Western Loan & Bldg. Co. v. McGillivrae

Decision Date28 December 1926
Docket Number19933.
Citation141 Wash. 392,251 P. 770
CourtWashington Supreme Court
PartiesWESTERN LOAN & BUILDING CO. v. McGILLIVRAE et ux.

Department 2.

Appeal from Superior Court, Kilsap County; Gilliam, Judge.

Action by the Western Loan & Building Company against J. E McGillivrae and wife. From a judgment for plaintiff defendants appeal. Cause returned to trial court to amend judgment.

Jas. W. Carr and Marion Garland, both of Bremerton, for appellants.

Van Dyke & Thomas, of Seattle, for respondent.

MACKINTOSH J.

The respondent made a building loan to the appellants in the sum of $12,000, which was evidenced by the following note secured by mortgage.

'$12,000.00.
'Bremerton, Washington, April 12, 1921.
'For value received, we promise to pay to the order of the Western Loan & Building Company, a corporation, at its office in Salt Lake City, Utah, the sum of twelve thousand dollars, with interest thereon at the rate of twelve per cent. per annum, principal and interest payable monthly, as follows: Two hundred fifteen and 40/100ths dollars on the 16th day of each and every month, commencing with the month of May, 1921, until eighty-one (81) payment shall have been made, payments to be applied first upon interest due, the balance upon principal. Default in the payment of any installment shall, at the election of the holder hereof without notice, mature the entire indebtedness, and if after default, this note is placed in the hands of an attorney for collection, we agree to pay the reasonable attorney's fee of such attorney.'

The note not being paid in full, this action was begun to foreclose the mortgage, to which the appellants interposed a defense that the respondent had charged them, and that they had paid, usurious interest on the loan, and consequently the respondent should be penalized in double the amount of interest paid and should be allowed no interest on the balance of the principal remaining unpaid. The trial court found that the note did not provide for usurious interest and no usury had been paid, and consequently denied appellants' defense, and entered judgment for the respondent, from which this appeal is taken.

The evidence shows that a few months prior to the making of the loan the appellants had subscribed to shares of stock in the respondent company, and thereafter had made application for the loan and paid a commission of $120 for securing it; that the loan had not been advanced to the appellants in full at the time of the making of the note, but that $4,000 of the principal had been paid some months later, at which time the appellants received a credit of $224 as a refund on unearned interest. The testimony further showed that the respondent had claimed and charged penalties and delinquent charges.

Section 7304, Rem. Comp. Stat., provides that, if a greater rate of interest than 12 per cent. shall be contracted for, or received or reserved, the contract shall not be void, but certain penalties are provided for the usury. The question, then, for determination, is whether the contract here provided for more than 12 per cent. or whether more than that amount of interest was received.

The appellants' claim is that the note should be held to be one calling for the payment of principal and interest in 81 monthly payments, and that it was not a note to be enforced under 'the rule of partial payments.' In other words, the contention of the appellants is that under the note the interest should be calculated for the whole time, divided by two, then added to the principal, and divided into 81 equal payments, and that under this construction more than 12 per cent. interest was contracted for. The respondent claims that the clear meaning of the note is that it is to be paid in partial payments; that is, that each month should be calculated the interest for that month, which should be subtracted from that monthly payment and the interest thus paid, and the balance applied on the principal, the next month starting with that new principal, and the payment for that month applied on the month's interest and the balance used for reducing the principal, and so on throughout the life of the note.

While figures are unerring, they can be made to perform some astonishing feats, as this case bears witness. The intricacies of the computations, based upon the varying theories, are extremely confusing, and any attempt to analyze these computations would result in an interminable and unenlightening discussion. It will suffice to say that this note plainly states that it is a partial payment note, for on the face of it the monthly payments are 'to be applied first upon interest due, the balance upon principal.' And, figuring on that basis, as did the expert for the respondent, as well as the trial court and this court, all three results are within a few cents of agreeing, and show that approximately $180 less than 12 per cent. was called for if the payments were made according to the tenor of the note.

It is true that the respondent attempted, under the guise of penalties and delinquent charges, to exact more than the legal rate of interest, and, if it had been paid these illegal exactions, which were not contemplated by the terms of the note, it...

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6 cases
  • United States Building & Loan Ass'n v. Lanzarotti
    • United States
    • United States State Supreme Court of Idaho
    • February 4, 1929
    ...... wife usurious? (33 C. J. 187, sec. 28, p. 188; Western. Loan & Building Co. v. McGillivrae, 141 Wash. 392, 251. P. 770; 39 Cyc. 952 (C), p. 953 (D) and ... by law." (Ford v. Washington Nat. Bldg. etc. Assn., 10 Idaho 30, 109 Am. St. 192, 76 P. 1010;. Stevens v. Home Savings etc. Assn., 5 ......
  • Cuevas v. Montoya, 7603-2-III
    • United States
    • Court of Appeals of Washington
    • June 23, 1987
    ...does not pay a penalty which would have made the rate of interest usurious, the contract is not usurious. Western Loan & Bldg. Co. v. McGillivrae, 141 Wash. 392, 396, 251 P. 770 (1926). However, in Western Loan, at 395, 251 P. 770, the contract was not usurious on its face; rather, the lend......
  • O'Malley v. United States Building & Loan Ass'n, 5628
    • United States
    • United States State Supreme Court of Idaho
    • April 24, 1931
    ...... can use it without further payment. (Western Loan &. Bldg. Co. v. McGillivrae, 141 Wash. 392, 251 P. 770; 96. C. J., p. 975.). . . ......
  • Home Sav. & Loan Ass'n v. Sanitary Fish Co.
    • United States
    • United States State Supreme Court of Washington
    • March 25, 1930
    ...... . . Plaintiffs. also cite the case of Western Loan & Building Co. v. McGillivrae, 141 Wash. 392, 251 P. 770, 771. This was an. action ......
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