U.S. Life Title Ins. Co. v. Brents

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

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.

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 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 passed them to a completed transaction, may, by a subsequent statute, be taken away. It is a privilege that belongs to the remedy, and forms no element in the rights that inhere in the contract. The benefit of which he has received is the consideration of the contract, which, contrary to law, he actually made, is just ground for imposing upon him, by subsequent legislation, the liability which he intended to incur....

Other cases cited by U.S. Life Title, which follow generally the Ewell v. Daggs rule, are American Savings Life Insurance Company, Inc. v. Financial Affairs Management Company, 20 Ariz.App. 479, 513 P.2d 1362 (Ariz.App.1973); and United Realty Trust v. Property Development & Research Company, 269 N.W.2d 737 (Minn.1978). Plaintiff cites no Missouri cases which it claims support its position.

However, this court has quite recently ruled upon the question in the opposite way. In Garrett v. Citizens Savings Ass'n, 636 S.W.2d 104, 108-109 (Mo.App.1982), it was held that a statute (§ 408.035, RSMo 1978), which removed a certain kind of loan ("a business loan of $5,000 or more") from the interest rate limitation of § 408.030, supra, was prospective in operation and not retrospective. The later enacted statute did not aid a lender in a claim by the borrower for recovery of interest paid in excess of the interest limitation which was in effect at the time the loan was made. Garrett we think decides the case before us.

U.S. Life Title attempts to distinguish Garrett from this case. It points out that the plaintiff borrower in Garrett was seeking recovery of interest already paid, while in our case the defendant borrower is resisting the payment of interest not yet paid. At least with respect to the prospective or retrospective operation of the residential second mortgage loan statute, we do not think the distinction noted by U.S. Life Title makes any difference.

U.S. Life Title next says that the court in Garrett did not consider Ewell v. Daggs, supra, and cases following that line of reasoning. It may be true that the court did not focus upon those cases. They are not cited in the opinion and presumably were not cited by the parties. In any case decided by any appellate court, however, there is the possibility that some authority was not considered, or some argument. Nonetheless, the same or an analogous issue was decided and the case stands as authoritative precedent to be followed until and unless it is overruled. Stare decisis.

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