McNeal v. Truesdell , 167 Okla. 602 ( 1934 )

In this case plaintiff in error, plaintiff below, filed suit to foreclose a chattel and real estate mortgage executed by defendants in error, defendants in the trial court. For the sake of convenience the parties will be referred to as they appeared in the trial court.

For answer to plaintiff's petition defendant filed answer and counterclaim alleging that usurious interest was charged and reserved in the contract. The case was tried to the court and resulted in favor of the defendants on their counterclaim for usury, and judgment entered for the plaintiff in the total sum of $195.

The trial court found, and the record substantiates the finding, that the defendants received from the plaintiff $2,100 at the time the loan in question was consummated. Defendants executed, however, 24 notes in the sum of $100 each, due monthly, and one note for $150. The total amount of the mortgage and notes was $2,550, due in 25 monthly payments. The notes provided for 8 per cent. per annum interest from date. The trial court found correctly that $450 had been charged as a bonus for the loan, and that such sum was in fact an additional interest charge, and that this sum when added to the interest provided in the note made the interest charge in excess of 10 per cent. and rendered the contract usurious. At the time the trial court rendered judgment there was accrued the sum of $225 interest on the amount then due, as defendants had paid the first four notes. The trial court found correctly that defendants were entitled to double the amount of the $675 usurious interest charged as a counterclaim and set-off. This entitled defendants to a credit of $1,350 on the contract. The only question to be determined is whether or not this $1,350 should be deducted from the amount of money actually borrowed, to wit, $2,100, or from the amount of the contract, $2,550. This involves a construction of sections 9519 and 9520, O. S. 1931. This question is settled by this court in the case of Richardson v. Barnhart et ux., 160 Okla. 246, 16 P.2d 98, which case is squarely in point, the rule of law being announced as follows:

"In an action on a promissory note in which the defendant enters a plea of usurious interest charged but not paid, the plaintiff is entitled to judgment for the full amount contracted by the defendant to be paid to the plaintiff, and, as a set-off thereto, the defendant is entitled to a judgment for twice the amount of the entire interest collected, reserved, charged, or received in the transaction, each party being entitled to an attorney's fee as provided by the statute and contract."

The trial court fixed the attorney's fee which plaintiff was entitled to recover in the sum of $95, and the attorney's fee which defendant should recover in the sum of $250. Computation of the balances between plaintiff and defendant would be approximately as follows: Total due plaintiff by defendant on the contract, $2,150, after crediting the $400 paid. From this $2,150 there should be deducted $1,350 usurious interest charged, plus $250 attorney's fee, or a total of $1,600. This leaves a balance due plaintiff' by defendant in the sum of $550, but the plaintiff is entitled also to $95 attorney's fee, leaving a net balance due plaintiff in the sum of $645, instead of $195, as found by the trial court. The trial court erred in deducting the penalty from the amount of money actually received, to wit, $2,100, instead of deducting the same from the amount of the contract, to wit, $2,550. To adopt the view of the trial court would in effect penalize the lender for approximately three times the amount of the interest charged or reserved instead of double the amount of the interest charged or reserved as provided by the statute. A triple penalty was not the intent of the statute. But this question was discussed, analyzed, and passed on in the case of Richardson v. Barnhart, supra. We see no reason for another extended discussion of the same subject in this opinion, inasmuch as we arrive at the same legal conclusion.

There are other errors assigned in the briefs, but in view of the decision reached herein we do not feel it necessary to discuss the same. The judgment of the trial court is modified to conform to the views herein expressed, and as so modified is affirmed. All costs to be assessed against the defendant.

SWINDALL, ANDREWS, McNEILL, OSBORN, BAYLESS, and WELCH, JJ., concur. RILEY, C. J., and CULLISON, V. C. J., dissent.