Summary
In Clements v. Williams, 136 Tex. 97, 147 S.W.2d 769 (1941), we held a note to be usurious because it permitted the holder to "mature said note..."
Summary of this case from Jim Walter Homes Inc. v. SchuenemannOpinion
Application No. 25427.
Decided February 12, 1941.
Usury — Negotiable Instruments — Debts.
Where the principal of a note was $1236.81 to which was added sufficient interest to make the face value thereof $1457.50, which sum was divided into monthly payments of $27.50, and the note contained the proviso that the holder of said note, upon failure of maker to pay any monthly installment, may, at his election, "mature said note, and it shall at once become due and payable," the said instrument is usurious from its inception, as it would result in more than ten per cent interest being collected. If the maturity clause had merely provided for the maturity of the debt, the note would not be usurious, as unearned interest could not be collected.
Application for writ of error to the Court of Civil Appeals for the Third District, in an appeal from Lampasas County.
Suit by Elbert Clements against Jesse Williams in the form of trespass to try title. Defendant admitted the execution of the deed, but that it was given only as a mortgage and that said deed was not supposed to be delivered, and that the note which plaintiff had theretofore held was usurious and that the debt was fully paid, and asked that the usury penalty be enforced. The trial court entered judgment that the plaintiff be denied all relief and that defendant recover the title and possession of the property. This judgment was affirmed by the Court of Civil Appeals, 146 S.W.2d 215, and plaintiff has brought error to the Supreme Court.
The application for writ of error is dismissed for want of jurisdiction — Correct Judgment.
Walker Hammett, of Lampasas, and Thos. C. Ferguson, of Burnet, for plaintiff in error.
The opinion of the Court of Civil Appeals ( 146 S.W.2d 215) makes the following statement:
"Appellant testified that there was added to the $1,236.81 principal enough interest to make the face value of the note $1,457.50, which was to be amortized by monthly payments of $27.50 each, which monthly payments included both principal and interest; and the note and contract provided that the holder could mature the entire debt upon failure to pay any monthly installment when due."
It will be noted that the opinion says "and the note and contract provided that the holder could mature the entire debt upon the failure to pay any monthly installment when due."
We have examined the note, and we find that the Court of Civil Appeals in its opinion inadvertently used the word debt, when it intended to use the word note. The default maturity clause in the note provides that the holder at his election may "mature said note, and it shall at once become due and payable * * *." Such default maturity clause permitted the holder of this note to mature all installments as written in it, including unearned interest. This resulted in providing for a contingency under which more than ten per cent. interest per annum could be collected. Such an instrument is usurious in its inception. Shropshire v. Commerce Farm Credit Co., 120 Tex. 400, 30 S.W.2d 282, 84 A.L.R. 1269, rehearing denied 120 Tex. 412, 39 S.W.2d 11, 84 A.L.R. 1269. If the default maturity clause had merely provided for the maturity of the debt, the note would not be usurious because unearned interest could not be collected. Walker v. Temple Trust Co., 124 Tex. 575, 80 S.W.2d 935.
The application for writ of error is DISMISSED W.O.J. — CORRECT JUDGMENT.
Opinion delivered February 12, 1941.