West v. Dorsey

Citation285 S.E.2d 703,248 Ga. 790
Decision Date06 January 1982
Docket NumberNo. 37857,37857
PartiesWEST et al. v. DORSEY et al.
CourtSupreme Court of Georgia

Durwood T. Pye, Atlanta, for Mildred Victoria West et al.

Michael C. Ford, Atlanta, for Gertrude Dorsey et al.

WELTNER, Justice.

We granted certiorari to distinguish between Southern Discount v. Ector, 246 Ga. 30, 268 S.E.2d 621 (1980), and Maynard v. Marshall, 91 Ga. 840, 18 S.E. 403 (1893), as to whether an amended penalty statute should apply retroactively to a usurious loan. This issue need not be addressed, however, as we hold that the 1976 amendment to the Secondary Security Deed Act did not alter the penalty for excessive interest charges. Ga.L. 1976, p. 726, 727, amending Ga.L. 1966, p. 574, 577; Code Ann. § 57-203(a).

The borrowers executed a promissory note in 1973, secured by a secondary security deed, and providing for 9 percent per annum simple interest and a 10 percent "rate of charge." The lenders concede that charging 9 percent simple interest is a violation of the Secondary Security Deed Act, as the Act at that time allowed a maximum of either 8 percent simple interest or 6 percent "add-on" interest (in addition to a 10 percent "rate of charge"). Dorsey v. West, 159 Ga.App. 274, 283 S.E.2d 314 (1981).

When the note was executed, the penalty for any violation of the Secondary Security Deed Act was total forfeiture of the principal, interest, and other charges. Ga.L. 1966, p. 574, 577; Code Ann. § 57-203(a). 1 The Act was amended in 1976, so that total forfeiture results only from an unauthorized "charge." Code Ann. § 57-203(a)(i). For any other violation, the lender is penalized solely by loss of the interest. Code Ann. § 57-203(a)(ii). 2

We affirm the holding of the Court of Appeals that the 9 percent interest rate is usurious, and that the penalty is total forfeiture of the principal, interest and other charges under the older version of the law. However, we disagree with its holding that under the amended Act, usurious interest results in the forfeiture of the interest only. Therefore, we do not reach the question of whether an amendment lessening a penalty should apply retroactively.

Because the Act as amended provides for total forfeiture for any unauthorized "charge," the issue here becomes whether the term "charge" includes interest. In construing the statute, we look to other uses of the word "charge" within the Act, to the intent of the General Assembly, and to public policy relative to usury.

The phrase "interest and other charges" in the amended penalty provision, Code Ann. § 57-203(a)(i), must mean that "charge" is a generic term encompassing "interest." Further, the use of the phrase "interest charge" in Code Ann. § 57-202(a) enforces the conclusion that "interest" is a type of "charge," and that within the context of this subsection, a clear line is drawn between "charge," which includes interest, and "rate of charge," which excludes interest (" '[R]ate of charge' shall not be construed as an interest charge or as including interest...."). 3

Code Ann. § 57-202(a) also distinguishes between "interest" and "rate of charge" as two kinds of "charges" in providing that the " 'rate of charge' ... may be charged ... in lieu of any separate charge ... except those permitted in subsections (b), (c), or (d) of this section ..." The "separate charge" which is permitted in subsection (d) is interest.

"In all interpretations the courts shall look diligently for the intention of the General Assembly, keeping in view, at all times, the old law, the evil, and the remedy." Code Ann. § 102-102(9). In the Secondary Security Deed Act, a maximum "rate of charge" and a maximum interest are fixed by law. It is not logical to suppose that the General Assembly would prescribe a heavy penalty for violation of the one, and a mild penalty for the other. The soundest interpretation of the amended statute is that both excessive interest and excessive "rate of charge" result in a total forfeiture of the principal, interest and other charges, and that a lesser penalty is assigned to other violations--substantially less significant--such as noncompliance with the closing statement disclosure requirements in Code Ann. § 57-204. Ga.L. 1966, p. 574, 577.

Finally, in construing this Act, we look to an historical aversion to usury. For an early history of the usury laws in Georgia, see Union Savings Bank v. Dottenheim, 107 Ga. 606, 610, 34 S.E. 217 (1899): "In 1759 the legislature of the province, in an act which in its preamble declared that 'the high rate of interest' in the province of Georgia was greatly prejudicial to the welfare of the planters and others, provided ..." for a maximum interest rate and a treble damage penalty. In McGehee v. Petree, 165 Ga. 492, 141 S.E. 206 (1927), this Court stated that "(i)t is the policy of the laws of this State to inhibit the taking of usury under every and any pretense or contrivance whatsoever.... Troutman v. Barnett, 9 Ga. 30, 35 [1850]."

We hold that interest is a "charge" within the meaning of Code Ann. § 57-203(a)(i), and that the penalty for usurious interest is forfeiture of the entire principal, plus interest and other...

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7 cases
  • West v. Dorsey
    • United States
    • Georgia Court of Appeals
    • June 16, 1983
    ...deeds. The Dorseys made some payments on the loan and then defaulted. Subsequent developments in the case are set forth in West v. Dorsey, 248 Ga. 790, 285 S.E.2d 703; Dorsey v. West, 161 Ga.App. 253, 289 S.E.2d 827; Dorsey v. West, 159 Ga.App. 274, 283 S.E.2d 314. The gist of those proceed......
  • Ward v. Hudco Loan Co., 42016
    • United States
    • Georgia Supreme Court
    • April 30, 1985
    ...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, ther......
  • Glinton v. AND R, INC.
    • United States
    • Georgia Supreme Court
    • December 2, 1999
    ...the laws of this state to inhibit the taking of usury under every and any pretense or contrivance whatsoever." See also West v. Dorsey, 248 Ga. 790, 285 S.E.2d 703 (1982); Pub. Finance Corp. v. State, 67 Ga.App. 635, 21 S.E.2d 476 (1942). The interpretation set forth in this opinion gives v......
  • Henson v. Columbus Bank & Trust Co.
    • United States
    • U.S. Court of Appeals — Eleventh Circuit
    • September 17, 1985
    ...cases. See Dorsey v. West, 159 Ga.App. 274, 283 S.E.2d 314, 316 (1981), aff'd in part and rev'd in part on other grounds, 248 Ga. 790, 285 S.E.2d 703 (1982). The narrow question is whether CB & T intended to charge an interest rate in excess of nine percent. The undisputed evidence shows th......
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