Va. v. Wolf.
| Decision Date | 29 July 1947 |
| Docket Number | No. 526.,526. |
| Citation | 54 A.2d 641 |
| Parties | ATLANTIC LIFE INS. CO. OF RICHMOND, VA., v. WOLF. |
| Court | D.C. Court of Appeals |
OPINION TEXT STARTS HERE
Appeal from the Municipal Court for the District of Columbia, Civil Division.
Action by Samuel E. Wolf against the Atlantic Life Insurance Company of Richmond, Va., to recover alleged usurious payment. From a judgment for plaintiff, the defendant appeals.
Reversed.
Jaquelin A. Marshall, of Washington, D. C. (Douglas, Obear & Campbell, of Washington, D. C., on the brief), for appellant.
Jacob N. Halper, of Washington, D. C., for appellee.
Before CAYTON, Chief Judge, and HOOD and CLAGETT, Associate Judges.
According to the undisputed facts plaintiff Samuel Wolf, together with his wife and another, borrowed from defendant insurance company in May 1940 the sum of $32,000. As evidence of the indebtedness they gave their promissory note in that amount, secured by a first deed of trust on real estate, providing for interest at the rate of 4 1/2 percent per annum on the unpaid balance. Payment was required to be made in monthly installments of $244.80 beginning June 1, 1940 and running for fifteen years thereafter. Neither the note nor the deed of trust contained any provision permitting repayment before the specified date of maturity nor vested any right or option of acceleration in the borrowers.
In November 1944 appellee became the sole owner of the property covered by the deed of trust. In order to finance this transfer he negotiated with appellant through its broker and agent for an increase of the first trust loan to $40,000. Appellant was willing to make this larger loan if the value of the property justified it. It was also willing, if it did not make the increased loan and if appellee obtained it elsewhere, to permit him to prepay the entire amount outstanding on the loan. But it prescribed as conditions for accepting such prepayment that it be made in January 1945 together with a charge of 4 1/2 percent of the outstanding balance (which was then $24,239.30). Appellee obtained the loan elsewhere and paid off appellant through a title company. Among other items included in the payment was the 4 1/2 percent premium demanded by appellant amounting to $1,090.77. Claiming that the charge was usurious, Mr. Wolf brought this action.
The trial judge filed a memorandum in which he held that the premium charged for the privilege of prepayment was interest; that it was usurious and therefore in violation of the District of Columbia Code, § 28-2704. He ordered finding for the plaintiff for $1,127.12, which represents the amount of the prepayment charge plus $36.35 accrued interest on the principal. Defendant prosecutes this appeal.
We must decide (1) whether the premium or charge exacted of the plaintiff can be considered interest and (2) assuming that it was interest, whether the rate charged was in excess of that fixed by law.
We think the payment of the premium or charge involved cannot be considered as interest. The note constituted a contract which provided for payment of the loan on specified terms over a period of fifteen years. Unlike many notes of this kind it contained no ‘on or before’ provision and no other language reserving to the borrower any option or right to accelerate payment. Therefore, neither borrower nor lender had the right to advance the maturity date. When the borrower, for reasons advantageous to him, sought to do so he was merely asking a privilige and not demanding a right. He was seeking to pay off a fifteen-year contract with all of its accompanying obligations for interest, in less than five years. The lender was within its rights in demanding compensation for that privilege.
The law gave the lender the right to expect performance of the loan agreement according to its terms, and the right to expect the agreed flow of payments, including interest, over the fifteen-year term of the loan. That right is not affected by debtor's election to pay the loan in advance of maturity. ‘A debtor cannot by his voluntary act render a transaction...
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...Lazzareschi Inv. Co. v. San Francisco Federal Savings & Loan Ass'n, 22 Cal.App.3d 303, 99 Cal.Rptr. 417 (1971); Atlantic Life Ins. Co. of Richmond v. Wolf, 54 A.2d 641 (D.C.1947) (neither borrower nor lender has right to advance the maturity date); Carpenter v. Winn, 39 Colo.App. 238, 566 P......
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Promenade Towers Mut. Housing Corp. v. Metropolitan Life Ins. Co.
...n. 4 (1979); 14 Williston on Contracts § 1694A & n. 2, at 768 (Jaeger 3d ed. 1972). Fairly typical of the cases is Atlantic Life Ins. Co. v. Wolf, 54 A.2d 641 (D.C.1947). The lender held the borrower's promissory note, secured by a first deed of trust on the borrower's real estate. The note......
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Cohen v. District of Columbia National Bank, Civ. A. No. 2110-69.
...maximum rate at which interest could be charged was 6 percent. See note 15, supra. 18 33 App.D.C. at 207. 19 Id. at 206, 207. 20 54 A.2d 641 (D.C.Mun.App.1947). 21 This is well established law, based on the theory propounded in Wolf that the borrower is requesting a privilege by prepaying, ......
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Montgomery Federal Savings and Loan Ass'n v. Baer
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