Woods v. Evans Products Co.
| Decision Date | 27 November 1978 |
| Docket Number | No. KCD29457,KCD29457 |
| Citation | 574 S.W.2d 488 |
| Parties | William S. WOODS, Sr. and Shirley A. Woods, Plaintiffs-Appellants, v. EVANS PRODUCTS COMPANY, Plymouth Mortgage Service Co., and First National Bank of Minneapolis, Defendants-Respondents. |
| Court | Missouri Court of Appeals |
M. Sperry Hickman, Independence, for plaintiffs-appellants.
Ross Eshelman, Clinton, for defendants-respondents.
Before SHANGLER, P. J., SWOFFORD, C. J., and WASSERSTROM, J.
Mr. and Mrs. Woods sue in this action to recover a portion of the money paid by them in connection with their purchase of a prefabricated home from Evans Products Company. Count I seeks recovery of an alleged unauthorized increase by Evans in the sale price which the Woods inadvertently paid. Count II seeks to recover the amount of what the Woods contend to be usurious interest. After hearing the Woods' evidence without a jury, the trial court dismissed Count II; and after hearing all the evidence, it gave judgment for the Woods on Count I. The Woods now appeal as to the dismissal of Count II.
On August 21, 1971, the Woods entered into negotiations with Evans for the purchase of a prefabricated home. Evans' agent Kiely at that time furnished them with a brochure showing various types of homes and the types of equipment available. Among other items of information set forth was a plan of financing. This information stated in part as follows:
During the conversation between the Woods and Kiely, the contents of the brochure were discussed, including the above quoted representations with respect to financing. The Woods picked out one of the homes described in the brochure, and a purchase order was signed by both parties. The pertinent parts of that document were as follows:
"Price of Home Described Above $9130
Wiring Package 415
Heating Package 590
Kitchen Cabinets 690
Plumbing Package 795
Total Sale Price 11620
Down Payment in Cash 100
Unpaid Balance of Price 11520
Sales Tax 164
Unpaid Principal Balance 11684
Time price differential 7711
Time Balance Owed 19395
Time Sale Price 19495
Time Balance Owed Payable in 144 monthly
installments of $135.00 each."
Following the original purchase order, some revisions and deviations from the original package were ordered by the Woods and agreed to by Evans. Evans then prepared a revised purchase order dated September 29, 1971, which, however, was never signed by the Woods and which plaintiff William Woods testified was never shown to them prior to the date of trial. The revision increased the basic price of the home from $9130, the amount shown in the August purchase order, to a higher figure of $9365. This difference of $235 was the subject matter of Count I in the Woods' petition. The trial court gave judgment to them for that item, and it no longer constitutes a matter in dispute.
Sometime in October, Evans mailed to the Woods a note in the sum of $20,199, payable in 144 monthly installments of $141, without interest. The note provided: "The makers shall have the right to prepay the balance due under this Note at any time prior to maturity or due date, without penalty." The note was accompanied by a mortgage, with Evans as mortgagee, covering the real estate upon which the prefabricated home was to be erected. The Woods also received a Disclosure Statement as required by 15 U.S.C.A. Secs. 1638 and 1605. See Copley v. Rona Enterprises, Inc., 423 F.Supp. 979, 983 n. 5 (D.C.Ohio 1976). The Disclosure Statement sets forth the figures on the transaction as contained in the revised purchase order of September 29, 1971, and in addition, contains the required computation of "Annual Percentage Rate" at 91/4%. These documents were executed by the Woods and delivered to Evans at the time the merchandise making up the prefabricated home was delivered to the Woods. Thereafter, Evans assigned the note and mortgage to Plymouth Mortgage Service Company and First National Bank of Minneapolis.
In July, 1975, the Woods sold the home in question and wrote to obtain the figure required to pay off the note and deed of trust. The Woods up to that time had made 46 installment payments, and they paid in 1975 a final payment in the amount of $10,131, upon which the mortgage was finally released and the note paid in full.
The Woods make the following points on this appeal: (1) that the court erred in striking out certain evidence; and (1) that the court erred in sustaining the motion for judgment on Count II for the reason that the transaction was an usurious loan, not a purchase money contract "because there was security for the loan on other than the property sold and the bargain reached between the seller and buyer was for a cash price plus simple interest rates on the balance only."
The evidence which the Woods contend was erroneously stricken came in as part of the cross-examination of plaintiff William Woods. He testified that during the course of his conversation with Kiely on August 21, 1971, and in connection with the discussion of financing, an interest figure of 71/2% was discussed. Defendants requested that all testimony with respect to the 71/2% figure be stricken on the ground that such evidence conflicted with the parole evidence rule. The trial court sustained that request. It is this ruling which the Woods challenge as their Point I.
It is unnecessary to rule whether the parole evidence rule bars the testimony in question. It can be assumed that the evidence is not barred by that rule. Even so, the evidence in question was immaterial and its striking was harmless.
It is to be noted that the Woods have at no time claimed that Evans breached any agreement to arrange financing at 71/2% simple interest. The only claim of breach of contract is contained in Count I of the petition which related to an entirely different matter. The evidence with respect to the 71/2% interest was offered only for the purpose of Count II, which was confined solely to the issue of usury.
On that issue of usury, the only question was whether the transaction between the Woods and Evans was a sale of property or a loan of money. As stated in the Woods' brief in this court, this testimony is claimed to be material as tending to establish "that the transaction was an usurious loan of money rather than a time-price differential as argued in Point II hereof."
That the Woods and Kiely did discuss financing and interest in connection therewith was given in evidence without objection and is not disputed. In Section II of this opinion, it will be shown that said discussion was without significance. However, even if the discussion were pertinent, the fact of the discussion was clearly established without the necessity of reference to any given interest percentage figure. What that exact figure may have been or whether any particular interest figure at all was discussed, is not in any way important. As already stated, the Woods did not seek to recover on any theory of breach of contract to obtain financing at any given figure. Rather their petition is confined to a claim that the amount actually paid by them exceeded the statutory rate of 8%, and the petition prays as damages only the difference of the statutory rate of 8% and the actual interest factor of 91/4%. The exact rate of interest discussed between the parties is therefore immaterial, and its exclusion cannot constitute prejudicial error.
With respect to its major contention that the transaction was usurious, the Woods concede the rule to be that a seller may set a time sale price higher than a cash price and that the difference between those two prices is not subject to the usury statute. The Woods nevertheless argue that this case falls within an exception to that rule. Their exclusive reliance for that contention is Lucas v. Beco Homes, Inc., 494 S.W.2d 417 (Mo.App.1973). An understanding of the ruling in Lucas requires a brief preliminary review of the earlier cases on this subject.
The well established traditional view has been that usury applies only to a loan of money and has no application to the sale of goods; that therefore a seller can establish a higher price for sale on time than for cash without raising any question of usury; and that such a sale stands separate and apart from any financing arrangement subsequently effected, such as the acquisition at a discount by a financial institution of the buyer's purchase note. Missouri has long followed this rule, the leading cases being the decisions by this court in General Motors Acceptance Corporation v. Weinrich, 218 Mo.App. 68, 262 S.W. 425 (1924) and Wyatt v. Commercial Credit Corporation, 341 S.W.2d 348 (Mo.App.1960).
Weinrich involved the sale of a new automobile by the dealer Reuter to Windsor. The cash price was $1,450 and a "time-selling...
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...contention that the dealings between plaintiff and the partnership ran afoul of the usury statutes is unsound. In Woods v. Evans Products Co., 574 S.W.2d 488 (Mo.App.1978), the court said, at "[A] seller may set a time sale price higher than a cash price and ... the difference between those......
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