King v. Citizens Bank of De Kalb, 35174

• Decision Date: 20 September 1954
• Docket Number: No. 2,No. 35174,35174,2
• Citation: 90 Ga.App. 638,83 S.E.2d 821
• Parties: L. H. KING v. CITIZENS BANK OF DE KALB
• Court: Georgia Court of Appeals

Page 821

83 S.E.2d 821

90 Ga.App. 638

L. H. KING v. CITIZENS BANK OF DE KALB.

No. 35174.

Court of Appeals of Georgia, Division No. 2.

Sept. 20, 1954.

L. H. King brought an action against Citizens Bank of DeKalb, to recover an alleged amount of usurious interest. In his petition as finally amended he alleges substantially the following material facts: (2) The defendant is indebted to the plaintiff in the sum of $6,883.94 by reason of the following facts. (3) The plaintiff is engaged in the used-car business in Fulton County and sells cars for cash and on credit. When a car is purchased on credit, the plaintiff takes from the purchaser a title-retention contract for the remainder of the time price, showing the full amount due, divided into monthly payments. His practice is then to sell his contracts outright to a finance company or borrow money thereon from a bank. (4) On or about February 10, 1951, J. R. Murphy, a relative by marriage of M. O. Sams, vice-president of the defendant bank, came to see him and advised him that the defendant bank would lend the plaintiff money on his contracts at a reasonable rate of interest, provided the plaintiff would deposit $5,000 with the defendant bank as security and assign all contracts to the bank, assume all losses, collect all past-due notes, and in every particular hold the bank harmless. (5) At that time the plaintiff did not have the $5,000 to deposit in the bank, and Murphy offered to lend him that sum provided the plaintiff would pay him $80 per month interest and assign to Murphy title to 16 automobiles then on the plaintiff's used-car lot, valued at more than $10,000. On February 13, 1951, he entered into an agreement with Murphy, a copy of which is attached to the petition together with a copy of a note signed by the plaintiff at the same time; and on the same day the note and contract were assigned by Murphy to the defendant bank, and the bank then and there gave the plaintiff $5,000. (5 1/2) This contract and note were drawn by Murphy at Murphy's office in Atlanta, executed and assigned there, and were then handed to the plaintiff by Murphy with instructions that he take both out to M. O. Sams, executive vice-president of the defendant bank, and that Sams would know what to do. On the same day the plaintiff delivered both the contract and the note to Sams at the bank building in Avondale Estates. At that time the plaintiff told Sams that Murphy had assured him that, if $5,000 was deposited with the bank as collateral, the bank would then lend the plaintiff the 'Red Book Value' on his automobile contracts. Sams replied that he was entirely familiar with the transaction and inquired if the plaintiff had any contracts with him at that time, to which the plaintiff replied that he had just left Murphy's office and did not have any contracts with him but would bring some out in a few days. The plaintiff then inquired of Sams what interest the bank would charge on the loans, to which Sams replied that the interest would be only six percent, thereby approving, ratifying, and adopting by his words and deeds all the acts and sayings of Murphy in the premises. (6) The plaintiff, on or about March 11, 1951, began borrowing money from the bank and using, at the insistence of the bank, the bank's special form of contract, a copy of which is attached to the petition. These contracts were assigned by the plaintiff to the bank with recourse and with the cars described therein as further security. From March 11, 1951, until sometime in September, 1951, the plaintiff borrowed money on more than 100 automobiles. A complete list of the transactions is attached to the petition, and shows an overcharge of interest by the bank, as will be more particularly set forth hereinafter. (7) At the time his first note was discounted, there was no written agreement and no particular understanding except that the bank was to have six percent interest on the amount of money lent to the plaintiff, together with the cost of insurance and recording fee, for the full time the note was to run, and the balance, up to the face value of the note, was to be set aside in an escrow account as further security to the bank. This matter of detail was to be left entirely up to Mr. Sams, with whom the plaintiff dealt at all times. It was further agreed that the defendant bank would lend the plaintiff, on each contract handled by it, the sum of money stipulated by the Red Book as the loan value of the automobile listed in the contract. The Red Book was the book used by the defendant in determining the value of automobiles when making loans thereon. (8) On August 23, 1952, the plaintiff redeemed all the notes outstanding in the defendant bank by paying the bank off in full, and now owes the bank nothing whatsoever. After he had paid the bank off in full, and had all the figures before him, the plaintiff found that the bank had charged an excessive amount of interest in the sum of $3,101.19, when calculated at 8 percent per annum on the loan made and the...