White v. Anderson

• Decision Date: 13 May 1912
• Parties: WHITE v. ANDERSON.
• Court: Missouri Court of Appeals

147 S.W. 1122

WHITE v. ANDERSON.

Kansas City Court of Appeals. Missouri.

May 13, 1912.

Rehearing Denied June 3, 1912.

1. USURY (§ 13) — WHAT CONSTITUTES — LOANS.

In order to constitute usury there must be a loan express or implied.

2. USURY (§ 28) — NATURE OF TRANSACTION — COUPON BOOKS — PURCHASE OF MERCHANDISE.

Plaintiff issued coupon ticket books for sums not exceeding $10 to persons without credit who desired to purchase merchandise at certain designated stores. The plan was for the purchaser to give plaintiff his own notes for the amount represented by the books sold with 5 per cent. addition, which books the purchaser took to the stores, paying for the merchandise with tickets out of the book; the merchant making no charge to him but retaining the tickets and charging them to plaintiff who later redeemed them by paying 10 per cent. less than the sum total of the merchant's tickets. Held, that such transaction was not a sale of plaintiff's credit, but was a loan of money and usurious.

Appeal from Circuit Court, Pettis County; H. B. Shain, Judge.

Action by E. C. White against M. O. Anderson. Judgment for defendant, and plaintiff appeals. Affirmed.

G. W. Barnett, of Sedalia, for appellant. Geo. W. Anamosa, for respondent.

ELLISON, J.

This is a contest in replevin for a horse which defendant mortgaged to plaintiff, and plaintiff's right depends upon the validity of the mortgage. The judgment in the trial court was for the defendant.

The mortgage was given to secure the payment of two promissory notes, each for $10.50 due in 30 days with 8 per cent. interest from maturity. The case was submitted to the court without a jury. It appears that plaintiff conducts a general business in Sedalia under the name of the "Credential Coupon Trading Company," whereby he issues a small book of coupon tickets for a sum not exceeding $10 to those who desire to purchase clothing, groceries, etc., at certain designated stores in that city. A person without credit of his own at the store where he wishes to make purchases will purchase of plaintiff one or more of these coupon books and, as in this case, give his note or notes due in 30 days to plaintiff for the amount represented in the coupon book with 5 per cent. in addition. Thus, if he wishes to make purchases amounting to $20, as in this case, he will get two coupon books with coupon tickets in each aggregating $10 for which he will execute his two notes, as in this case, for $10.50 each. He may then go to the stores and make purchases, paying with tickets out of his book; the merchant making no charge to him. The merchant retains all tickets thus received by him, charging them to plaintiff, and the latter pays, or redeems, them by paying 10 per cent. less than the sum total of the tickets. Thus, if a certain merchant has $100 in tickets, plaintiff may take them up in accordance with an understanding he has with the merchant by paying $90 in money.

Defendant was in need of an overcoat and was without money and had no credit at the clothing stores, and applied to plaintiff for two of his coupon books of $10 each, and executed as security for the payment thereof his two promissory notes for $10.50 each, secured by the chattel mortgage as has been already stated. With these he went to one of the stores which, under an agreement with plaintiff, take up his tickets, and bought an overcoat for $20, and plaintiff afterwards redeemed them from the merchant by paying $18, thus receiving his 10 per cent. discount as agreed with the merchant. It is, however, agreed that the price charged defendant by the merchant was the proper retail price; it being admitted that the coat was "of the value of $20." It was further admitted that the matter of time defendant's notes were to run was not taken into consideration as a basis of the amount of commission to be paid plaintiff; it being admitted "that plaintiff's terms to every person to whom credit and accommodation of like character were and are extended are 5 per cent. on the total amount or value furnished to any person, whether the time to elapse before settlement be for one day, or for six months, or one year, or any other time as might be agreed upon."

The coupons could not be used as money, nor received in payment of the holder's debts, nor for any purpose other than the purchase of merchandise. From this statement it is seen that plaintiff was compensated in these transactions by 5 per cent. of the amount of the coupon book received from the purchaser and 10 per cent. of the sale price of the goods received from the merchant, and the question for decision is, Is this usury?

It is said in State ex rel. v. Boatmen's Savings Inst., 48 Mo. 189, that: "In order to constitute usury there must be an express or an implied loan." Coleman v. Cole, 158 Mo. 253, 59 S. W. 106. Our statute (section 7182, R. S. 1909) includes "the forbearance" as well as the use of money, so that, though a note might not be usurious before maturity, it might become so by forbearance at an unlawful rate after that. If there is a loan in which there is more profit secured to the lender than the rate of interest allowed by law, the courts will pronounce it usurious however well disguised and concealed it may be. Missouri Real Est. Syndicate v. Sims, 179 Mo. 679, 78 S. W....