Rosenthal & Rosenthal, Inc. v. Houma Town House Apartments, Inc.

• Decision Date: 30 June 1970
• Docket Number: No. 8017,8017
• Citation: 238 So.2d 9
• Parties: ROSENTHAL AND ROSENTHAL, INC. v. HOUMA TOWN HOUSE APARTMENTS, INC., et al.
• Court: Court of Appeal of Louisiana — District of US

Page 9

238 So.2d 9

ROSENTHAL AND ROSENTHAL, INC. v. HOUMA TOWN HOUSE APARTMENTS, INC., et al.

No. 8017.

Court of Appeal of Louisiana, First Circuit.

June 30, 1970.

Rehearing Denied Aug. 18, 1970.

R. Paul Greene, Baton Rouge, for appellant.

Elton A. Darsey, Houma, for appellees.

Before LOTTINGER, BLANCHE and PICKETT, JJ.

BLANCHE, Judge.

Plaintiff, Rosenthal and Rosenthal, Inc., filed suit for a deficiency judgment against defendants, Houma Town House Apartments, Inc., the maker of a promissory note, and Thomas R. Pruyn and C. S. Pruyn, Jr., the endorsers thereof. This note was secured by a second mortgage on apartments owned by the corporate defendant, against whom plaintiff had previously brought foreclosure proceedings and had the collateral seized and sold. The two individual defendants herein, hereinafter referred to collectively as 'Pruyn,' were not made parties defendant in the executory proceeding, but were served with notice of the seizure and sale. No appearance was made on behalf of the corporate defendant, and judgment by default was rendered against it. After answer was filed by Pruyn, plaintiff filed a rule for summary judgment. The matter was taken under advisement and the trial court granted summary judgment infavor of plaintiff and against Pruyn in the full sum of $29,583.15, together with interest thereon at the rate of eight percent per annum from September 26, 1967 (the date of default), until paid, plus fifteen percent attorney's fees on the total amount of principal and interest due and owing, subject to a credit of $1,922.72 paid on September 13, 1967,¹ and for all costs of the proceedings. From this judgment Pruyn perfected this devolutive appeal. Plaintiff answered the appeal urging that the judgment be amended so as to cast appellants liable in solido.

Appellants contend that there were genuine issues of material fact which precluded plaintiff's right to a summary judgment. The first of these issues concerns the discrepancy between the attorney's fees stipulated in the note and those provided for in mortgage. The mortgage describes the note as stipulating attorney's fees at ten percent of the amount due, whereas the note itself stipulates attorney's fees at fifteen percent of the amount due. The presiding judge correctly disposed of this issue in the following manner:

'With reference to the disparity which exists in the attorney fees as between the note and the mortgage, the plaintiff alleges that if this suit were the executory proceeding, then probably the attorney fees provided for in the mortgage would have prevailed. The plaintiffs urge that this is a suit on the note alone and that the note is not attacked by any special defense and that therefore the attorney fees called for in the note should be given. Additionally, the plaintiff mentions the certificate which appears on the reverse side of the note, which certificate was executed by L. H. Rosenson, the Notary before whom the mortgage was executed, which certificate is made under the provisions of R.S. 13:4104 and reads as follows:

"I hereby certify, pursuant to R.S. 13:4104 that the stipulation for 10% Attorneys fees on page three of the act of mortgage with which this note is identified is at variance with the stipulation for 15% Attorney fees in this note; that such variance is due to clerical error; and that the correct amount of attorney's fees is 15%.

S/L. H. Rosenson

L. H. Rosenson

Notary Public'

'R.S. 13:4104 provides as follows:

"The right to an order for executory process shall exist when there is a variance between a notarial act of mortgage and the note or notes issued in connection therewith, when such variance is due to a clerical error and the fact that such variance is so due is certified on the note or notes or on the act of mortgage, or both, over the official signature of the Notary before whom the mortgage was passed.

'Counsel for defendants urges that this statute should be interpreted to mean that if the clerical error was on the note, then the certification of the Notary must appear on the note, and if the error was on the mortgage, then the certification by the Notary must be on the mortgage. They further argue that since in the present case the claimed error occurred in the mortgage and the certification is on the note, that the certification does not meet the requirements of the statute. This Court does not interpret R.S. 13:4104 in that manner. This statute to the Court clearly indicates that the certificate relative to the variance may be placed on the note or notes Or on the act of mortgage, Or both. In this instance, the Court believes that the certification relative to the clerical error on the note is sufficient to satisfy the requirements of this particular statute.' (Written Reasons for Judgment, Record, pp. 22, 23)

Appellant's second issue--relative to usury--is meritorious and requires amendment of the judgment of the trial court, although it does not present an issue of material fact so as to preclude rendition of summary judgment in plaintiff's favor. The note sued upon stipulates the following with regard to interest:

'The maker obligates itself to pay, commencing August 19, 1965, and monthly thereafter, on the 19 (sic) day of each month, in thirty-six (36) consecutive monthly instalments, the first thirty-five (35) instalments each in the amount of $416.67, plus interest at the rate of twelve (12%) per cent per annum From date until the maturity of each instalment, with the final instalment of $25,416.55, plus interest at the rate of twelve (12%) per cent per annum From date until maturity. It is agreed and understood that the maker shall pay interest at the rate of two (2%) per cent per month from the maturity of each instalment until paid.' (Record, p. 16, exhibit--emphasis added)

Appellants contend the aforementioned provision of the note relative to interest is usurious in that it provides for interest at a rate in excess of eight percent per annum, the maximum conventional interest provided by Louisiana Civil Code Article 2924. Plaintiff evidently recognized the usury problem, at least with regard to appellants as individuals, and sought in the petition for deficiency judgment to reduce the interest to eight percent per annum, as evidenced by paragraph 10 of the petition, which reads as follows:

'10.

'Petitioner shows that under the provisions of Civil Code Article 2924 of the State of Louisiana, as interpreted by the Supreme Court of Louisiana in the case of Osborne v. Mossler Acceptance Co., 214 La. 503, 38 So.2d 151, the interest herein sued on said note is reduced to eight (8%) per cent per annum from August 19, 1965, until paid.' (Record, p. 6)

The presiding judge accepted plaintiff's contentions that the Osborne case permits reduction of the usurious interest to the maximum conventional rate of interest, as evidenced by the following excerpt from his Written Reasons for Judgment:

'Dealing first with the question of the interest rate provided for by the note, plaintiff contends that under the holding of the Supreme Court in Osborne v. Mossler Acceptance Company, 214 La. 503, 38 So.2d 151 and Article 2924 of the La. Civil Code the maximum legal rate of interest of 8% Can be recovered in this instance, despite the provision in the note calling for interest at the rate of 12%. Article 2924, inter alia, provides as follows:

"The owner or discounter of any note or bond or other written evidence of debt for the payment of money(,) payable to order of (sic) bearer or by assignment, shall have the right to claim and recover the full amount of such note, bond or other written evidence of debt and all interest not beyond 8% Per annum interest that may accrue thereon, not withstanding (sic) that the rate of interest or discount at which the same may be or may have been discounted has been beyond the rate of 8% Per annum interest at (sic) discounts (sic); but this provision shall not apply to the banking institutions of this State in operation under existing laws.

"The owner of any promissory note, bond or other written evidence of debt for the payment of money to order or bearer are (sic) transferable by assignment shall have the right to collect the whole amount of such promissory note, bond or other written evidence of debt for the payment of money, notwithstanding such promissory note, bond or other written evidence of debt for the payment of money may include a greater rate of interest or discount than 8% Per annum; provided such obligation shall not bear more than 8% Per annum after maturity until paid.'

'In discussing the law generally with reference to recovery of interest where the amount provided for was usurious, the Supreme Court in the Osborne case made the following observation:

"An examination of the Louisiana statute reveals that under the provisions of Act No. 291 of 1855(,) if a contract was usurious, the penalty was that of forfeiture of the entire interest. The Court of Appeal, on rehearing, in Clark v. Harvey, 1912, 9 Orleans App. 277, 278 stated: 'Act No. 291 of 1855, amending Article 2924, R.C.C. provides that the amount of (the) conventional interest should not exceed 8% Under pain of forfeiture of the entire interest.

"'But Act No. 68 of 1908, amending the same article and practically redrafting it, omitted the penalty of the Act of 1855, and contains a repeal of all conflicting legislation.

"'This amendment took the place of the pre-existing article, which thereupon ceased to exist and became suspended by the amendment * * *.

"'We think the rate of interest properly reducable (sic) to the highest rate allowed for conventional interest by our statute.'

'From a reading of the codal article, and particularly by reason of the fact(s) herein stated, the rate of interest of 10% Should be reduced to 8%, the highest rate of conventional interest allowable under Louisiana law.'

'Under the authority of the (sic) Osborne and Article 2824 of the Revised ...