Norstar Bank v. Pickard and Anderson

• Decision Date: 15 November 1989
• Citation: 547 N.Y.S.2d 734,155 A.D.2d 911
• Parties: NORSTAR BANK, Appellant-Respondent, v. PICKARD AND ANDERSON, William C. Anderson, Elizabeth D. Anderson, Frederick J. Dziuba and Linda B. Dziuba, Respondents-Appellants.
• Court: New York Supreme Court — Appellate Division

Page 734

547 N.Y.S.2d 734

155 A.D.2d 911

NORSTAR BANK, Appellant-Respondent, v. PICKARD AND ANDERSON, William C. Anderson, Elizabeth D Anderson, Frederick J. Dziuba and Linda B. Dziuba Respondents-Appellants.

Supreme Court, Appellate Division Fourth Department.

Nov. 15, 1989.

Crossmore Law Office by Edward Crossmore, Ithaca, for appellant-respondent.

Grass, Balanoff, Costa & Whitelaw, P.C. by Timothy Mulvey, Syracuse, for respondents-appellants.

Before DILLON, P.J., and CALLAHAN, BOOMER, LAWTON and DAVIS, JJ.

MEMORANDUM:

On a prior appeal, we determined that Norstar had charged a usurious rate of interest, but we declined to grant summary judgment in favor of defendants, noting that our order did not preclude a renewal of the motion after plaintiff had an opportunity to present evidence showing that the usurious rate was not "knowingly" charged (Norstar Bank v. Pickard & Anderson, 140 A.D.2d 1002, 529 N.Y.S.2d 667). Defendants renewed the motion. Norstar opposed the motion and cross-moved for summary judgment in its favor, stating that it did not intend to charge the usurious rate; that it had a procedure in place which was designed to "cap" the rate of interest charged on the loan so that it would not exceed the legally permissible rate; but that, through inadvertence, this procedure was not applied to the loan in question. Supreme Court denied both motions.

A lender will be held to have knowingly exacted excess interest if it intentionally charges or receives more than the legal rate for a loan; the lender need not have the specific intent to violate the usury laws (Kin-Ark Corp. v. Boyles, 593 F.2d 361, 364 [10th Cir]; Kissell Co. v. Gressley, 591 F.2d 47, 53 [9th Cir]. Usurious intent may be implied from the charging or receiving of interest greater than the legal rate (DeKorwin v. First Nat. Bank of Chicago, 275 F.2d 755 [7th Cir], cert. denied sub nom. Jones v. Kaufman, 364 U.S. 824, 81 S.Ct. 61, 5 L.Ed.2d 53; Jenkins v. Dugger, 96 F.2d 727 [6th Cir], cert. denied 305 U.S. 623, 59 S.Ct. 84, 83 L.Ed. 398; Fiedler v. Darrin, 50 N.Y. 437, 443). When the agreement is not usurious on its face, however, the presumption of usurious intent is not conclusive ( Hotel Co. v. Wade, 97 U.S. 13, 23, 24 L.Ed. 917; Freitas v. Geddes Sav. & Loan Assn., 63 N.Y.2d 254, 262, 481 N.Y.S.2d 665, 471 N.E.2d 437) and may be rebutted by evidence that the excessive charge was the result of an honest mistake or inadvertence ( Lloyd v. Scott, 29 U.S. (4 Pet.) 205, 224, 7 L.Ed. 833; Kin-Ark Corp. v. Boyles, supra, at 365; Freitas v. Geddes Sav. & Loan Assn., supra, 63 N.Y.2d at 262-263, 481 N.Y.S.2d 665, 471 N.E.2d 437; Moers v. American Exchange Nat. Bank, 208 App.Div. 473, 203 N.Y.S. 727).

Here, the loan agreement was not usurious on its face and the plaintiff presented evidence tending to show that it did not intend to charge a rate of interest that exceeded the legal rate, but did so only...