Nationwide Financial Corp. v. English
| Decision Date | 31 July 1980 |
| Docket Number | No. 1364,1364 |
| Citation | 604 S.W.2d 458 |
| Parties | NATIONWIDE FINANCIAL CORPORATION, Appellant, v. Freddie E. ENGLISH, Appellee. |
| Court | Texas Court of Appeals |
Miles H. Appleberry, San Antonio, for appellant.
Barry Snell, Bayne, Snell & Krause, San Antonio, for appellee.
This is an appeal from a summary judgment sustaining a claim for usury. The litigation commenced on March 17, 1977, when plaintiff, Freddie E. English, instituted suit against defendant, Nationwide Financial Corporation (Nationwide), claiming various violations of the Texas Consumer Credit Code 1 in a retail installment contract in connection with the purchase of a mobile home. Nationwide answered with a general denial and filed a counterclaim, alleging that since English was in default, Nationwide had elected to accelerate the payments and demand payment of the entire unpaid balance. In response, English, by an amended petition filed on March 9, 1978, alleged that by its counterclaim, Nationwide had charged in excess of twice the amount of time-price differential permitted by law and was therefore guilty of usury. English prayed for a recovery of twice the amount of time-price differential and default charges as provided for by Article 5069-8.01(a), 2 and for a forfeiture of the entire principal and all other charges as provided for by Article 5069-8.02. 3 English then filed a motion for partial summary judgment. After a hearing, the trial court awarded English a partial summary judgment upon his claim for twice the amount of time-price differential and default charges in the amount of $18,611.60, and the court further decreed a forfeiture of all unpaid principal, finance charges, and other charges due and owing under the retail installment contract. After a hearing with regard to English's claim for attorney's fees, the trial court entered a final judgment incorporating the provisions of the partial summary judgment together with an award for attorney's fees. The judgment recites that "(a)ll relief sought or requested by any party herein, not specifically granted is hereby denied." 4 Nationwide perfected this appeal.
We reverse and remand.
On February 14, 1975, English entered into a real estate contract with Mobile America 5 in payment of a mobile home. At the time the contract was signed, it was contemplated by the parties that the contract would be assigned to Nationwide. Under the terms of the agreement, English promised to pay an agreed price of $21,342.25, which included a finance charge of $8,705.80. The monthly payments, including the finance charge, was precomputed so that English was to pay the sum of $168.69 per month for 120 months commencing on March 20, 1975. After the contract had been assigned to Nationwide, English continued to make payments through September 1, 1977, totaling $5,870.18.
On November 30, 1977, Nationwide, in response to interrogatories, gave the following answers:
On March 9, 1978, Nationwide filed its counterclaim, accelerating the payments. The company sought judgment for the sum of $14,432.62, the entire balance due on the contract, which amount included unearned time-price differential in the amount of $4,473.11. There is nothing in the original counterclaim showing that Nationwide offered to rebate any of the unearned finance charge.
Shortly after English filed his motion for summary judgment seeking a recovery of $18,611.60 (twice the amount of time-price differential and default charges allegedly made by Nationwide), Nationwide amended its counterclaim and alleged that after deducting all unearned time-price differential and finance charges, the balance due and owing amounted to $9,416.49. Accordingly, it sought judgment in the amount of $9,416.49 rather than the $14,432.62 sued for in its original counterclaim.
Nationwide contends under its first point of error that the trial court erred in granting a summary judgment in favor of English because there is a genuine issue of fact as to whether it "charged" any unearned time-price differential in violation of the Code. It further contends under this point that even if some amount of unearned time-price differential was charged, there is no summary judgment proof showing that it charged twice the amount of time-price differential authorized by the Code, and therefore the trial court erred in rendering a summary judgment for twice the time-price differential and in decreeing a forfeiture of the principal balance due under the contract.
It is Nationwide's contention that it did not "charge" any unearned interest, because by amending its original counterclaim and eliminating all unearned interest, it was not in violation of the Code at the time the trial court conducted a hearing on the motion for summary judgment. Nationwide therefore concludes that there was no evidence to show that it had "charged" English with unearned interest, except in the abandoned pleading which Nationwide contends may not be considered as evidence. We are not in accord with this proposition.
It has been held repeatedly that pleadings demanding unearned interest or time-price differential constitute a charge for usurious interest. Madden v. Harlandale Bank, 574 S.W.2d 590, 591 (Tex.Civ.App. Beaumont 1978, writ ref'd n. r. e.); General Motors Acceptance Corp. v. Uresti, 553 S.W.2d 660, 663 (Tex.Civ.App. Tyler 1977, writ ref'd n. r. e.); Moore v. Sabine National Bank, 527 S.W.2d 209, 212 (Tex.Civ.App. Austin 1975, writ ref'd n. r. e.). See also Note, 54 Tex.L.Rev. 652 (1976).
The original counterclaim filed by Nationwide seeking to recover the entire balance of the account, including unearned interest, amounted to a claim for usurious interest. As such, the original counterclaim constituted an admission against Nationwide for the purposes of summary judgment proof. McCormick v. Stowe Lumber Co., 356 S.W.2d 450, 457-59 (Tex.Civ.App. Austin 1962, writ ref'd n. r. e.); Lesikar v. Lesikar, 251 S.W.2d 555, 558 (Tex.Civ.App. Galveston 1952, writ ref'd n. r. e.).
It is our view that Nationwide's action in amending its counterclaim so as to rebate the unearned time-price differential was not sufficient to nullify its prior violation of the Code. To allow the defendant, upon being faced with an action for penalties for overcharges, to escape liability by reducing the amount demanded to within permissible limits, would allow it to circumvent the statute. If a creditor is to be allowed to reduce the amount that he sues for after a usury claim has been asserted against him, then the penalty provided by the statute would be totally ineffective, since any violation and penalties could be erased simply by reduction of the amount sued for. Southwestern Investment Co. v. Hockley County Seed & Delinting, Inc., 516 S.W.2d 136, 137 (Tex.1974). Thus, Nationwide must be held to have charged usurious interest.
This brings us to the question of whether the summary judgment proof offered by English is sufficient to establish, as a matter of law, that the amount of the unearned time-price differential charged by Nationwide amounted to twice the amount authorized by law. We have concluded that it does not.
The contract in question is known as a "precomputed" consumer credit transaction where the finance charge is added to the principal. The total amount is then divided into 120 installments without allocation between principal and interest. In a precomputed consumer credit transaction, where there has been a default and acceleration, the question of usury turns upon whether the creditor rebated to the debtor all of the unearned interest so that the earned interest charged prior to acceleration does not exceed the maximum amount permitted by law. Our courts have held that the date of acceleration is considered to be the date of maturity, and that the rebate of any amount less than the unearned interest due the debtor constitutes a usurious "charge" within the purview of the Code. Southwestern Inv. Co. v. Mannix, 557 S.W.2d 755, 765 (Tex.1977); General Motors Acceptance Corp. v. Uresti, supra ; Chavez v. Aetna Finance Co., 553 S.W.2d 174, 176 (Tex.Civ.App. San Antonio 1977), writ ref'd n. r. e. per curiam, 561 S.W.2d 799 (Tex.1978); Moore v. Sabine National Bank, supra.
Generally, unless usury appears on the face of the transaction, the burden of proving that the...
To continue reading
Request your trial
-
Gibraltar Sav. v. LDBrinkman Corp.
...filing of an earlier pleading. See, e.g., Tyra v. Bob Carroll Constr. Co., 639 S.W.2d690 (Tex.1982); Nationwide Fin. Corp. v. English, 604 S.W.2d 458 (Tex.Civ.App.--Tyler 1980, writ dism'd). However, under Fed.R.Civ.P. 15, an amended pleading is expressly deemed to "relate back" to the comm......
-
Missouri-Kansas-Texas R. Co. v. Fiberglass Insulators, MISSOURI-KANSAS-TEXAS
...usury, never received by debtor, constituted charging when delivered and opened during trial); Nationwide Financial Corp. v. English, 604 S.W.2d 458 (Tex.Civ.App.--Tyler 1980, writ dism'd) (usury established as a matter of law by counterclaim for usurious amount, though it was later amended......
-
Danziger v. San Jacinto Sav. Ass'n
...Company v. Hockley County Seed and Delinting, Inc., 516 S.W.2d 136 (Tex.1974). See also Nationwide Financial Corp. v. English, 604 S.W.2d 458 (Tex.Civ.App.--Tyler 1980, writ dism'd as moot). San Jacinto's practice of crediting back overpaid interest is insufficient to overcome the violation......
-
Cuellar v. City of San Antonio
...ref'd n.r.e.). Statements contained in a brief also do not constitute summary judgment proof. Nationwide Fin. Corp. v. English, 604 S.W.2d 458, 463 (Tex.Civ.App.--Tyler 1980, dism'd as moot). If the judgment granting the motion for summary judgment does not specify upon which ground it is b......