Ronen v. Teer

• Decision Date: 20 July 1972
• Docket Number: No. 10855,10855
• Citation: 94 Idaho 811,498 P.2d 1284
• Parties: Sadie RONEN, Plaintiff-Appellant, v. Benton R. TEER, Defendant-Respondent.
• Court: Idaho Supreme Court

Page 1284

498 P.2d 1284

94 Idaho 811

Sadie RONEN, Plaintiff-Appellant, v. Benton R. TEER, Defendant-Respondent.

No. 10855.

Supreme Court of Idaho.

July 20, 1972.

Stephen Bistline, Sandpoint, for plaintiff-appellant.

Peter B. Wilson, of Wilson & Walker, Bonners Ferry, for defendant-respondent.

SHEPARD, Justice.

Plaintiff brought this action against defendant seeking the imposition of the penalties of our usury statute presently codified as I.C. § 28-22-107. Following trial, the district court concluded that although the agreement between the parties contemplated the payment of interest which was usurious, a later agreement the following year had purged the original agreement of its otherwise usurious nature. Judgment was entered for the defendant and plaintiff appeals. We affirm.

Plaintiff and defendant entered into an agreement in July of 1966 wherein plaintiff executed a note for the sum of $3,616.80 payable in 48 monthly payments of $75.35 each. That note was secured by a mortgage on real property situate in Bonners Ferry, Idaho. Defendant actually loaned plaintiff the sum of $2,740. The difference between the amount of the loan and the amount of the note indicates the interest charged. Defendant contends that the amount of interest intended to be charged was 8%, which is admittedly permissible under our statute. Defendant contends that he merely calculated 8% of the sum actually loaned and multiplied that amount by the four years after which the debt was to be paid. Obviously, that procedure did not take into account the declining balance on the principal amount which would result from the monthly payments, and resulted in a contract for the payment of usurious interest.

Plaintiff invested the $2,740 in an illadvised business venture and lost the entire sum. Plaintiff's only assets were her social security payments and rental payments from the mortgaged house amounting to $40 to $50 per month on such occasions as the tenants actually paid their rent. Plaintiff made three monthly payments on the note, then paid $10 per month for three months and then made no further payments. The total amount thus paid was $256.05.

In early 1967 correspondence was initiated between the parties and as a result thereof plaintiff, by warranty deed, conveyed the real property in Bonners Ferry to the defendant by way of full settlement of the note. An additional contract was entered into by the parties which provided that if plaintiff could cause the real property to be sold for more than $2,800 the plaintiff could retain any amount in excess of $2,800. This latter contract was to be in effect for sixty days. At the expiration of that time the property had not been sold and the warranty deed was recorded in defendant's name. Approximately six months later the present action was commenced by which plaintiff sought to recover sums of money which, although not paid to defendant, were allegedly usurious interest under the note and mortgage.

I.C. § 28-22-107 provides in pertinent part:

'The taking, receiving, reserving, or charging a rate of interest greater than is allowed by this chapter, when knowingly done, shall be deemed a forfeiture by the person so taking, receiving, reserving or charging to the benefit of the person paying or being charged, of the entire interest which the contract carries with it of which has been agreed to be paid thereon, plus twice the amount of such interest. In case the greater rate of interest has been paid, the person by whom it has...