Krupp Realty Co. v. Joel

Deen, Presiding Judge.

Appellant filed an affidavit for a dispossessory warrant, seeking possession of appellee’s leased premises and past due rent in the amount of $405. (As part of the alleged past due rent, appellant was claiming an additional $50 to which it contends it was entitled under the written lease as a late charge for rent paid after the 5th day of the month.) Joel, an attorney, answered and stated that he offered to pay the monthly rental of $334 on the seventh day of the month, but it was refused because he would not pay the $50 late charge because it was unconscionable. He paid $334 into the registry of the court.

The case was tried before a judge sitting without a jury. The court found that the late charge was usurious because it violated OCGA § 7-4-2 (Code Ann. § 57-101), that the plaintiff was not entitled to a writ of possession, and was entitled only to the $334 which had been paid into the registry of the court.

1. We disagree that the late charge is usurious. While OCGA § 44-7-16 (Code Ann. § 61-114) provides: “All contracts for rent shall bear interest from the time the rent is due,” and OCGA § 7-4-2 (Code Ann. § 57-101) provides for a legal rate of interest of 7 percent for any loan or advance of money or forbearance to enforce collection, and 10-1/2 percent in other specified instances, the provision in the lease either is one for liquidated damages or is an unlawful penalty. A usurious transaction requires a loan or forbearance of money, an understanding that a principal amount will be returned, that the loan be for profit at an amount greater than that authorized by law, and that the agreement be made with the intent to violate the law. Bailey v. Newberry, 52 Ga. App. 693 (184 SE 357) (1935). While a landlord can recover upaid rent and is also entitled to recover the legal rate of interest on the unpaid rental money, it does not follow that an agreement in a lease providing for a late charge when the rent is not timely paid must comply with the usury laws of Georgia. Parties to a contract are permitted to provide for liquidated damages in the event of a contract breach and unless the agreement violates some principle of law, the parties are bound by their agreement. OCGA § 13-6-7 (Code Ann. § 20-1402).

In determining whether the lease provision is enforceable as one for liquidated damages rather than an unlawful penalty, the court must make the following determination: (1) that the injury caused by the breach is difficult or impossible to estimate accurately, (2) that the parties intended to provide for damages rather than a penalty, (3) that the sum stipulated is a reasonable pre-estimate of the probable loss. Southeastern Land Fund v. Real Estate World, 237 Ga. 227, 230 *481(227 SE2d 340) (1976). Gibson v. Sheriff, 155 Ga. App. 578 (271 SE2d 710) (1980).

Decided October 18, 1983. Gerald W. Fudge, for appellants. David Joel, pro se.

The lease in question provides for a $50 charge as “additional rent” in two instances: (1) when a rent check is returned from the lessee’s bank without payment, and (2) when the rent due on the first of the month is received after the fifth. In the first instance, the lease states the charge is made because it causes the agent/owner additional expenses for bookkeeping and clerical services and in the second instance, it provides that the charge “is due for services required of the agent/owner. . .” We find that the lease provision meets the requirements for liquidated damages set forth above and that the trial court erred in holding that it was a usurious charge.

2. Appellant has not supported his second enumeration by either citation to authority or argument, and it is deemed abandoned. Field Developers v. Johnson, 160 Ga. App. 180 (289 SE2d 321) (1981).

Judgment reversed in part and affirmed in part.

Banke, J., concurs. Shulman, C. J., Quillian, P. J., and McMurray, P. J., concur in the judgment only. Birdsong and Pope, JJ., concur in part and dissent in part. Carley and Sognier, JJ., dissent.