DiPaglia, a partner of Builders' Supply Company, subsequently 'approved and accepted' the contract in Des Moines, Iowa. At the time they executed the contract in Saline County, appellants also executed their note in the amount of $1,506.60 (principal and 'carrying charges'), together with interest at the rate of 7% per annum after maturity, said note being payable at Des Moines. Within a day or two, work was commenced on the house, and shortly completed. ¹ Builders' Supply Company endorsed the note without recourse to Republic Finance Co., Inc., of Des Moines, and when payment was refused by appellants on the ground of usury, suit was instituted in the Saline Circuit Court. After the filing of an answer, in which the defense of usury was pleaded, the case was submitted for trial to the Circuit Court on the pleadings, exhibits, and a stipulation entered into between the parties which included the admitted fact that the contract and note are usurious under both Iowa and Arkansas law. In its 'finding of fact' the court stated:

'This Court believes that the law requires that if there can be any basis for sustaining a note that such note be sustained. In this situation if the note under consideration be an Arkansas note then it is usurious and null and void. The situation exists though in which if the note be construed under the law of Iowa then, relying upon the representations of the attorney for the plaintiff in his brief, if the note be considered to have been finally executed in Iowa the provisions for payment of interest alone are null and void and the note should be paid in its principal sum.'

It then found 'that the final execution of the note was in the State of Iowa and that the plaintiff is entitled to recover the sum of $1,200.00, and that the provisions for interest on such note shall be cancelled and shall be held for naught.'

From the judgment so entered, appellants bring this appeal.

Paragraph Seven of the stipulation concisely sets forth the question we are called upon to determine. That paragraph reads as follows:

'That the sole question to be determined by this Court in this action is whether the contract and note constitute an Arkansas contract or an Iowa contract, as it is conceded by the plaintiff that the contract and note are usurious under both Arkansas and Iowa law, and if found to be an Arkansas contract, judgment should be for the defendants, but if the Court construes the note and contract to be Iowa contracts then judgment should be for the plaintiff with the provision that the accrued interest on the note shall be paid into the Iowa School Fund.' ²

We have reached the conclusion that the judgment must be reversed. While in Cooper v. Cherokee Village Development Company, 236 Ark. 37, 364 S.W.2d 158, we stated, 'This court has consistently inclined toward applying the law of the state that will make the contract valid, rather than void,' this statement is only applicable where ostensibly the law of either state could apply, or where there is doubt as to which properly does apply. Under the facts in the instant case, we have no hesitancy in declaring that the contract before us was an Arkansas contract, and is controlled by the law of this state.

In the first place, the contract was entered into, and the note executed by appellants, and Cardamon, the agent of the company, in Benton, Arkansas, and the work was to be performed in Arkansas. It is true that the instrument was subsequently 'approved and accepted'...