Odell v. Commerce Farm Credit Co.

• Decision Date: 15 December 1933
• Docket Number: No. 1196.,1196.
• Citation: 67 S.W.2d 626
• Parties: ODELL et ux. v. COMMERCE FARM CREDIT CO. et al.
• Court: Texas Court of Appeals

67 S.W.2d 626

ODELL et ux. v. COMMERCE FARM CREDIT CO. et al.

No. 1196.

Court of Civil Appeals of Texas. Eastland.

December 15, 1933.

Rehearing Denied January 19, 1934.

Appeal from District Court, Haskell County; Clyde Grissom, Judge.

Suit by J. L. Odell and wife against the Commerce Farm Credit Company and others. Judgment for defendants, and plaintiffs appeal.

Affirmed.

T. R. Odell, of Haskell, for appellants.

Terrell, Davis, Hall & Clemens, of San Antonio, for appellees.

HICKMAN, Chief Justice.

On November 24, 1926, appellant J. L. Odell borrowed $8,500 from appellee Commerce Farm Credit Company, for which he executed six principal notes (sometimes called bonds), the first five being for the principal sum of $200 each, and the last for $7,500. Note No. 1 matured January 1, 1928; notes Nos. 2 to 5, inclusive, matured one each successive year; and note No. 6 matured January 1, 1937. The agreed interest rate was 6½ per cent. per annum. The interest to accrue upon the loan was evidenced by two groups of notes. The first group represented interest at the rate of 5½ per cent. per annum, and was attached to the principal notes, there being one interest note for each year's interest to accrue on each principal note until its maturity. The other group represented interest at the rate of 1 per cent. per annum, and was not attached to the principal notes. One note of this second group matured each year concurrently with those of the first. To secure the payment of all the various notes executed by him, appellant and his wife executed and delivered two deeds of trust of even date with the notes on certain real estate situated in Haskell county. One of these deeds of trust, hereinafter designated the first deed of trust, secured the principal notes or bonds, and the interest notes attached to them; and the other, hereinafter designated second deed of trust, secured the 1 per cent. interest notes. A few days after the execution and delivery of the several notes and deeds of trust, they were all transferred by the Commerce Farm Credit Company to Commerce Trust Company, herein called appellee.

Appellant duly made all principal and interest payments up to and including those maturing on January 1, 1931, but has made no payment since that time. He paid all his taxes up to and including those levied for the year 1929, but not those levied for the years 1930 and 1931. On February 1, 1932, the appellee paid the taxes for the year 1930, amounting to $135.30. The taxes for 1931 had not been paid at the time of the trial of this case below. During the year 1932, after default had been made by appellant in the payment of principal and interest due January 1, 1932, and after the appellee had paid the taxes for the year 1930, and after the 1931 taxes had become delinquent, appellee called upon the trustee named in the first deed of trust to make sale thereunder. This he declined to do, but tendered his resignation as trustee, whereupon a substitute trustee was duly appointed and the property was sold by him on October 4, 1932, to appellee for $2,000. There is no question as to the regularity of all the proceedings with reference to the appointment of a substitute trustee, notice of sale, or other prerequisites.

A deed conveying the property to the purchaser was duly executed by the substitute trustee, but before same was recorded in the deed records of Haskell county by the county clerk, the present suit was instituted by appellants J. L. Odell and wife, Ivah Odell, against Commerce Farm Credit Company, Commerce Trust Company, Keystone Mortgage Company, J. C. Allensworth, substitute trustee, and Jason W. Smith, county clerk of Haskell county, to enjoin the filing or recording thereof, to declare the original contract usurious, and to obtain certain relief because of the alleged payment by them of usurious interest. A temporary injunction was issued as prayed for, but later, upon a trial of the case on its merits, the same was dissolved and judgment entered that appellants, who were plaintiffs below, take nothing. Upon the cross-action of appellee, judgment was rendered in its favor against appellants for the title and possession of all the real estate described in the deed of trust; writ of possession and damages in the sum of $25 were awarded, and all costs of the proceedings taxed against appellants. The appeal is from that judgment.

The theory of appellants' suit was that the contract was usurious and on that account all payments made on the notes should be credited upon the principal notes or bonds, and that, so applying them, all of the indebtedness evidenced thereby had been discharged, except a portion of the last note, maturing January 1, 1937. Upon this theory, if correct, there was nothing due at the time the sale was made by the substitute trustee, and, therefore, such sale was unauthorized.

Findings of fact and conclusions of law were filed by the trial judge, but, since there was no disputed fact issue involved, we do not find it necessary to refer to the fact findings. The trial judge concluded, as a matter of law, (1) "that said contract is usurious," and (2) "that the Commerce Trust Company had the legal right to declare the entire principal due as and at the time it did under the deed of trust, because of plaintiffs' failure to pay the taxes on said property for 1930." The judgment rested upon conclusion No. 2. For reasons assigned hereinafter in this opinion, we think conclusion No. 2 is correct and affords a support for the judgment rendered. We are just as firmly convinced that conclusion No. 1 is incorrect, and, since appellees have by proper cross-assignments challenged the correctness of that conclusion, we shall first consider their cross-assignments. It is obvious that, if the contract was not usurious, there was no basis for appellants' suit, and the assignments in their brief present immaterial questions.

Was the contract usurious? It must be borne in mind in construing the contract that it is made up of several parts, viz., (1) the principal notes or bonds, (2) the coupons covering 5½ per cent. interest attached to these principal notes, (3) the first deed of trust securing the payment of the principal notes and the attached coupons, (4) the second lien notes for 1 per cent. interest, and (5) the second deed of trust securing these second notes. The provisions of these different instruments with reference to accelerated maturity should be considered together with a view of determining whether they evidence a contract under which there is any contingency by which, if the contract were enforced, appellee might receive more than the lawful rate of interest. The principal notes or bonds contained this provision: "If this Bond or any installment of interest thereon is not paid when due the principal of this and all other bonds forming a part of this series shall come due and collectible at once without notice at the option of the holder. The principal of this Bond from and after its maturity, and all past due interest thereon, shall bear interest at the rate of ten percentum per annum, payable annually, from due date thereof until paid." (Italics ours.)

This language does not provide for the collection of notes representing unearned interest upon default in the payment of the bond or any installment of interest, but only that the principal of all the bonds shall become due and collectible. No possible taint of usury could be read into that language. The provision that the principal of the bond after its maturity and all past due interest thereon shall bear interest at the rate of 10 per cent per annum from the due date thereof until paid, does not render the contract usurious. Crider v. San Antonio Real Estate Building & Loan Ass'n, 89 Tex. 597, 35 S. W. 1047. The conclusion is that no usurious contract is evidenced by the provisions of the principal notes.

In the first deed of trust there is a description of the indebtedness secured thereby. A part of that description is in this language: "Said Bond(s) further provide that, if the principal or any installment of interest thereon is not paid when due, then the entire indebtedness shall become due and collectible at once without notice, at the option of the holder."

It will be noted that no obligation is created or expressed by...