Wooldridge v. State, 14637.

• Decision Date: 03 November 1944
• Docket Number: No. 14637.,14637.
• Parties: WOOLDRIDGE v. STATE.
• Court: Texas Court of Appeals

183 S.W.2d 746

WOOLDRIDGE v. STATE.

No. 14637.

Court of Civil Appeals of Texas. Fort Worth.

November 3, 1944.

Rehearing Denied December 1, 1944.

Appeal from District Court, Parker County; J. E. Carter, Judge.

Suit by the State of Texas against Charles Wooldridge to enjoin defendant from collecting usurious interest. From an adverse judgment, defendant appeals.

Reversed and remanded.

Grindstaff, Zellers & Hutcheson, of Weatherford, for appellant.

Nolan Queen, of Weatherford, for appellee.

B. L. Agerton, Mark McGee, Dan E. Lydick, and B. E. Godfrey, all of Fort Worth, amicus curiae.

BROWN, Justice.

The Honorable Nolan Queen, County Attorney of Parker County, Texas, brought suit against appellant, Charles Wooldridge, invoking the provisions of an act of the 48th Legislature passed in 1943, known as Senate Bill No. 43, and being Chapter 144 of said Acts, Vernon's Ann.Civ.St. art. 4646b.

The said County Attorney sought to invoke the provisions of this Act which empower such an officer to seek injunctive relief against one who makes loans and "habitually" charges usurious interest, defining the term "habitually."

In Section 2 of the Act is found the following definition of "usurious interest": "By the term `usurious interest', as used in this Act, is meant interest at a rate in excess of ten (10%) per centum per annum."

Section 2a following such definition provides:

"Nothing in this Act shall in any way modify, alter or change any valid provision of Article 8 of Chapter 5 of House Bill No. 79, Acts of the Regular Session, 48th Legislature, nor shall anything in this Act prevent charging of any actual and necessary expense, now or hereafter permitted and authorized by law, and such shall not be considered interest.

"In the trial of any application for injunction under this Act there shall exist a prima facie presumption that the actual and necessary expense of making any such loan was One ($1.00) Dollar for each Fifty ($50.00) Dollars, or fractional part thereof loaned; but this prima facie presumption shall extend only to the first note or debt owing at the same time by an individual to any person, firm, corporation, partnership or association, and shall not apply to any renewal or extension thereof unless the original note or debt and all extensions thereof were for a period of not less than sixty (60) days."

It is noted that this Act appears to attempt to tie in with House Bill No. 79 passed also by the 48th Legislature, same being known as Chapter 97 of the Laws of the 48th Regular Session, and also known as "The Texas Banking Code of 1943." Vernon's Ann.Civ.St. art. 342—101 et seq.

Chapter V of said "Code" and Article 8 thereof was passed to govern the charges that may be made for making loans. Article 8 is as follows: "No bank shall charge or collect any loan fee or any other charge, by whatever name called, for the granting of a loan. Provided, however, a bank may require an applicant for a loan or discount to pay the cost of any abstract, attorney's opinion or title insurance policy, or other form of insurance, and filing or recording fees or appraisal fees. Expenses necessary or proper for the protection of the lender, and actually incurred in connection with the making of the loan may be charged, and further provided that a bank may charge any borrower the reasonable value of services rendered in connection with the making of any loan, including the drawing of notes, the taking of acknowledgements and affidavits, the preparation of financial statements, and the investigation or analysis of the financial responsibility of the borrower or any endorser, surety or co-signer, in an amount agreed upon, but not to exceed One Dollar ($1) for each Fifty Dollars ($50) or fractional part thereof loaned; but the charges for such services shall not be deemed a loan fee or interest or compensation for the use of the money loaned; and the last charge next above shall not be collected unless the loan is actually made."

Defendant Wooldridge answered denying that he had charged or collected any usurious interest and asserted that he had only made such charges as are provided for by the very law on which the plaintiff bottoms his suit. The plaintiff insists that the statutes on which Wooldridge relies are unconstitutional and void.

The agreed statement of facts discloses that Wooldridge has charged only such sums as are warranted in the provisions of the law. The trial court rendered judgment for the plaintiff, and found that the statutes on which defendant relies "are unconstitutional and that by reason thereof the `service charge' as made by the defendant in connection with each loan is illegal." The injunctive relief sought by the plaintiff was granted, and the judgment is as follows: "It is therefore the order, judgment and decree of the court that the injunction as prayed for by the plaintiff be granted and that a writ of injunction issue restraining the defendant from collecting the `service charge' upon any loan made by him."

The prayer in the petition is that "defendant be permanently enjoined and restrained from demanding, receiving or by the use of any means attempting to collect from any borrower on any loan heretofore made any usurious interest, and that he be further permanently enjoined from hereafter contracting for or charging any person, firm or corporation for the use and detention of money interest in excess of ten (10%) percent per annum, and for such other and further relief in law and in equity to which he may show himself entitled."

Article XVI, and Section 11 of the State Constitution, Vernon's Ann.St., provides: "All contracts for a greater rate of interest than ten per centum per annum, shall be deemed usurious, and the first Legislature after this amendment is adopted, shall provide appropriate pains and penalties to prevent the same."

The case was tried upon a written stipulation of facts. The stipulation recites that the defendant is now and has been since the month of October, 1943, engaged in making loans in Parker County, upon both a secured and an unsecured basis, and that he has made the loans, among others, which are referred to in the stipulation. Seven such loans are thus referred to. The first is described as follows:

"1. Loan to Hugh M. Miller, note dated November 1, 1943, for the sum of Thirteen and Sixty/100 Dollars ($13.60). This amount was arrived at as follows: Cash—$12.00; Interest, ten percent. (10% per annum, amounting to sixty cents ($0.60); service charge $1.00; total $13.60."

The other six loans are described in somewhat similar fashion.

The concluding paragraph of the stipulation reads as follows: "8. The parties agree that the `interest' collected in each of the above loans was set at the rate of ten (10%) per cent per annum for the time the loan was to run, and that the recording fees, costs of inspection of securities, costs of preparing mortgage papers are the usual and customary charges and are reasonable; and that the `service' charge was made pursuant to Article 4646b, Vernon's Annotated Civil Statutes, Acts of the 48th Legislature, Chapter 144, page 227; and Article 8, Chapter 5, House Bill 79, Acts of 48th Legislature; and that said `service charge' was the average or normal sum required to compensate the lender for particular services rendered to particular borrowers in making the loans herein described and above set forth."

In his answer defendant alleged that "under the terms of Article 4646b, Vernon's Annotated Civil Statutes of Texas, Chapter 144, Page 227, in Section 2a thereof, defendant is permitted to charge the sum of one ($1.00) Dollar for each fifty ($50.00) dollars, or fraction thereof loaned, and that said section of said Act is valid and constitutional, and that defendant made more than three loans but has not charged more than...