Jennings v. Texas Farm Mortg. Co., s. 1523-1791-6374.

• Decision Date: 27 March 1935
• Docket Number: Nos. 1523-1791-6374.,s. 1523-1791-6374.
• Citation: 80 S.W.2d 931
• Parties: JENNINGS v. TEXAS FARM MORTG. CO.
• Court: Texas Supreme Court

Page 931

80 S.W.2d 931

JENNINGS v. TEXAS FARM MORTG. CO.

Nos. 1523-1791-6374.

Commission of Appeals of Texas, Sections A and B.

March 27, 1935.

Error to Court of Civil Appeals of Eighth Supreme Judicial District.

Suit by R. F. Jennings, as independent executor of the estate of J. D. Jennings, deceased, and as administrator with the will annexed of the estate of W. H. Jennings, deceased, against the Texas Farm Mortgage Company. To review a judgment which affirmed district court's judgment for defendant [52 S.W.(2d) 272], plaintiff brings error.

Judgments of Court of Civil Appeals and district court affirmed.

R. F. Spencer, A. J. Lewis, and Spencer, Rogers, Lewis & Slatton, all of San Antonio, for plaintiff in error.

S. W. Marshall, of Dallas, and James L. Shepherd, Jr., and Baker, Botts, Andrews & Wharton, all of Houston, for defendant in error.

RYAN, Commissioner.

The question here is whether the Court of Civil Appeals correctly affirmed judgment of the district court sustaining general demurrer to a petition seeking recovery by way of penalty, in double the amount of interest paid on borrowed money, on the proposition that the transaction was usurious (although interest contracted to be paid, and actually paid, was at the rate of only 7 per cent. per annum), if upon certain contingencies there be a possibility of an acceleration of interest so that more than 10 per cent. may be collected. 52 S.W.(2d) 272.

There is no contention that in the transaction the interest actually provided for, in the absence of acceleration, would constitute usury.

The amended petition, to which general demurrer was sustained, alleges, in substance, that on or about November 1, 1923, the Texas Farm Mortgage Company made a loan of $66,000 to J. D. Jennings and W. H. Jennings, both of whom were then living; both having since died, plaintiff in error R. F. Jennings is the independent executor of the will of J. D. Jennings, deceased, and administrator with the will annexed of the estate of W. H. Jennings, deceased, duly appointed, qualified, and acting as such under proper orders of the county court of Webb county and of the county court of Bexar county, respectively; said loan being evidenced by a written promissory note signed by the said J. D. Jennings and W. H. Jennings, due on October 1, 1933, payable to the order of said company at its office in the city of Dallas, with interest after maturity at the rate of 10 per cent. per annum, and the further provision that if said note is placed in the hands of an attorney for collection after its maturity, or if collected by any proceeding in any court, including courts of bankruptcy and probate, the makers agree to pay a sum equal to 10 per cent. of the entire amount, principal and interest due thereon, as attorney's fees.

That simultaneously with the making of said loan and the execution of said principal note, the said J. D. and W. H. Jennings also signed ten interest notes, due in numerical sequence on the first day of October of each year thereafter, the last one maturing on the 1st day of October, 1933. Said interest notes were in amounts at the rate of 6 per cent. per annum on the principal; the first covering eleven months' interest from November 1, 1923, to its due date, October 1, 1924, in the amount of $3,630.00, and the other nine for $3,960 each.

Each of said interest notes, except as to amount, number, and maturity, as just stated, provide and read substantially as follows, viz.:

                "$3,630.00             November 1, 1923
                

"On the first day of October (fixed) 1924, we promise to pay to the order of Texas Farm Mortgage Company thirty six hundred thirty and no/100 dollars at its office in the city of Dallas, State of Texas, for value received, with interest at the rate of ten per cent per annum after maturity, being interest on one principal note for $66,000.00 this date given by us to said company.

                                          "W. H. Jennings
                "No.1                      J. D. Jennings."
                

As part of the loan transaction and for the purpose of securing payment of said principal and interest coupon notes, the said J. D. and W. H. Jennings made a deed of trust and lien on certain lands in Zapata county, aggregating 26,918 acres, to Leslie Waggener, trustee, for the use and benefit of the payee and any other holder and owner of said notes. One paragraph of said deed of trust provides in substance that "this indenture is intended as a deed of trust to secure the payment of one promissory note, hereinafter called `principal note' for the sum of $66,000.00, bearing even date herewith, executed by the parties of the first part, payable at Dallas, Texas, to the order of the Texas Farm Mortgage Company, * * * on October 1, 1933 * * * bearing interest from date until maturity, according to the tenor and effect of interest notes thereto attached of even date herewith, secured hereby and hereto referred to and made a part hereof, said interest notes being payable annually on the 1st. day of October of each and every year until the maturity of said principal note; all of which principal and interest notes are intended to be secured hereby, and stipulate that they shall bear interest at the rate of 10 per cent per annum after maturity."

Another paragraph of said deed of trust provides: "Now, it is further understood and agreed that if default be made in the payment of any indebtedness, whether principal or interest, herein provided for, when the same may become due and demandable, or if default be made in any stipulation, agreement or covenant herein contained, then the whole of the indebtedness secured in and by this instrument may, at the option of said party of the third part, or any holder of said note, or other indebtedness secured hereby, without notice to said parties of the first part, be declared due and payable, and the said party of the third part, or any holder of said notes or any other indebtedness secured hereby, may proceed to enforce this deed of trust, as hereinafter provided, or at its or his option, institute proceedings respectively, for the collection at law or in equity, of such amounts as may be then unpaid."

It is further alleged that:

As an additional part of the aforesaid loan transaction, the said J. D. Jennings and W. H. Jennings were required to and did execute and deliver to said Texas Farm Mortgage Company, a `second interest note' dated November 1, 1923, payable to the order of Texas Farm Mortgage Company, in the sum of $6545.00 * * * as follows:—$605.00 on the 1st day of October, 1924 and $660.00 on the 1st. day of each succeeding October until paid, with interest at the rate of 10 per cent per annum on each installment after its maturity, reciting further that the payment of this note is secured by a second deed of trust, which is recorded in the public records of Zapata County, in the State of Texas, and is given for a part of the interest on a loan of $66,000.00 to the undersigned by the Texas Farm Mortgage Company, and, it is expressly agreed that if this note be placed in the hands of an attorney for collection, after its maturity, or after the maturity of any of its installments, or if placed in the hands of an attorney for collection before maturity, under circumstances authorizing suit to be brought at such time, or if collected by any proceeding in any court,...