Lawrimore v. Sun Finance Co., 48517

• Decision Date: 12 February 1974
• Docket Number: Nos. 1,No. 48517,2,3,48517,s. 1
• Citation: 205 S.E.2d 110,131 Ga.App. 96
• Parties: Annie H. LAWRIMORE v. SUN FINANCE COMPANY
• Court: Georgia Court of Appeals

Page 110

205 S.E.2d 110

131 Ga.App. 96

Annie H. LAWRIMORE v. SUN FINANCE COMPANY.

No. 48517.

Court of Appeals of Georgia, Division Nos. 1, 2, 3.

Feb. 12, 1974.

Rehearing Denied March 4, 1974.

Alfred C. Kammer, II, Lee Payne, Atlanta, for appellant.

Arnall, Golden & Gregory, H. Fred Gober, Atlanta, for appellee.

Hansell, Post, Brandon & Dorsey, Allen Post, W. Rhett Tanner, Atlanta, amicus curiae.

Syllabus Opinion by the Court

PANNELL, Judge.

This is an appeal by a borrower from the overruling of her motion to set aside a judgment rendered against her, by default, in favor of a licensee under the Georgia Industrial Loan Act, made on the grounds the loan instrument attached to the pleading was void, and the pleading, therefore, showed on its face that no cause of action 1. It was held in Lewis v. Termplan, Inc., 124 Ga.App. 507, 508, 184 S.E.2d 473, 475, in a similar case under the Georgia Industrial Loan Act, 'That the maximum interest for a 24 month note had already been calculated and included and could not, under Code Ann. § 25-315(a) (Section 15(a), Georgia Industrial Loan Act, Ga.L.1955, pp. 431, 440) be discounted in advance, for which reason when the plaintiff opted to accelerate and claim unearned interest on the otherwise unmatured instalments of November 5, 1970, through June 5, 1971, this amount was usurious and the instrument authorizing its collection is void under Code Ann. § 25-9903 (emphasis supplied) (Section 20, Georgia Industrial Loan Act, Ga.L.1955, pp. 431, 444).' It is true that the record in the present case does not show on its face that the judgment obtained includes any usury; however, the note contains a provision authorizing its collection and this alone is sufficient to void the obligation. Section 16 of the Georgia Industrial Loan Act (Ga.L.1955, pp. 431, 442; Code Ann. § 25-316) provides: 'No licensee shall charge, contract for, or receive any other or further amount in connection with any loans authorized by this Act,' than those therein provided. The last sentence of Section 20 of the Georgia Industrial Loan Act (Ga.L.1955, pp. 431, 444) provides 'Any loan contract made in violation of this Act shall be null and void.' The statement in Lewis v. Termplan, supra, that 'This plaintiff sought and obtained a judgment which, judge alone by the terms of the instrument, was valid,' was not a holding that the judgment based on the instrument was valid but merely a statement that the judgment based on the instrument, considered without respect to the laws governing such instruments was valid.

existed. The grounds stated were (a) The contract to provide for 'interest from maturity at the rate of 8% per annum,' and (b) The contract provided for charges in excess of those permitted by the Act in providing that 'failure to pay any instalment or other sums when due hereunder shall, at the option of the holder hereof and without notice, render all installments due and payable at once.' The amount of the note was $2,064, payable in 24 instalments of $86.00 each. The instrument showed the cash advance to be $1,382.80 and added thereto were fees of.$106.56, recording fee $1.00, and insurance $288.96 and 2 years interest of $284.68, each $86.00 instalment consisting of principal, etc., and interest which was unaccrued or unearned until the respective instalments became due each month. Held:

2. The contract or note here involved contained the following provision: 'Any provisions of this instrument prohibited by the laws of this State shall be ineffective to the extent such prohibition without invalidating any other remaining provisions of this instrument.' To give this provision of the contract effect would nullify the provisions of the statute above quoted and applied, and Section 16 of the Georgia Industrial Loan Act, supra, makes provision for just such an attempt when it provides that 'No licensee shall divide into separate parts any contract for the purpose or with the effect of obtaining charges in excess of those authorized by this Act.'

3. Having held that the contract is void for the reasons given, it is unnecessary to determine whether it may be void for other reasons.

4. The trial court erred in overruling appellant's motion to set aside the judgment rendered.

Judgment reversed.

BELL, C.J., HALL, P.J., and DEEN, QUILLIAN, EVANS and STOLZ, JJ., concur.

EBERHARDT, P.J., and CLARK, J., dissent.

EBERHARDT, Presiding Judge (dissenting).

For the following reasons I cannot agree with the conclusion reached in either division 1. The items included in this note are only those clearly authorized by the statute, arrived at by the method outlined in Robbins v. Welfare Finance Corp., 95 Ga.App. 90, 96 S.E.2d 892, which we have followed in McDonald v. G. A. C. Finance Corp., 115 Ga.App. 361(2), 154 S.E.2d 825; Clark v. Liberty Loan Corp. of Dalton, 116 Ga.App. 213, 156 S.E.2d 535, and citations; Gentry v. Consolidated Credit Corp. of Floyd County, 124 Ga.App. 597, 184 S.E.2d 692, and others. Interest is properly calculated upon the 'face of the note' at 8 per cent per annum during the contract period, and no excess interest is included. Code Ann. § 25-315. As to what constitutes the 'principal amount' of a loan, see McDonald v. G. A. C. Finance Corp., 115 Ga.App. 361, 364, 154 S.E.2d 825, supra.

of the majority opinion, and must dissent.

2. A provision in the note for payment of interest from maturity at 8 percent per annum does not render the obligation usurious under the Industrial Loan Act, for the lender's right to collect interest 'is not limited to any time short of the date of payment.' Hartsfield Company v. Demos, 174 Ga. 43, 162 S.E. 138. It has long been the law that the rate of interest specified in the contract is to be applied after as well as before maturity. Code § 57-110; Silvey v. McCool, 86 Ga. 1(4), 12 S.E. 175; Crockett v. Mitchell, 88 Ga. 166(3), 14 S.E. 118. And 'where a contract specifies a rate of interest which is not beyond the percent. which the parties may legally contract for, if a judgment is rendered on such contract, it bears interest at the contract rate, and not at the rate which all contracts carry if no rate be stipulated therein.' Cauthen v. Central Georgia Bank, 69 Ga. 733; Daniel v. Gibson, 72 Ga. 367; Neal v. Brockhan, 87 Ga. 130, 134, 13 S.E. 283; Central Bank & Trust Corp. v. State of Georgia, 139 Ga. 54, 60, 76 S.E. 587. It would be a strange doctrine indeed to say that while an obligation bears interest prior to maturity it can bear none afterward. This would make it possible for a debtor to obtain a reduced rate of interest on his obligation by simply ignoring the payments as they become due, thereby extending the time without adding to the total of his interest payment, while one who meets his obligations promptly would receive no such advantage. Both law and equity have ever looked with favor upon one who is diligent and faithful in keeping his obligations rather than upon him who is slothful and laggard in doing so. Even where a note specifies that a stated sum is to be paid on a certain date 'without interest' the holder is entitled to interest after maturity. Jenkins v. Morgan, 100 Ga.App. 561(1), 112 S.E.2d 23.

3. Provisions of the Industrial Loan Act provide for the collection of attorney's fees and court costs. Code Ann. § 25-316.

4. The petition in this action sought the recovery of an unpaid balance of $850.06 and attorney fees of $127.50. 'Unpaid balance' means unpaid balance on the principal. Lanier v. Consolidated Loan & Finance Co., 47 Ga.App. 148(3), 170 S.E. 99; Bell v. Atlanta Cooperage Co., 121 Ga.App. 207, 173 S.E.2d 427. The judgment was entered for 'Principal $850.06, and attorney fee $127.50.' It does not provide for interest after maturity, or for future interest on the judgment, though it lawfully might have done so. Hartsfield Co. v. Demos, 44 Ga.App. 802, 163 S.E. 219.

5. The acceleration clause in the instrument is not proscribed by the statute and does not render the obligation void. While the Industrial Loan Act makes no reference, eo nomine, to acceleration clauses in instruments to be executed by the debtor as evidence of or in security of the debt, there is a clear recognition of them found in Code Ann. § 25-316 where provision is made for attorney fees 'incurred in the collection of any contract in default,' and for actual and reasonable expenses of repossessing and storing any collateral pledged as security 'for any contract in default.' (Emphasis supplied.) Nowhere in the Act is there a prohibition of the clause. The provision in § 25-315(a) that the obligation may be repayable 'in one A contrary conclusion would result in exposing the debtor to a suit for each maturing instalment which is unpaid, the expense of defending, if he desires a defense, and the accumulation of court costs in each action. Code § 20-1401. It is inconceivable that the General Assembly intended to impose so burdensome a result on a debtor. Nor do we believe that there was an intent to require a lender to proceed in a multiplicity of actions where the debtor simply fails to meet his obligations as they mature, for 'both law and equity abhor a multiplicity of suits.' Johnson v. Klassett, 9 Ga.App. 733, 72 S.E. 174. And what of the security? Must the lender stand by and await a maturing of the whole of the obligation while the debtor, ignoring the instalments as they fall due, continues the use and depreciation of it? It is wholly unreasonable to conclude that the General Assembly intended, by failing to mention the acceleration clause, outlawed it! We will not so construe the Act.

single payment or repayable in monthly or other periodic instalments' and the recognition that contracts do go into default clearly shows a legislative intent that the acceleration clause, as a generally, if not universally, accepted practice in the lending market, be permitted in these contracts.

'Parties laboring under no disabilities...