Wiseman v. State Bank and Trust, N.A.

• Decision Date: 24 May 1993
• Docket Number: No. 93-177,93-177
• Citation: 313 Ark. 289,854 S.W.2d 725
• Parties: Danny W. WISEMAN and Sonya A. Wiseman, Appellants, v. STATE BANK AND TRUST, N.A., Appellee.
• Court: Arkansas Supreme Court

Page 725

854 S.W.2d 725

313 Ark. 289

Danny W. WISEMAN and Sonya A. Wiseman, Appellants, v. STATE BANK AND TRUST, N.A., Appellee.

No. 93-177.

Supreme Court of Arkansas.

May 24, 1993.

Judith A. DeSimone, Pine Bluff, for appellants.

J. Maurice Rogers, Mark K. Halter, North Little Rock, for appellee.

GLAZE, Justice.

On June 29, 1992, the appellants, Danny and Sonya Wiseman, visited their local Toyota-Hyundai car dealership in Pine Bluff and selected to purchase a 1988 Toyota Celica. The Wisemans informed their salesman, Mr. Bill Tucker, that, in order for them to buy the car, an installment plan financing arrangement would have to be obtained. Tucker provided the Wisemans with a credit application which had been supplied to the dealership by the appellee, State Bank and Trust, N.A. Tucker explained that State Bank was not the exclusive financing agent of the dealer and that the Wisemans were not required to finance the car's purchase through that bank. Nevertheless, the Wisemans completed and executed the credit application. Tucker then faxed the application to State Bank for its acceptance in Tulsa, Oklahoma.

State Bank is a national banking association under the National Bank Act, Rev.Stat. § 5157, 12 U.S.C. § 37 (1988). Its charter address and principal place of business is Tulsa, Oklahoma. Although State Bank does not operate any branch offices within the state of Arkansas, it does have ties to our state--a majority of its stock is owned by an Arkansas bank holding company, Arvest Bank Group, Inc.

Mr. Rick Huck, an employee of State Bank, reviewed the Wisemans' credit application, determined their credit was adequate for participation in the financing program at an interest rate of thirteen percent (13%) per annum, and telephoned Tucker informing him that the Wisemans' application for credit had been accepted. Huck then directed Tucker to have the Wisemans complete and execute a credit loan contract and security agreement which had also been provided by State Bank. The Wisemans returned to the dealership on July 1, 1992, to execute the required documents. The loan contract contained the following relevant terms: (1) the interest rate on financing through State Bank would be thirteen percent (13%) per annum, and (2) the parties intended and agreed that the contract was to be governed by and construed under the laws of Oklahoma. After the Wisemans executed the agreement, Tucker forwarded it to State Bank for its acceptance and execution. The dealer then allowed the Wisemans to drive the car home. On July 2, 1992, in Tulsa, Huck reviewed, approved, and executed the contract on behalf of State Bank.

The Wisemans made the first three installment payments of $174.56 prior to stopping payments. On September 18, 1992, they instituted a declaratory judgment action in the Circuit Court of Jefferson County, alleging that the loan contract violated the maximum lawful rate of interest under the Arkansas Constitution, and thus, was usurious. ¹ The parties entered a joint stipulation of facts and each filed a motion requesting summary judgment. By letter opinion, the trial judge found there were no genuine issues of material fact and granted State Bank's motion for summary judgment by refusing to apply Arkansas's usury law and holding that the parties' contract was not invalid for the two following independent and alternative reasons: first, under the choice-of-law principle, the law of Oklahoma, and not Arkansas, governed; and second, even if the choice-of-law principle required application of Arkansas law to the parties' contract and the subject transaction, the National Bank Act, Rev.Stat. § 5197, as amended, 12 U.S.C. § 85 (1988), and the doctrine of federal preemption, mandate the application of Oklahoma's interest rate provisions. Although the trial court may be correct for both reasons, we affirm on the basis of the National Bank Act because we believe that Act clearly controls the parties' transaction here.

The interest rate which a national banking association may charge is governed by the National Bank Act, Rev.Stat. § 5197, 12 U.S.C. § 85 (1988), which reads in pertinent part as follows:

Any association may take, receive, reserve, and charge on any loan or discount made, or upon any notes, bills of exchange, or other evidences of debt, interest at the rate allowed by the laws of the state ... where the bank is located, ...

On appeal, the Wisemans impliedly concede that State Bank is a banking association created under the National Bank Act. Accordingly, the rate of interest State Bank can charge on any loan is governed under 12 U.S.C. § 85 (1988) and is the rate allowed by the laws where State Bank is "located." The Wisemans do not contend below or on appeal that charging interest at a rate of thirteen percent is violative of Oklahoma's usury law. Instead, for reversal, the Wisemans advance the argument that State Bank is not "located," as that phrase is defined under 12 U.S.C. § 85 (1988), in the state of Oklahoma. Specifically, the Wisemans contend that because Arvest Bank Group, Inc., an Arkansas Corporation, owns a majority of State Bank's stock, the Bank in actuality is "located" in Arkansas. We disagree.

In Marquette Nat'l Bank of Mpls v. First of Omaha Service Corp., 439 U.S. 299, 99 S.Ct. 540, 58 L.Ed.2d 534 (1978), the United States Supreme Court was granted an opportunity to interpret 12 U.S.C. § 85 (1988) under facts very similar to those here. The First National Bank of Omaha, situated in Omaha, Nebraska, solicited Minnesota customers to take part in its credit card business. The Omaha Bank charged Minnesota customers interest on the balance due at a rate permitted under the laws of Nebraska, but in excess of that permitted by the laws of Minnesota. Marquette National Bank, situated in Minneapolis, Minnesota, brought suit to enjoin Omaha Bank's credit card business...