Michigan Nat. Bank v. Mattingly

• Decision Date: 25 March 1975
• Docket Number: No. 12953,12953
• Citation: 212 S.E.2d 754,158 W.Va. 621
• Court: West Virginia Supreme Court
• Parties: MICHIGAN NATIONAL BANK, a corporation v. Robert L. MATTINGLY and Margie Mattingly.

Page 754

212 S.E.2d 754

158 W.Va. 621

MICHIGAN NATIONAL BANK, a corporation v. Robert L. MATTINGLY and Margie Mattingly.

No. 12953.

Supreme Court of Appeals of West Virginia.

March 25, 1975.

Syllabus by the Court

1. The law of the state in which a contract is made and to be performed governs the construction of a contract when it is involved in litigation in the courts of this State.

2. Since the place of execution is not an essential part of a written instrument, parol evidence is admissible to show where the instrument was executed.

3. 'An exception to the application of the usury laws may be found in the 'time-price' doctrine: in a commercial transaction involving the sale of property by credit arrangement, if the negotiation between the seller and the buyer involves a Bona fide quotation of both a cash price and a credit price, the transaction does not involve usury, even though the quoted credit price is such as to exceed the cash price plus lawful interest thereon.' Point 2 Syllabus, Carper v. Kanawha Banking & Trust Company, W.Va., 207 S.E.2d 897 (decided February 5, 1974).

4. 'This Court will not consider on appeal nonjurisdictional questions which have not been acted upon by the trial court.' Point 1 Syllabus, Western Auto Supply Company v. Dillard, 153 W.Va. 678, 172 S.E.2d 388.

5. Where usury is asserted as a defense in a civil action upon the basis of the provisions of Code, 1931, 47--6--6, prior to its amendment by Chapter 7, Acts of the Legislature, Second Extraordinary Session, 1968, the trial court has a mandatory duty to comply with each of the provisions of Code, 1931, 47--6--7, unless the defendant in some manner waives his rights under the statute.

Robert E. Keltner, Parkersburg, for appellant.

No appearance for appellees.

Sprouse, Justice:

This is an appeal by the plaintiff bank from a judgment of the Circuit Court of Pleasants County. The plaintiff brought the action to foreclose on a chattel mortgage held on a house trailer owned by the defendants, and a jury awarded it $609.02. The plaintiff demanded possession of the house trailer and a judgment for the deficiency due under a contract and promissory note executed by the defendants. It claimed $2,932.50 was owed on the contract and note. The defendants contended they owed a lesser amount because the contract and note were usurious under the laws of West Virginia.

The defendants purchased a house trailer from McDonald's Trailer Sales, Inc. in Belpre, Ohio in December, 1961. They executed three documents in connection with the sale: A negotiable promissory note in the face amount of $8,958.60, a retail installment contract, and a 'Customer's Statement'. This action was brought upon the retail installment contract and the negotiable note.

The retail installment contract indicated a cash price of $8,700 and a downpayment, representing a trade-in allowance on another trailer of $2,906.75, leaving an unpaid cash price balance of $5,703.25. The instrument reflects the addition of $515.49, representing insurance costs, making a 'principal balance owed and payable in installments' of $6,308.74. The finance charge, listed as $2,649.86, was added to achieve a 'time balance' of $8,958.60. Under the designation of finance charge, in parentheses, were the words 'time price differential'. The evidence in the case reflected that the 'finance charge' or 'time price differential' was actually a six percent 'add-on' interest charge which was equivalent to 11 1/2 percent simple interest. The next item on the retail installment contract was the payment schedule reflecting eighty-four monthly payments of $119.06. The final figure on the contract was a 'time sales price' shown as $11,865.35. There is no explanation of the 'time sales price' in either of the three instruments. Testimony indicated that this figure was added after the defendants signed the contract.

There is a discrepancy between the 'time balance' of $8,958.60 and the payment schedule. The schedule of eighty-four payments of $119.06 totals $10,001.14. Apparently, the insurance figure of $515.49 covered only a two-year period, and an additional five-year coverage was necessary. The cost of the additional five-year coverage was, therefore, added to the monthly installment price. The testimony developed at trial does not explain the discrepancies between the three instruments, but from an inadequate record and an inadequate brief, we think the fairest inference that can be made is that the defendants owed to the appellant the approximate sum of $2,900, unless usury was a valid defense.

The issues presented on this appeal are: (1) Whether the trial court correctly applied the law of West Virginia rather than the law of Ohio in determining the proper rate of interest; (2) whether the parol evidence and the best evidence rule were violated in permitting testimony concerning the proper forum; (3) whether the defendant as a 'holder in due course' of a negotiable instrument should have been exempt from the defense of usury; (4) whether the 'time price' exception to a usurious contract should have governed the verdict in this case; and (5) whether the trial court committed error by not directing the jury to find specially if the transaction were usurious and to compute the amount of the verdict accordingly.

The plaintiff contends that the law of Ohio governs the transaction as a matter of law and that this question should not have been submitted to the jury. The applicable rule is clear. The law of the state in which it was made and to be performed governs a contract's construction when it is involved in litigation in the courts of this State. State v. Hall, 91 W.Va. 648, 114 S.E. 250. See also Gooding v. Ott, 77 W.Va. 487, 87 S.E. 862.

The contract does not reflect where it was executed nor does the intention of the parties appear from the instruments involved. It is uncontroverted that the McDonald agent twice visited the defendants in West Union, West Virginia, and that the trailer was subsequently delivered there to the defendants. In the interim, the defendants visited the McDonald Trailer Sales location in Ohio to select the trailer. The note executed by the defendants reflects that it was signed in the State of Ohio, but no place of execution is noted either on the retail installment contract or on the 'Customer's Statement'. Both defendants testified, however, that they were signed at their West Virginia residence. McDonald, a witness for the appellant, testified that the three documents were signed at the Belpre, Ohio location.

It is, of course, conclusively presumed that the writing contained the entire agreement between the parties and any parol evidence of prior or contemporaneous conversations or declaration tending to substitute a new and different contract for the one evidenced by the writing is incompetent. 30 Am.Jur.2d, Evidence, Section 1016, page 149. See Petty v. United Fuel Gas Co., 76 W.Va. 268, 85 S.E. 523.

However, since the place at which an instrument was executed is not an essential part of the writing, 'parol evidence is admissible to show that the instrument was executed at a place different from the one at which it purports to have been executed.' 32A C.J.S. Evidence § 996, page 508. Similarly, the best evidence rule is aimed only at excluding evidence which concerns the contents of a writing. Testimony as to facts about the place of execution may be admissible. See 29 Am.Jur.2d, Evidence, Section 449, pages 510--511. The conflict of laws question in this case evolved into a factual issue. The court properly allowed oral testimony concerning the place of execution and the jury found the contract was executed in West Virginia. There was no legal error in this determination.

The appellant next asserts that it is a 'holder in due course' of a negotiable promissory note executed by the defendants, and that the defense of usury is not available for this reason. There is no merit in this contention.

Code, 1931, 47--6--6, as amended, effective September 14, 1968, limits the liability of a holder in due course in respect to one who has been damaged by usury. See Carper v. Kanawha Banking & Company, W.Va., 207 S.E.2d 897. At the time of the transaction involved in this case (1961), however, usury was a defense in this State even against a holder in due course of a negotiable instrument. Hall v. Mortgage Security Corporation of America, 119 W.Va. 140, 192 S.E.2d 145, and Artrip v. Peters, 114 W.Va. 819, 174 S.E. 524.

Plaintiff contends on appeal that the 'time price' exception to usurious contracts should defeat the usury defense. It is true...