Langille v. Central-Penn Nat. Bank of Philadelphia, CENTRAL-PENN

Decision Date15 December 1959
PartiesClyde W. LANGILLE and Jennie Langille, Appellants, v.NATIONAL BANK OF PHILADELPHIA, a corporation of the United States of America, Appellee.
CourtUnited States State Supreme Court of Delaware

Appeal from a judgment of the Court of Chancery of New Castle County dismissing plaintiffs' complaint. Affirmed.

John S. Walker and Frank J. Miller, Wilmington, for appellants.

H. James Conaway, Jr. of Morford, Young & Conaway, Wilmington, for appellee.


SOUTHERLAND, Chief Justice.

Plaintiffs (the Langilles) brought suit to compel the satisfaction and discharge of a bond and a mortgage executed by them and held by the defendant bank (Central-Penn).

The facts are these:

The Langilles owned a lot of land in Brandywine Hundred, New Castle County, Delaware. On August 18, 1954, they bought from Washington Lumber and Millwork Co., of Llanerch, Pennsylvania, a supply of pre-fabricated building materials for the purpose of erecting a house on their lot. The cash purchase price was $3,990, but the Langilles applied for a deferred payment purchase. The deferred payment price was $6,191.80. As part of the transaction they executed an agreement to give a bond and mortgage on the house and lot in order to secure the payment of that amount. They were to deposit $100 and pay the balance of $6,091.80 in sixty monthly installments of $72.53 each plus a final payment of $1,740.80. The materials were to be delivered in three installments, as the building of the house progressed.

Washington's agreement to sell was conditioned upon acceptance of the application for the deferred payment purchase.

At the time of plaintiffs' application for a deferred payment purchase Washington had in force a contract with a finance company, Barco, Inc., under which Washington agreed to sell and Barco agreed to buy all Washington's deferred payment agreements, subject to Barco's right to reject any agreement if it determined that the purchaser was an unsatisfactory credit risk. Barco had full recourse against Washington, i. e., upon default by the purchaser Barco had the right to reassign the agreement to Washington and demand payment of the amount then due.

On September 1, 1954 Washington transmitted the Langille contract and application to Barco. Barco approved it and took an assignment of the contract.

On December 10 Barco notified Mr. Langille that the application had been approved. On January 7 Barco fixed January 11 as the time of settlement. On January 12 all the necessary papers, including the bond and mortgage, were executed and delivered. Barco then assigned the bond and mortgage to Central-Penn as security for its loans.

The Langilles assail the transaction as usurious. The Chancellor held the transaction legal and dismissed the complaint. The Langilles appeal.

It is agreed that the validity of the transaction is governed by Pennsylvania law.

The legal rate of interest in Pennsylvania is six per cent. Act of May 28, 1858, as amended by the Act of April 20, 1949, 41 P.S. §§ 3, 4. It is conceded that the amount of interest and the amount of service charges payable in this transaction exceed the limit of six per cent.

We note at the outset that the Pennsylvania decisions hold that the usury statutes do not apply to sales of goods on credit. In such cases the parties may make their own bargain. Melnicoff v. Huber Investment Co., 1929, 12 Pa.Dist. & Co.R. 405 (lease of automobile); cited with approval by the Supreme Court of Pennsylvania in Equitable Credit & Discount Co. v. Geier, 342 Pa. 445, 21 A.2d 53.

In the Melnicoff case the Court said:

'In recent years, companies like the defendant have sprung into existence in large numbers, due to the unprecedented demand by the public, in a good many cases against the best interests of the public, for automobiles, pianos, radio sets, refrigerators, heating equipment and household articles, which are purchased on the instalment plan. Houses are now wired on such arrangement. The extension of credit is worked out ordinarily by lease or conditional sales arrangement. Naturally, the risks are great. Cash would ordinarily purchase the article, chattel or service at a price or prices lower than the instalment or credit price.

'In view of the importance of the question involved in this case, the court has examined a large number of cases bearing upon the subject, and has concluded the rule to be well settled that usury cannot be predicated upon the fact that property is sold on credit and at an advance of price over what would be charged in the case of a cash sale so long as it appears that the price charged is in fact fixed for the purchase of goods on credit when no intention or purpose of defeating the usury laws, although the difference between the cash price and the credit, if considered as interest, amounts to more than the legal rate.'

See also Personal Discount Co. v. Lincoln Tire Co., 67 Pa.Dist. & Co.R. 35, in which...

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3 cases
  • Saul v. Midlantic Nat. Bank/South
    • United States
    • New Jersey Superior Court — Appellate Division
    • April 10, 1990
    ...87 N.J.Super. at 517, 210 A.2d 88 (quoting Langille v. Central-Penn Nat. Bank of Philadelphia, 38 Del.Ch. 382, 153 A.2d 211, aff'd 156 A.2d 410 (Sup.Ct.1959) ]. Plaintiff chose to purchase a luxury automobile on a credit basis. He is not the type of person "forced by adversity to borrow and......
  • Steffenauer v. Mytelka & Rose, Inc.
    • United States
    • New Jersey Superior Court
    • May 3, 1965
    ...12 Pa.D. & C.Rep. 405 (Mun.Ct.1929); Langille v. Central-Penn. Nat. Bank of Philadelphia, 153 A.2d 211 (Del.Ch.1959), affirmed 156 A.2d 410 (Del.Sup.Ct.1959); Brooks v. Auto Wholesalers, Inc., 101 A.2d 255 (D.C.Mun.App.1953); Zazzaro v. Colonial Acceptance Corp., 117 Conn. 251, 167 A. 734 (......
  • Equipment Finance, Inc. v. Grannas
    • United States
    • Pennsylvania Superior Court
    • March 24, 1966
    ...Court of Delaware, applying Pennsylvania law, reached the same result after considering similar arguments in Langille v. Central-Penn National Bank, 156 A.2d 410 (1959).3 There was testimony at trial that appellants were reluctant to 'tie up their borrowing capacity' at a bank that would re......

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