Hollan v. American Bank of Commerce & Trust Co.

McCulloch, C. J.,

(dissenting). This court is definitely committed to the rule if “a promise to pay a sum above legal interest depends on a contingency, and not upon the happening of a certain event, the loan is not usurious.” Reeves v. Building & Loan Ass’n, 56 Ark. 335; Briant v. Carl-Lee Bros., 158 Ark. 62.

If therefore there was a valid and enforceable contract between the parties for renewals of the notes until sales of the automobiles could be made, then there existed such a contingency as rendered it uncertain whether the rate of interest would or would not ultimately exceed ten per centum per annum, and the loans were not usurious.

The notes executed by appellant called for interest at eight per cent, per annum, they were free from usury, and the burden of proof ££is upon the party who pleads usui’y to show clearly that the transaction was usurious.” Smith v. Mack, 105 Ark. 653; Briant v. Carl-Lee Bros., supra.

Parol evidence is admissible to prove that a promissory note, legal on its face, is in fact usurious by reason of the exaction of excessive interest, but -such testimony is likewise admissible to uphold the contract by showing that the excessive -exaction was not received as interest,' and that usury was not intended. Briant v. Carl-Lee Bros., supra.

It was shown by a decided preponderance of the testimony that the brokerage charge was made because of the fact that the loans were intended to be renewed from time to time until the automobiles could be sold. Walker and another one of appellee’s employees in the bank testified that such was the agreement, and the chancery court found, in favor of appellee on that issue. They testified that such was the custom in making loans’ to automobile dealers; that the notes were made payable on short time (30 days) to enable dealers to make payments as cars were sold and thus to save interest, and that appellant’s notes were renewed in accordance with that custom. Appellant admitted, in his testimony, that it was customary for the bank to renew his notes until he could sell his cars, and that he “understood” that he was to have a chance to sell the cars so as to pay the notes out of the proceeds. He denied, however, that there was any express agreement to that effect. The preponderance of the evidence shows that the contract was made in accordance with the 'Custom, and the finding of the chancellor should not be overturned. ■

But the majority of the court say that “the contingency under which the excessive interest is payable is under the control of the lender,” that appellant cannot control it, and that the contract is not relieved of the taint of usurjr. I do. not think so. The .agreement for extension was an independent contract supported by a valuable consideration, and appellant could have enforced it. No rule of evidence is violated in permit-' ting the oral agreement to be proved, as it was an independent one, and, though contemporaneous with the writing, the proof does not vary the terms of the writing. Weaver v. Fletcher, 27 Ark. 510; Trumbull v. Harris, 102 Ark. 669.

Tlie written contract to pay on a given date is one thing, and the agreement for extension is another. The latter is 'supported by a consideration, and is enforceable.

It is no answer to say that the automobiles might never be sold, and that the extensions might never end. Other principles of law would apply in such a contingency as that.

Mr. Justice Smith concurs in these views.