Sloan v. Sears, Roebuck & Co.
| Decision Date | 23 December 1957 |
| Docket Number | No. 5-1393,5-1393 |
| Citation | 308 S.W.2d 802,228 Ark. 464 |
| Parties | James L. SLOAN, Appellant, v. SEARS, ROEBUCK AND CO., Appellee. |
| Court | Arkansas Supreme Court |
James L. Sloan, pro se, and Tom Gentry and Thorp Thomas, Little Rock, for appellant.
Robert M. Wood, Atlanta, Ga., Eichenbaum, Scott & Miller, Little Rock, for appellee.
James M. McHaney of Owens, McHaney, Lofton & McHaney, Little Rock, amici curiae.
The appellee, Sears, Roebuck and Co., sold a garden tractor and four automobile tires to appellant, James L. Sloan. The price of the tractor was $295.58, including sales tax. Apparently a sales ticket was made out for that amount. The four tires came to $111.80; $20.00 was allowed on old tires traded in, leaving $91.80; federal tax of $4.36 was added to that amount, and a sales tax of $2.24, making a total for the tires, including tax, of $98.40. This amount, added to the price of the tractor, as shown on the face of the written contract, is 'Total Cash Price $393.98'. Added to that sum is what is designated as 'Carrying Charge $37.17', making a total of '$431.15'. There was a cash payment of $40.00, leaving a balance of $391.15. This sum was payable in monthly installments of $22.00. The 'Carrying Charge' amounts to more than 10% per annum.
The issue is whether the transaction is usurious. The trial court held there was no usury, and Sloan has appealed. There does not appear to be any substantial dispute as to the facts.
It is appellee's contention that our usury laws have no application to a sale of merchandise on credit; that such laws apply only to a loan of money and to an amount charged by a creditor for allowing additional time to pay a debt after it has become due.
Article 19, Section 13, of the Constitution of Arkansas of 1874 provides:
'All contracts for a greater rate of interest than ten percent per annum shall be void, as to principal and interest, and the General Assembly shall prohibit the same by law; * * *'
Pursuant to this constitutional directive, the very first year following the adoption of the 1874 Constitution, the General Assembly adopted Act 56 of 1875. It provides:
Act 39 of the Acts of Arkansas of 1887 [Ark.Stat. § 68-609] provides:
'Every lien created or arising by mortgage, deed of trust or otherwise, on real or personal property, to secure the payment of a contract for a greater rate of interest than ten per centum per annum, either directly or indirectly, and every conveyance made in furtherance of any such lien is void; and every such lien or conveyance may be cancelled and annulled at the suit of the maker of such usurious contract, or his vendees, assigns or creditors. * * *'
The constitutional interdiction that 'all contracts for a greater rate of interest than ten percent per annum shall be void' is not limited to loans of money or to debts after they once become due. If that had been the intention of the framers of the Constitution, no doubt the wording would have been explicit in that regard and would have provided 'no contract for the loan of money', etc. It is clear that the Legislature did not construe Art. 19, § 13, of the Constitution as being so limited, because the aforementioned act of 1875, § 1 [Ark.Stat. § 68-602], provides that interest, not exceeding 10%, may be charged on any contract 'due or to become due'.
Appellee contends that 'forbearance' means an extension of the time to pay a debt after it becomes due. Section 68-602, quoted above, settles the question of the meaning of forbearance. The statute provides: '* * * due or to become due.' 'Forbearance' as used in the act simply means that the person to whom the money is owed waits for all or part of the money after the consummation of the contract in which the money is involved. The seller foregoes payment in cash and waits for all or part of his money. In the early case of German Bank v. DeShon, 41 Ark. 331, it is said:
'* * * 'All contracts' include bonds, bills, notes and all other contracts, verbal and written, whereby a rate of interest greater than ten per centum per annum is reserved, taken or secured, or agreed to be taken or reserved, as fully and completely as if they had been severally and particularly enumerated in the constitution and declared void.'
Over a considerable period of time this Court approved contracts for the sale of merchandise where interest exceeded 10% per annum. Finally, in 1952, there was decided the case of Hare v. General Contract Purchase Corp., 220 Ark. 601, 249 S.W.2d 973, 977. There it was said
We then went on to say that the case had to be affirmed on the strength of the previous holdings, but added:
* * *'
Following the Hare case, many cases arose involving the question of usury. In those cases where the contract was made prior to the decision in the Hare case, we have uniformly held that the rule announced in the old cases decided prior to the Hare case applied. Crisco v. Murdock Acceptance Corp., 222 Ark. 127, 258 S.W.2d 551; Aunspaugh v. Murdock Acceptance Corp., 222 Ark. 141, 258 S.W.2d 559; Perry v. Duncan, 222 Ark. 160, 258 S.W.2d 560; Universal C. I. T. Credit Corp. v. Crossley, 222 Ark. 200, 258 S.W.2d 562; Murdock Acceptance Corp. v. Clift, 222 Ark. 313, 259 S.W.2d 517; Pacific Finance Co. v. Tinsley, 222 Ark. 723, 262 S.W.2d 282; Hoover v. Murdock Acceptance Corp., 223 Ark. 181, 264 S.W.2d 838; General Contract Corp. v. Dodge, 223 Ark. 476, 266 S.W.2d 816.
But in appeals where the transaction occurred subsequent to the Hare case, we have held that contracts providing for interest greater than 10% per annum are controlled by Art. 19, § 13, of the Constitution and are void.
O'Brien v. Atlas Finance Co., 223 Ark. 176, 264 S.W.2d 839, 841, involved a transaction between a borrower and a lender of money. No sale was involved, and the Court wass of the opinion that perhaps the Hare case, which involved the sale of an automobile, could be construed as applying only to sales. In the O'Brien case we said:
'The caveat in the Hare case was not broad enough to apply to a transaction like the one in the case at bar; but the present caveat is to apply to all kinds of loans. * * *'
In the case at bar appellee contends that the caveat in the Hare case is not broad enough to apply to sales transactions.
In Thompson v. Murdock Acceptance Corp., 223 Ark. 483, 267 S.W.2d 11, we held that the court erred in sustaining the finance company's motion that the case be dismissed at the completion of plaintiff's testimony. We held that according to the evidence introduced up to that point, Mrs. Thompson had made out a case of usury. Our decision was based on the fact that the evidence showed that more than 10% per annum had been charged by the seller of the automobile. The fact that the note had been transferred to the Murdock Acceptance Corporation was not considered as material.
And in Public Loan Corp. of Fayetteville v. Peterson, 224 Ark. 22, 271 S.W.2d 353, 354, in speaking of the Hare case we said:
'* * * But there we overruled several earlier decisions which had sanctioned an artificial distinction between a cash sale and a credit sale. * * *'
The cases we overruled were mostly contracts for the sale of goods, wares and merchandise. See cases cited in Hare v. General Contract Purchase Corp., supra.
In Universal C. I. T. Credit Corp. v. Stanley, 225 Ark. 96, 279 S.W.2d 556, it was held that a usurious rate of interest was charged on the balance owed on the purchase price of an automobile. It is true the seller had transferred the paper to a credit company, but there is nothing whatever in the opinion to indicate that the same transaction would not have been held usurious if the seller had kept the paper.
The facts and circumstances existing at the instant the contract is consummated determine whether it is usurious. The test is not whether the seller at a later date transfers the paper to a finance...
To continue reading
Request your trial
-
Ward School Bus Mfg., Inc. v. Fowler
...it) and the doctrine of separation of powers as well, Art. 19, § 20, and Art. 4, Constitution of Arkansas; Sloan v. Sears, Roebuck & Co., 228 Ark. 464, 308 S.W.2d 802; Muncrief v. Hall, 222 Ark. 570, 262 S.W.2d 92. It also has a duty to determine whether it has jurisdiction of a case. Arkan......
-
Ryder Truck Rental, Inc. v. Kramer
...to exact more than the legal rate of interest must exist at the time the alleged usurious instrument was made. In Sloan v. Sears, Roebuck & Co., 228 Ark. 464, 308 S.W.2d 802, this court The facts and circumstances existing at the instant the contract is consummated determine whether it is u......
-
Winkle v. Grand Nat. Bank
...it must be presumed that it will be performed according to its terms. See General Contract Corp. v. Duke, supra; Sloan v. Sears, Roebuck & Co., 228 Ark. 464, 308 S.W.2d 802; Harris v. Guaranty Financial Corp., 244 Ark. 218, 424 S.W.2d 355; Foster v. Universal C.I.T. Corp., 231 Ark. 230, 330......
-
First Nat. Bank in Mena v. Nowlin
...e.g., Strickler v. State Auto Finance Co., 220 Ark. 565, 249 S.W.2d 307, 310--311 (1952). See generally Sloan v. Sears, Roebuck & Co., 228 Ark. 464, 308 S.W.2d 802, 804--805 (1958).8 Loganville Banking Co. v. Forrester, 143 Ga. 302, 84 S.E. 961 (1915).9 Fleckner is not a sound precedent for......