Ward v. Hudco Loan Co., 42016
Decision Date | 30 April 1985 |
Docket Number | No. 42016,42016 |
Citation | 254 Ga. 294,328 S.E.2d 729 |
Parties | WARD v. HUDCO LOAN COMPANY. |
Court | Georgia Supreme Court |
Gloria A. Einstein, Waycross, Paula S. Kauffman, for Rosa ward.
Dennis J. Strickland, Sr., Waycross, for Hudco Loan Co.
On May 27, 1983, the appellant-plaintiff filed the present complaint seeking to enjoin the appellee-defendant from foreclosing on real estate pledged as collateral under a 1978 security deed. The 1978 security deed was taken in connection with the refinancing of a 1976 loan together with a security deed. Although both security deeds were labeled as secondary security deeds, they were in fact first security deeds on the subject properties. The superior court granted the appellee-defendant's motion to dismiss.
In this appeal, the appellee concedes that the notes secured by the security deeds in question exceeded the allowable interest under former law; however, the appellee argues that the overcharges were the result of clerical error, inadvertence, or a trifling excess. Sumner v. Adel Banking Co., 244 Ga. 73(2a), 259 S.E.2d 32 (1979) and cits.; Williams v. First Bank & Trust Co., 154 Ga.App. 879(4), 269 S.E.2d 923 (1980) and cits. We affirm the trial court's dismissal of the complaint on the ground that the security deeds in question are governed by a 1983 Act of the General Assembly authorizing the parties on any loan secured by an interest in real estate to contract in writing for "any rate of interest, expressed in simple interest terms ... where the principal amount involved is more than $3,000." OCGA § 7-4-2(a)(1) (Ga.L.1983, pp. 1146, 1147-1148, § 1). Both the 1976 and the 1978 security deeds were pledged as collateral for loans exceeding $3,000.
1. Under the 1983 Act, OCGA § 7-4-2(a)(1) provides, OCGA § 7-4-18(a) generally prohibits any person from charging any rate of interest greater than 5% per month.
2. In early decisions of this court, it was held that a repeal of the usury laws did not apply retroactively to contracts entered into before the date of the repeal. Broach v. Kelly, 71 Ga. 698(2) (1883); Campbell & Jones v. Murray, 62 Ga. 86(5) (1878); Shealy v. Toole, 56 Ga. 210(5) (1876). However, under the equitable principle that he who would have equity must do equity, it was also held that a usurious loan would not be canceled without tender of the principal amount of the loan as well as the lawful interest. Campbell & Jones v. Murray, supra, (6). In later decisions, it was held that where the legislature enacted laws ameliorating the penalty for usury, such laws did not apply retroactively to loans made before the effective date of the laws. Maynard v. Marshall, 91 Ga. 840(2), 18 S.E. 403 (1893); Long v. Gresham, 148 Ga. 170(2), 96 S.E. 211 (1918). These later decisions were based, at least in part, on the rationale that since the legislature did not abolish the laws making the loans usurious, the legislature did not intend the amended penalty statutes to apply retroactively. Maynard v. Marshall, supra, 91 Ga. at 845-846, 18 S.E. 403; Long v. Gresham, supra, 148 Ga. at 173-174, 96 S.E. 211. The previously cited decisions were also based on the constitutional prohibition against retroactive laws, as well as a historical aversion to usury. Id.; also West v. Dorsey, 248 Ga. 790, 792, 285 S.E.2d 703 (1982), citing Union Savings Bank etc., Co. v. Dottenheim, 107 Ga. 606, 610, 34 S.E. 217 (1899).
3. However, in later years, there has been a change in the view that retroactive operation cannot be given to statutes lifting the penalty for usury, and, to an extent, the historical aversion to usury has given way to an aversion to harsh penalty statutes for usury being invoked by borrowers seeking to avoid payment of their bargained-for debts.
In Southern Discount Co. of Ga. v. Ector, 246 Ga. 30, 268 S.E.2d 621 (1980), this court addressed the question of whether retrospective operation was to be given to a provision in the 1978 amendment to the Industrial Loan Act, Ga.L.1978, pp. 1033, 1034 (OCGA § 7-3-29(f)) providing the lender with a good-faith defense to violations of the Industrial Loan Act. Prior to the 1978 amendment, the penalty for usurious loans under the Industrial Loan Act had been the forfeiture of all interest and other charges but not the principal amount of the loan. In Ector, the Court of Appeals had held that the 1978 amendment should not be given retrospective operation because of an absence of language in the 1978 amendment requiring such application. On certiorari, we reversed, holding that, 246 Ga. at 30-31, 268 S.E.2d 621.
In Fountain v. Dixie Finance Corp. of Ga., 252 Ga. 543, 314 S.E.2d 906 (1984), we held that the 1982 Amendment to the Secondary Security Deeds Act, Ga.L.1982, pp. 488, 492, § 8, and the 1983 repeal of the usury provisions of the Secondary Security Deeds Act, Ga.L.1983, pp. 1146, 1152, § 8(b), were to be applied retroactively to a loan entered into before the effective dates of the legislation, where the defense of usury was not raised until after the legislation became effective. In Fountain, we stated:
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