Lancia v. Grossman's of R. I., Inc.
| Decision Date | 03 March 1965 |
| Docket Number | No. 10653,10653 |
| Citation | 99 R.I. 337,207 A.2d 607 |
| Parties | Anthony J. LANCIA et al. v. GROSSMAN'S OF RHODE ISLAND, INC. Ex. |
| Court | Rhode Island Supreme Court |
Factor, Chernick & Hillman, William C. Hillman, Pawtucket, for plaintiffs.
Adler, Pollock & Sheehan, Bernard R. Pollock, Peter Lawson Kennedy, Providence, for defendant.
This action of the case was brought pursuant to the provisions of G.L.1956, § 6-26-4, to recover money paid to the defendant under an alleged usurious loan and mortgage in violation of our usury statute, § 6-26-2. The cause is before us on the plaintiffs' single exception to the decision of a justice of the superior court overruling their demurrer to the defendant's special plea.
The plaintiffs are husband and wife. Their declaration alleges in substance that on April 5, 1961, they made and executed a negotiable promissory note, payable to defendant, in the sum of $721.36; that the note and a mortgage of their real estate as security therefor were given to secure an indebtedness of plaintiffs to defendant in the sum of $611.32; and that pursuant to the terms of such note, plaintiffs made payments as follows:
Sept. 30,1961 $20.00
Mar. 31, 1962 40.00
June 30, 1962 20.00
Sept. 11, 1962 885.86
-------
$965.86
A copy of the note is attached to the declaration and by reference made a part thereof. It provides that the sum of $721.36, including interest, was to be paid in thirty-five successive monthly installments of $20 each, commencing one month from the date thereof and continuing on the fifth day of each and every month thereafter and a thirty-sixth and final installment of $21.36. The note also provides for the payment of all costs of collection, including a reasonable attorney's fee in the event the note is defaulted and placed with an attorney for collection, and for acceleration of maturity in case of default. The mortgage contains the usual statutory power of sale.
The plaintiffs further allege that the payments totaling $965.86 were made to defendant or to its attorneys and constitute the full amount claimed by defendant to be due and owing under the note; that the amounts so paid exceed the maximum charge or compensation for interest and services or expenses incidental to the making, negotiation or collection of the note in question permitted by § 6-26-2; that the transaction was therefore usurious and void; and that in the circumstances they are entitled to recover all sums paid to defendant on said note.
The defendant filed a plea of the general issue and also a special plea setting out in detail the facts involved in the financial transaction between the parties. The special plea alleges in substance that plaintiffs' indebtedness arose out of certain purchases of building materials and equipment for which they remained indebted to defendant for some time prior to April 5, 1961; that the note and mortgage were executed to secure the payment of the debt and in lieu of commencing legal action therefor against plaintiffs; and that the figure of $721.36 was arrived at by adding 6 per cent interest for three years to the balance of $611.32 then due.
It also alleges that plaintiffs defaulted by failing to make the first monthly payment; that foreclosure proceedings were commenced on or about August 21, 1962, approximately fifteen and one half months after default; that on or about September 11, 1962, the sum of $885.86 was received by defendant from plaintiffs; and that the foreclosure sale to be held on September 12, 1962 was thereupon cancelled.
The plea further alleges that of the sum of $885.86 so paid, $641.36 was for the balance due on the note, $94.16 for foreclosure expenses, and the balance of $150.34 for attorney's fees. The defendant concludes its special plea with the allegation that the amounts paid in excess of $641.36 were not charges or compensation for interest and services or expenses incidental to the making, negotiation or collection of such indebtedness, but were incidental to a separate and distinct transaction, namely, the default of plaintiffs on the note and foreclosure of the mortgage.
The plaintiffs demurred to this plea on the ground that it does not contain a defense to their action. The trial justice overruled the demurrer without disclosing the ground or grounds upon which he based his decision. The transcript does show however, that plaintiffs refused the trial justice's offer to file further pleas. Instead they brought the case here on their exception to his decision.
In view of defendant's express statement that the question of novation is immaterial, we shall assume, without deciding, the correctness of plaintiffs' contention that the execution of the note and mortgage constituted a novation. See Philip Carey Mfg. Co. v. General Products Co., 89 R.I. 136, 144, 151 A.2d...
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