State ex rel. Crist v. Nationwide Financial Corp. of Missouri, No. 40900

CourtCourt of Appeal of Missouri (US)
Writing for the CourtGUNN; REINHARD, P. J., and CRIST
Citation588 S.W.2d 8
Docket NumberNo. 40900
Decision Date10 July 1979
PartiesSTATE ex rel. Edgar H. CRIST, Commissioner of Finance, Appellant, v. NATIONWIDE FINANCIAL CORPORATION OF MISSOURI, Respondent.

Page 8

588 S.W.2d 8
STATE ex rel. Edgar H. CRIST, Commissioner of Finance, Appellant,
v.
NATIONWIDE FINANCIAL CORPORATION OF MISSOURI, Respondent.
No. 40900.
Missouri Court of Appeals, Eastern District, Division Three.
July 10, 1979.
Motion for Rehearing and/or Transfer to Supreme Court Denied
Sept. 17, 1979.
Application to Transfer Denied Nov. 14, 1979.

Page 9

John D. Ashcroft, Atty. Gen., Terry C. Allen, Asst. Atty. Gen., Jefferson City, Irven L. Friedhoff, Gen. Counsel, Steven M. Geary, Div. of Finance, Edgar H. Crist, Jefferson City, for appellant.

Richmond C. Coburn, Jeffrey H. Pass, St. Louis, for respondent.

GUNN, Judge.

Does the phrase "real estate loan" as used in § 408.035 1 of the Missouri Usury Statutes denote a loan for any purpose secured by real estate? Such is the core issue into which we must delve to reach a denouement in this quo warranto action instituted by relator Commissioner of Finance against respondent Nationwide Financial Corporation of Missouri, a company engaged in the business of making consumer credit loans.

On February 24, 1978, the Finance Commissioner filed a two count complaint against Nationwide: count one in the form of an information in the nature of quo warranto and count two a prayer for an injunctive relief. The Commissioner charged that Nationwide violated the usury law interest ceiling set forth in § 408.030 by making at least 133 loans to various customers at rates of interest in excess of 10 percent per annum. The Commissioner alleged that Nationwide thereby illegally contracted to receive at least $344,132.38 in usurious interest. The purposes for the 133 loans were manifold, including debt consolidation, college tuition, automobile purchase, investment and medical expenses. Nationwide contended that the loans were "real estate loans" within the meaning of § 408.035 and were therefore exempt from the interest rate limitations of § 408.030. Though no loan was made for a purpose related to real estate, Nationwide declared that each challenged loan was secured by a second deed of trust on residential property. On February 24, 1978, the circuit court ordered Nationwide to show cause why a preliminary injunction should not be granted. On March 23, 1978, Nationwide filed a motion to dismiss the complaint on the ground that the Commissioner had no jurisdiction to institute the quo warranto action and that adequate remedies at law precluded an injunction. The motion was denied as to the issue of standing but granted for failure to state a cause of action. The court also granted the Commissioner twenty days to replead. He then filed an amended petition on April 25, 1978, and shortly thereafter Nationwide moved to dismiss the complaint. On August 4, 1978, the court granted Nationwide's motion to dismiss with prejudice and held as a matter of law that ". . . the term 'real estate loan' as used in § 408.035 means a loan secured by real estate." Such dismissal represents a final appealable order. State on inf. of McKittrick ex rel. Handlan v. Wilkie Land Co., 165 S.W.2d 432 (Mo.App.1942).

The statutory provisions relevant to our decision are as follows:

Section 408.030. Interest, maximum rate allowed . . . .

1. After January 9, 1975, parties may agree in writing, for the payment of interest, not exceeding ten percent per annum, on money due or to become due upon any contract.

2. If a rate of interest greater than permitted by law is paid, the person paying the same or his legal representative may recover twice the amount of the interest thus paid, provided that the action is brought within five years from the time when said interest should have been paid. The person so adjudged to have received a greater rate of interest shall also be liable for the costs of the suit, including a reasonable attorney's fee to be determined by the court.

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Section 408.035. Unlimited interest, when allowed.

Notwithstanding the provisions of section 408.030, It is lawful for the parties to agree in writing to any rate of interest in connection with any

(1) Loan to a corporation;

(2) Business loan of five thousand dollars or more, but excluding loans for any agricultural activity;

(3) Real estate loan, other than residential real estate loans and loans secured by real estate used for an agricultural activity;

(4) Loan of five thousand dollars or more secured solely by certificates of stock, bonds, bills or exchange, certificates of deposit, warehouse receipts, or bills of lading pledged as collateral for the repayment of such loans. (Emphasis added)

Section 408.015 Definitions.

(6) "Residential real estate loan" shall mean a loan made for the acquisition, construction, repair, or improvement of the real estate used or intended to be used as a residence by not more than four families. The term shall also include any loan made to refinance such a loan. No loan secured by residential real estate shall be considered to be a business loan. (Emphasis added)

The Commissioner argues that the trial court erred when it dismissed the complaint as the loans in question made by Nationwide were not related to real estate in any way other than through the deeds of trust on residential real estate and were not, therefore, "real estate loans" entitled to unlimited interest rates under § 408.035. The Commissioner's contention is that the usury limitations apply to the purpose of the loan and not to the security. Since the loans were not for a purpose within the unlimited interest rate provisions and the purposes of § 408.035, the ten percent interest restriction would apply regardless of the fact that the loans were secured by real estate. Nationwide's position is the opposite that it is the security given for the loan, not the purpose, which determines whether there are interest rate restrictions. In this case, according to Nationwide, the security was real estate, thereby making the loans, despite their purposes, real estate loans free from § 408.035 interest rate strictures. Nationwide further argues that "the 10% Usury limit is determined not by the definitional Section 408.015 . . . as the Commissioner suggests, but by application of" § 408.035(3), which subjects residential real estate loans to the 10% Limit but exempts other real estate...

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4 practice notes
  • Garrett v. Citizens Sav. Ass'n, No. 32170
    • United States
    • Court of Appeal of Missouri (US)
    • May 11, 1982
    ...Missouri Discount Corp. v. Mitchell, 216 Mo.App. 100, 108, 261 S.W. 743, 746 (1924)." State ex rel. Crist v. Nationwide Finance Corp., 588 S.W.2d 8, 11 (Mo.App.1979). Although § 408.050 limits those who may maintain a cause of action for usury to the borrower and certain of his personal and......
  • State ex. Sanders v. City of Lake Lotawana, No. WD 66758.
    • United States
    • Court of Appeal of Missouri (US)
    • February 6, 2007
    ...by a private relator is not difficult to attain." State ex rel. Crist v. 220 S.W.3d 800 Nationwide Financial Corporation of Missouri, 588 S.W.2d 8, 12 Lee's Summit had an interest in Lake Lotawana's annexation of the Barber property that exceeded that of the general public. As Lee's Summit ......
  • Wilner v. O'Donnell, No. 42500
    • United States
    • Court of Appeal of Missouri (US)
    • July 27, 1982
    ...that loans secured by residential real estate are to receive favored treatment," State ex rel. Crist v. Nationwide Financial Corporation, 588 S.W.2d 8, 12 (Mo. App. 1979), and our treatment of this issue is consistent with that policy. We rule the point against In their Point III on appeal,......
  • State ex rel. Patterson v. Holden, No. SD 35998
    • United States
    • Court of Appeal of Missouri (US)
    • September 17, 2019
    ...to serve the public interest.") (internal quotation and citation omitted); State ex rel. Crist v. Nationwide Fin. Corp. of Missouri , 588 S.W.2d 8, 13 (Mo. App. E.D. 1979) (recognizing standing for public officers demonstrating "sufficient special interest by ... desire to prevent a violati......
4 cases
  • Garrett v. Citizens Sav. Ass'n, No. 32170
    • United States
    • Court of Appeal of Missouri (US)
    • May 11, 1982
    ...Missouri Discount Corp. v. Mitchell, 216 Mo.App. 100, 108, 261 S.W. 743, 746 (1924)." State ex rel. Crist v. Nationwide Finance Corp., 588 S.W.2d 8, 11 (Mo.App.1979). Although § 408.050 limits those who may maintain a cause of action for usury to the borrower and certain of his personal and......
  • State ex. Sanders v. City of Lake Lotawana, No. WD 66758.
    • United States
    • Court of Appeal of Missouri (US)
    • February 6, 2007
    ...by a private relator is not difficult to attain." State ex rel. Crist v. 220 S.W.3d 800 Nationwide Financial Corporation of Missouri, 588 S.W.2d 8, 12 Lee's Summit had an interest in Lake Lotawana's annexation of the Barber property that exceeded that of the general public. As Lee's Summit ......
  • Wilner v. O'Donnell, No. 42500
    • United States
    • Court of Appeal of Missouri (US)
    • July 27, 1982
    ...that loans secured by residential real estate are to receive favored treatment," State ex rel. Crist v. Nationwide Financial Corporation, 588 S.W.2d 8, 12 (Mo. App. 1979), and our treatment of this issue is consistent with that policy. We rule the point against In their Point III on appeal,......
  • State ex rel. Patterson v. Holden, No. SD 35998
    • United States
    • Court of Appeal of Missouri (US)
    • September 17, 2019
    ...to serve the public interest.") (internal quotation and citation omitted); State ex rel. Crist v. Nationwide Fin. Corp. of Missouri , 588 S.W.2d 8, 13 (Mo. App. E.D. 1979) (recognizing standing for public officers demonstrating "sufficient special interest by ... desire to prevent a violati......

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