U.S. Life Title Ins. Co. v. Brents, No. WD

• Court: Court of Appeal of Missouri (US)
• Writing for the Court: KENNEDY
• Citation: 676 S.W.2d 839
• Parties: U.S. LIFE TITLE INSURANCE COMPANY, Respondent, v. Robert B. BRENTS and Patricia G. Brents, Appellants. 34172.
• Docket Number: No. WD
• Decision Date: 07 February 1984

Page 839

676 S.W.2d 839 U.S. LIFE TITLE INSURANCE COMPANY, Respondent,
v.
Robert B. BRENTS and Patricia G. Brents, Appellants. No. WD 34172. Missouri Court of Appeals,
Western District. Feb. 7, 1984.
Motion for Rehearing and/or Transfer to
Supreme Court Overruled and Denied
March 27, 1984.
Application for Transfer Sustained
May 15, 1984.
Case Retransferred Sept. 28, 1984.
Court of Appeals Opinion Readopted
Oct. 10, 1984.

Page 840

Robert K. Ball, II, Kansas City, for appellants.

J. Kent Emison and Charles Christian Kirley, Kansas City, for respondent.

Before MANFORD, P.J., and CLARK and KENNEDY, JJ.

KENNEDY, Judge.

U.S. Life Title Insurance Company of Dallas had judgment against Robert D. Brents and Patricia Brents for $8,650.50 principal plus interest of $3,223.41, attorney's fees of $900 and costs. The judgment was on a promissory note signed by Mr. and Mrs. Brents to Household Realty Corporation, an adjunct of Household Finance Corporation, and assigned to plaintiff U.S. Life Title.

Mr. and Mrs. Brents appeal, claiming that that note provided a usurious rate of interest (15.617 annual percentage rate). They claim that when the excessive interest paid by them is applied to principal, as directed by statute, § 408.060, RSMo 1978, that the amount of the principal is reduced to $6,538.29 and the interest owing by them (computed by the "legal rate", § 408.020, RSMo, Supp.1984 (amend.1979) ) is $1,031.96 as of the date of judgment. They claim also that the court was in error in awarding attorney's fees and costs to the plaintiffs.

Mr. and Mrs. Brents had made irregular payments on the note, totaling $4,220, principal and interest inclusive. The trial court applied the interest rate called for by the note, resulting in the unpaid principal balance of $8,650.50, as noted above.

The resolution of all the above questions depend upon whether the interest rate called for by the note is usurious, and the resolution of that question depends in turn upon whether § 408.231-408.240, RSMo Supp.1984 as amended (which for convenience we will call "the residential second mortgage law"), controls the permissible interest rate, or § 408.030, RSMo Supp.1984 (amended 1979). The former statute, which would allow the interest rate called for by this note (15.16% per annum), became effective September 29, 1979, but the promissory note had been executed on October 17, 1977. U.S. Life Title says that the statute was retroactive in its operation and served to validate the interest rate called for by the note.

Mr. and Mrs. Brents, on the other hand, claim that the residential second mortgage law was prospective in operation, and that the applicable statute was § 408.030, supra, which allowed only a 10 percent annual interest rate.

We agree with the defendants and accordingly reverse the judgment, remanding the same for the entry of a new judgment.

We hold that §§ 408.231-240, RSMo Supp.1984, relating to residential second mortgage loans, is applicable only to loans made after its effective date of September 29, 1979.

U.S. Life Title cites us to a number of cases from other jurisdictions which hold that a note, usurious under a statute in effect when the note is made, is made non-usurious by a later repeal or amendment of the statute. The leading case seems to be Ewell v. Daggs, 108 U.S. 143, 2 S.Ct. 408, 27 L.Ed. 682 (1883). That case held that an interest rate which was usurious when a note was made under the Texas statute then in effect, was collectible by suit after the statute was repealed by a

Page 841

constitutional amendment. The court wrote, 1.c. 151:

... Independent of the nature of the forfeiture as a penalty, which is taken away by a repeal of the act, the more general and deeper principle on which they are to be supported is, that the right of a Defendant to avoid his contract is given to him by statute, for purposes of its own, and not because it affects the merits of the obligation; and that whatever the statute gives, under such circumstances, as long as it remains in feiri, and not realized by having...