Sammons-Pennington Co. v. Norton

• Decision Date: 07 November 1966
• Docket Number: No. 5--3992,SAMMONS-PENNINGTON,5--3992
• Citation: 241 Ark. 341,408 S.W.2d 487
• Parties: COMPANY, Appellant, v. Harry H. NORTON and Thomas M. Mann d/b/a Ashley County Music Company, Appellees.
• Court: Arkansas Supreme Court

Page 487

408 S.W.2d 487

241 Ark. 341

SAMMONS-PENNINGTON COMPANY, Appellant, v. Harry H. NORTON and Thomas M. Mann d/b/a Ashley County Music Company, Appellees.

No. 5--3992.

Supreme Court of Arkansas.

Nov. 7, 1966.

Rehearing Denied Dec. 12, 1966.

Switzer & Griffin, Crossett, for appellant.

John F. Gibson, Dermott, and James L. Sloan, Little Rock, for appellees.

HARRIS, Chief Justice.

Appellees, Harry H. Norton and Thomas M. Mann, purchased all asserts of the Graham-Wilson Company, consisting mainly of coin operated music machines, and Sammons-Pennington Company, appellant herein financed the transaction for appellees, as hereinafter set out. On February 15, 1964, appellees executed a conditional sales contract and note in the amount of $15,943.05, plus a finance charge of $2,574.79. We shall refer to these instruments hereafter as Contract No. 1. A short time thereafter, Norton advised the company that the contract and note were unacceptable for the reason that the payments exceeded the sum of $100.00 per week, and appellees did not desire to pay more than this amount, including interest. Appellant company then prepared a new contract and note to be used in lieu of Contract No. 1 (apparently using the same date) which provided for weekly payments over a period of 192 weeks, or 44.3 months, payments being set at $100.00 per week. We shall refer to these instruments as Contract No. 2. The paper was subsequently sold to Walter E. Heller Company of Chicago, the finance company for Sammons-Pennington, appellant guaranteeing payment. According to the evidence, this was the first time that appellant had granted a loan for this long a period of time; theretofore the company had set a maximum term for a loan of this type at 36 months. ¹ George W. Sammons, President of Sammons-Pennington Company, and who resides in Memphis, testified that he knew that the legal rate of interest in Arkansas was 10% simple interest, but he did not know how to figure the amount under the new contract; accordingly, he called the Walter Heller Company to ascertain the correct amount to be charged as interest. The finance company, using 'Lake's Monthly Installment and Interest Tables,' gave him the figure of $3,182.64 for interest, which was added to the principal sum of $15,943.05. On August 1, 1964, Mann and Norton entered into another conditional sales contract with appellant covering the purchase of additional equipment, the note being in the amount of $1,637.71, which included carrying charges of $227.71. This note was to be paid over a period of 36 months, the first 35 installments in the amount of $46.00 each, and the final installment being in the amount of $27.41. We shall hereafter refer to these instruments as Contract No. 3. After appellees defaulted in six payments, appellant instituted suit in June, 1965, in the Ashley County Chancery Court to recover on Contracts 2 and 3, seeking judgment in the amount of $13,220.79, together with interest from February 1, 1965. Appellee Norton answered, asserting that Contract No. 2 was usurious, and accordingly void, and he contended that both contracts (Nos. 2 and 3) should be cancelled, and title to all property involved should be vested in him. ² On trial, the Chancellor found that Contract No. 2 was void, because of usury, but that the August, 1964, contract (No. 3) was valid, and judgment was given to appellant for the balance due under that agreement. From that portion of the decree holding Contract No. 2 void, cancelling same, and voiding the lien, appellant brings this appeal.

We have reached the conclusion that this decree should be reversed, though it is stipulated that the amount of interest called for under Contract No. 2 was an overcharge (in excess of 10%) of between $57.00 and $60.00. It might be stated that the Chancellor was not without case authority in reaching his determination, and he cited several cases in a comprehensive opinion in support of his findings. Appellees mainly rely upon our cases of Ford Motor Credit Company v. Catalani, 238 Ark. 561, 383 S.W.2d 99, Brooks v. Burgess, 228 Ark. 150, 306 S.W.2d 104, and Holland v. Doan, 228 Ark. 340, 307 S.W.2d 538. Appellant relies principally upon our case of Cox v. Darragh Company, 227 Ark. 399, 299 S.W.2d 193, although other cases are also mentioned in appellant's brief. Actually, it would seem that we have two lines of cases, the line of demarcation between usurious and nonusurious contracts being rather slight. It appears that, in determining whether a usurious charge has been made, all attendant circumstances must be taken into consideration. When this is done, we think it is plain that the overcharge in the instant litigation was the result of an error, made in good faith, rather than being based on an intent to violate the usury law. In the first place, there is no question but that the first contract prepared (Contract No. 1), which called for the retirement of the debt in 36 months, was a...