Peoples Loan & Inv. Co. v. Booth, 5-4526

• Decision Date: 16 September 1968
• Docket Number: No. 5-4526,5-4526
• Citation: 245 Ark. 146,431 S.W.2d 472
• Parties: PEOPLES LOAN AND INVESTMENT COMPANY, Appellant, v. B. B. BOOTH, Lydia Booth et al., Appellees.
• Court: Arkansas Supreme Court

Page 472

431 S.W.2d 472

245 Ark. 146

PEOPLES LOAN AND INVESTMENT COMPANY, Appellant, v. B. B. BOOTH, Lydia Booth et al., Appellees.

No. 5-4526.

Supreme Court of Arkansas.

Sept. 16, 1968.

Ball & Gallman, Fayetteville, and Franklin Wilder, Fort Smith, for appellant.

Walter Niblock and Richard Hipp, Fayetteville, for appellees-Booth.

Glen Wing and Charles W. Atkinson, Fayetteville, for appellees-Haggard.

WARD, Justice.

This appeal raises the issue of usury in two separate notes. To aid in an understanding as to how the issues arose we set out below a brief statement of the facts.

On August 21, 1963 the Peoples Loan and Investment Company (appellant here) loaned B. B. Booth and his wife (two of the appellees here) the sum of $5,500 (to pay certain debts) and also the sum of $40,000 for the construction of chicken houses on land belonging to them. These two advancements are represented in one note (hereafter referred to as Note #1) a copy of which is found at page 337 of the record--marked 'Plaintiff's Ex. #1. The two notes are referred to hereafter as Note #1 and Note #2.

Note #1. The face of the note shows a principal sum of $80,421.55, 'payable in thirty nine quarterly installments of $2,010.53 each, and one final installment of $2,010.88 * * *.' The note was secured by a * * *.' The note was secured by a page 339 of the record and marked Plaintiff's Ex. #2. The principal sum of the note, as shown by appellant's records, consisted of the following items:

                (1). Net cash to borrower                           $40,000
                (2) Other payoffs                                     5,500
                (3) Hazard Insurance (1st year)                         402
                (4) Credit Life Insurance                             4,058
                (5) Total charges paid by Peoples                       185
                                                                    ----------
                     Total Principal                                $50,145.
                (6) Interest @ 5.41%, ten years                      27,128.
                (7) Hazard Insurance after first year--nine years     3,135.
                (8) Legal Preparation and Credit Report.                 12.50
                                                                    ----------
                      Total Face of Note                            $80,421.55
                

Note #2. This note was executed by Booth and his wife to appellant on October 9, 1963 (a copy shown at p. 15 of the record) in the principal amount of $6,611.40, 'payable in 47 monthly installments of $137.73 each and one final installment of $138.09; the first installment to become due and payable on or before the 9th day of October, 1963 * * *.' (emphasis ours.) It will, of course, be noted that the first installment of $137.73 was due on the day the note was executed. This note was secured by a chattel mortgage on cattle owned by Booths.

On August 25, 1964 the Booths conveyed their interest in the real estate and the cattle to Carl Gregory Haggard and his wife--also appellees here.

On March 21, 1966 appellants filed suit against all the appellees to recover the balances due on the two notes and to foreclose said mortgages.

After an extended hearing (set forth in over 400 pages and numerous exhibits in the record) the trial court made comprehensive findings which, in pertinent part, are summarized below.

(a) The Haggards agreed with Booths to assume both debts.

(b) Appellees contend both notes are usurious.

(c) Interest must be calculated on the reducing principal basis.

(d) Note #1 is usurious because Booths did not authorize Hazard Insurance--shown as items (3) and (7) above mentioned.

(e) Note #2 is usurious because it requires the first payment to be made

on the date of execution, and the proof does not show this was merely an honest mistake on the part of appellant.

From the above findings appellant, on appeal, contends the trial court erred in holding each of the notes usurious. For reasons hereafter discussed, we are compelled to agree with appellant in both instances.

Note #1. Due to the commendable frankness by both parties on oral argument the decisive issues here are limited largely to certain questions of fact.

Since the note does not show usury on its face, the burden was on appellees to show it was, in fact, usurious. See: Baxter v. Jackson, 193 Ark. 996, 104 S.W.2d 202; Commercial Credit Plan v. Chandler, 218 Ark. 966, 239 S.W.2d 1009. Also, usury will not be presumed when the opposite conclusion can reasonably be reached. Cammack v. Runyan Creamery, 175 Ark. 601, 299 S.W. 1023; Hill v. Jacobs, 187 Ark. 1162, 60 S.W.2d 564; and Brittain, Adm. v. McKim, 204 Ark. 647, 164 S.W.2d 435. In the McKim case we also pointed out that, to constitute usury, '* * * there must have been an intention on the part of the lender to take or receive more than the legal rate of interest'.

In our opinion the appellees did not meet the burden of proving usury. It is not questioned by appellees that fire and windstorm insurance was a benefit to them or that it was not a proper requirement by appellant. The thrust of appellees' contention is that they did not know appellant required such insurance. However, this contention is completely nullified by the fact the Mr. Booth and his wife signed the mortgage (securing the note) which specifically required the insurance. This...