Summary
holding that a borrower may not bring a civil cause of action based on a violation of the criminal usury statute
Summary of this case from Soaring Pine Capital Real Estate & Debt Fund II, LLC v. Park St. Grp. Realty Servs.Opinion
Docket No. 77-1413.
Decided March 7, 1978. Leave to appeal denied, 402 Mich. 905b.
Appeal from Clare, Robert H. Campbell, J. Submitted January 9, 1978, at Lansing. (Docket No. 77-1413.) Decided March 7, 1978. Leave to appeal denied, 402 Mich. 950b.
Complaint by Joseph Wilkerson and Vesta Wilkerson against James Seder and John J. Hermann to set aside a foreclosure of a mortgage, to clear title to real estate, and for damages for violation of the usury law. Summary judgment in favor of defendant Hermann. Plaintiffs appeal. Affirmed.
Donald W. Grant and Richard P. King, for plaintiffs.
John J. Hermann, for defendants.
This appeal involves a complaint against an attorney (Hermann) seeking damages based on his alleged preparation of a promissory note specifying a usurious rate of interest. The trial court granted summary judgment for Hermann on the basis that the complaint failed to state a cause of action, see GCR 1963, 117.2(1), and that plaintiffs had failed to raise an issue of fact as to his knowledge of a usurious interest rate, see GCR 1963, 117.2(3).
The complaint alleged that a one-year note for $24,000 was executed in consideration for a $15,000 loan.
MCLA 438.41; MSA 19.15(51) provides:
"A person is guilty of criminal usury when, not being authorized or permitted by law to do so, he knowingly charges, takes or receives any money or other property as interest on the loan or forbearance of any money or other property, at a rate exceeding 25% at simple interest per annum or the equivalent rate for a longer or shorter period. Any person guilty of criminal usury may be imprisoned for a term not to exceed 5 years or fined not more than $10,000.00, or both."
MCLA 438.42; MSA 19.15(52) provides:
"A person is guilty of possession of usurious loan records when, with knowledge of the contents thereof, he possesses any writing, paper, instrument or article used to record criminally usurious transactions prohibited by this act. Any person guilty of possession of usurious loan records may be imprisoned for a term not to exceed 1 year or fined not more than $1,000.00, or both."
The trial court correctly held that plaintiffs failed to state a cause of action.
Plaintiffs contend that a private civil action may be maintained on the basis of the criminal usury statute, MCLA 438.41, 438.42; MSA 19.15(51), 19.15(52). The existence of a civil cause of action based on a criminal statute is based on the presumed intention of the Legislature. See 1 CJS, Actions, § 12, p 996. Intent to provide a common-law civil remedy may be inferred from a penal statute creating a private duty for the benefit of particular individuals or a class, as opposed to a duty to the public, Taylor v Lake Shore Michigan Southern R Co, 45 Mich. 74 (1881). Also relevant is the absence of a statutory remedy. See BF Farnell Co v Monahan, 377 Mich. 552, 555-556; 141 N.W.2d 58 (1966), cf. National Bank of Detroit v Eames Brown, Inc, 396 Mich. 611; 242 N.W.2d 412 (1976).
We find that the criminal usury act does not create a private duty toward certain individuals, but a public obligation not to engage in usurious loan transactions. Furthermore, the statute itself provides for remedies, including a defense to an action for interest, fees and costs, MCLA 438.32; MSA 19.15(2) and injunctive relief, MCLA 438.31c; MSA 19.15(1)(c). Thus, we hold that no civil cause of action may be based upon the criminal usury statute. Summary judgment under GCR 1963, 117.2(1) was proper.
We also find that plaintiff failed to raise a genuine issue as to Hermann's knowledge of the alleged usurious interest rate. The promissory note and mortgage do not on their face disclose a usurious interest rate. Furthermore, in none of the pleadings, affidavits or depositions filed are there facts raising an issue as to Hermann's knowledge of the interest rate. See Rizzo v Kretschmer, 389 Mich. 363; 207 N.W.2d 316 (1973). Summary judgment under GCR 1963, 117.2(3) was also proper.
Affirmed. Costs to appellees.