Mecey v. Seggern

• Decision Date: 12 March 1980
• Docket Number: No. 13007,13007
• Citation: 596 S.W.2d 924
• Parties: Gus MECEY, Appellant, v. Henry SEGGERN et ux., Appellees.
• Court: Texas Court of Appeals

Page 924

596 S.W.2d 924

Gus MECEY, Appellant, v. Henry SEGGERN et ux., Appellees.

No. 13007.

Court of Civil Appeals of Texas, Austin.

March 12, 1980.

Rehearing Denied April 16, 1980.

Harriet Samon Owen, Austin, for appellant.

Mark W. Owen, Owen, Jones & Bogart, Elgin, for appellees.

PHILLIPS, Chief Justice.

Between the years 1973 and 1976, appellees Henry and Molly Seggern, ranchers in Elgin, entered into approximately seven oral loan transactions and one written note with appellant Gus Mecey, owner and operator of a local tavern. Mecey advanced sums to the Seggerns for various farm improvements, feed, and a new truck. At the time of filing of suit in October, 1976, five of the loans had been repaid in full, two were not repaid, and one was paid in part.

The Seggerns filed suit against Mecey alleging that he had contracted for or received usurious interest on these transactions, and sought to recover statutory penalties, as provided by Tex.Rev.Civ.Stat.Ann. art. 5069-1.06 (1971), in the amount of $70,916.25 plus attorney's fees.

Mecey answered by specially denying that he charged the Seggerns usurious interest, by filing a cross-action for sums lent to the Seggerns but never repaid, and by counterclaiming for $100,000 in damages for an alleged slander by Henry Seggern. The slander cause of action was subsequently severed and the usury suit proceeded to trial on October 23, 1978.

Pursuant to a jury verdict, rendered in response to special issues, the trial court entered judgment in November of 1978 that the Seggerns be awarded $51,675 in statutory penalties, and $15,000 in attorney's fees. The judgment also provided for an additional $6,500 in attorney's fees if appeal was taken to the Court of Civil Appeals, and $4,000 if subsequently appealed to the Supreme Court. Mecey timely perfected his appeal to this Court and is before us on twelve points of error.

We overrule all points of error and affirm the judgment of the trial court.

I.

Initially, appellant complains that the trial court erred in holding oral contracts to lend money at interest to be governed by the usury statutes and, further, in failing to submit special issues requiring specific findings as to the existence of the elements of a contract.

"Article 5069-1.06 provides that any person who 'contracts for, charges or receives' interest in excess of the amount authorized by law shall be liable for the penalties set forth in the article. . . . By describing the conditions precedent to recovery of penalties in the disjunctive, the Legislature made it clear that only one such condition need occur to trigger penalties; either a contract for, a charge of or receipt of usurious interest." Windhorst v. Adcock Pipe and Supply, 547 S.W.2d 260 (Tex.1977). (Emphasis added).

Article 5069-1.02 provides:

"Except as otherwise fixed by law, the maximum rate of interest shall be ten percent per annum. A greater rate of interest than ten percent per annum unless otherwise authorized by law shall be deemed usurious. All contracts for usury are contrary to public policy and shall be subject to the appropriate penalties prescribed in Article 1.06 of this Subtitle." (Emphasis added).

This provision mirrors that in Tex.Const. art. XVI, § 11 (Supp.1980), as amended November 8, 1960:

". . . (I)n the absence of legislation fixing maximum rates of interest all contracts for a greater rate of interest than ten percentum (10%) per annum shall be deemed usurious . . . ." (Emphasis added).

Both the Constitution and Article 5069-1.02 speak in terms of "all contracts." "All contracts" includes both oral and written agreements. Glenn v. McCarty, 130 S.W.2d 295, 301-2 (Tex.Civ.App. Amarillo), aff'd, 137 Tex. 608, 155 S.W.2d 912 (1941); Autocredit of Fort Worth, Inc. v. Pritchett, 223 S.W.2d 951 (Tex.Civ.App. Fort Worth 1949, writ dism'd).

The January 1973 loan of $3,000, May 1973 loan of $3,000, February 1974 loan of $8,000, 1975 loan of $7,900, and the 1975 fertilizer loan of $4,000 were completed transactions in which it was demonstrated that interest in excess of 10% had been charged and/or received by Mecey. This charge or receipt of usurious interest rightfully triggered the penalty provisions of Article 5069-1.06.

The $4,000 truck loan of 1973, the 1976 $7,500 note, and the 1976 $1,500 loan were transactions not fully executed. Appellees contend that ". . . there is no significant reason to differentiate between whether the ground of recovery is contracting for 'usurious interest' or 'charging' usurious interest. Here . . . Mecey demanded payment of (or charged) the interest he contracted for." As to the truck loan of 1973, demand can be shown by a memo containing the language: "Due 7/15/75 $1,900" and "Due 7/15/76 $1,700" and certain testimony by Mecey about this memo. Demand was shown as to the 1976 $7,500 note by a letter from the Bastrop County Attorney demanding payment from the Seggerns and by certain testimony by Henry Seggern. The letter from the County Attorney also dealt with the 1976 $1,500 loan. Demand was further shown by Mecey's attempt to cash the Seggerns' $1,800 check.

In reviewing the meaning of the word "charging," this Court in Moore v. Sabine National Bank of Port Arthur, 527 S.W.2d 209, 212 (Tex.Civ.App. Austin 1975, writ ref'd n. r. e.), determined that ". . . a charge could be . . . 'an act by the promisee constituting or implying a demand for its payment, e. g., the inclusion in a statement of indebtedness submitted to the debtor.' " (Emphasis added). See also: Tanner Development Company v. Ferguson, 561 S.W.2d 777, 788-9 (Tex.1977). The above testimony and exhibits are evidence of the charging of interest above that allowed by law. As such, it was not required that the trial court require a finding as to the elements of a contract. Windhorst v. Adcock Pipe and Supply, supra; Tanner Development Company v. Ferguson, supra.

Mecey claims that this cause is governed by Articles 5069-1.03 and 5069-1.04. We disagree. In the case at bar, we are not called upon to determine what rate of interest should have been allowed between the parties, but if the interest actually charged by Mecey was, as a matter of law, usurious. Thus, Articles 5069-1.03 and 5069-1.04 are inapplicable.

Appellant also alleges that the usury statutes apply only to those who lend in the ordinary course of their business. Article 5069-1.06 provides that "any person who contracts for, charges or receives" usurious interest is liable for the penalties under the statute. Article 5069-1.01(e) defines a person as . . . an individual, partnership, corporation, joint venture, trust, association or any legal entity, however organized." (Emphasis added).

Mecey is an individual. The statute requires no precise organization. The record shows that more than one transaction was entered into by the parties. The abundance of checks, stubs and memoranda that are exhibits in this case, show at least some organization on the part of Mecey. Accordingly, Mecey was within the class of persons regulated by the usury laws.

Mecey argues, under point of error one, that the application of the usury statutes to him, as an individual, violates the due process requirements of the 14th Amendment to the United States Constitution and Article I, §§ 13 and 19 of the Texas Constitution. Specifically, he claims that Articles 5069-1.03 and 5069-1.04 are unconstitutionally vague when applied to an oral contract by a lender not organized to lend money.

As has been demonstrated, these two provisions are inapplicable to the case at bar, and, thus, we are not required to reach the constitutional argument as to them. This cause is governed solely by the provisions of Articles 5069-1.02 and 5069-1.06. Appellant does not argue the constitutionality of these statutes. Under Rule 418(e), Texas Rules of Civil Procedure (Supp.1980), points of error are required to be supported by argument and authority, and if not supported, the points are waived. Rayburn v. Giles, 182 S.W.2d 9 (Tex.Civ.App. San Antonio 1944, writ ref'd); Ranger Insurance Co. v. Rogers, 530 S.W.2d 162 (Tex.Civ.App. Austin 1975, writ ref'd n. r. e.).

Appellant in point of error three complains that ". . . the Court erred in entering judgment . . . on the verdict of triple interest and return of principal. . . ."

Article 5069-1.06 ¹ provides:

"(1) Any person who contracts for, charges or receives interest which is greater than the amount authorized by this Subtitle, shall forfeit to the obligor twice the amount of interest contracted for, charged or received . . .

"(2) Any person who contracts for, charges or receives interest which is in excess of double the amount of interest allowed . . . shall forfeit as an additional penalty, all principal as well as interest . . ." (Emphasis added).

The trial court allowed recovery of principal, interest and double interest on each transaction where the amount of interest paid was double that allowed by statute. It was correct in so doing. ". . . Subsection two authorizes a recovery of double the interest rate contracted for, charged or received, a refund of all interest paid and other charges, and a forfeiture of all of the principal." Symposium, Texas Usury Law, 10 St. Mary's L.J. 687, 861-2 (1979); Lafferty v. A.E.M. Developers and Builders Co., 483 S.W.2d 279, 282 (Tex.Civ.App. San Antonio 1972, writ ref'd n. r. e.); Watson v. Cargill, Inc., Nutrena Division, 573 S.W.2d 35, 42 (Tex.Civ.App. Waco 1978, writ ref'd n. r. e.).

Mecey also asserts that there is ". . . no evidence that the insertion of 10% interest (in a 1975 $7,500 note) was not the result of a bona fide error."

Here, Mecey seeks to come within the provision of Article 5069-1.06(1) which provides ". . . there shall be no penalty for a violation which results from an accidental and bona fide error."

In determining whether there is no evidence to back up the finding of no bona fide error, we must ". . . view the evidence in its most...