Redbarn Chemicals, Inc. v. Bradshaw

George Rose Smith, Justice,

This action was brought by Redbarn Chemicals, Inc., to recover judgment upon an $11,479.91 open account for agricultural chemicals and fertilizers sold by Redbarn to the defendants, F. K. Bradshaw, Sr., and his son. The trial court, sitting-without a jury, sustained the defendants! contention that the plaintiff’s claim was void for usury. For reversal Red-barn argues on direct appeal that the Bradshaws failed to prove that the debt was usurious.

We find the proof sufficient to support the judgment. The account extended over a period of many years. It was Redbarn’s practice to send a monthly statement to the debtors, showing the previous balance, the debits and credits during the month, the finance charge that was being added for the month, and the new balance. The statement for the period ending April 28, 1970, showed a previous balance of $12,739.97. and a finance charge of $126.40, which was recited to be “computed by a periodic rate of 1.00% per month which is an annual percentage rate of 12.00%.” Thus according to Redbarn’s own statement an interest charge exceeding the legal rate of 10% per annum was imposed for the month in question.

Redbarn advances three arguments in its effort to rebut the prima facie showing of usury. First, it is contended that the excessive charge was due to an innocent mistake on the part of the person who operated the computer that printed the monthly statement. According to Redbarn’s testimony, the company does business in a number of states. Its usual finance charge is 12% a year, but in Arkansas it charges only 10%. A Redbarn witness theorized that the overcharge was due to the computer operator’s failure to punch the right key in feeding data into the machine.

Apart from the issue of credibility that is inherent in Redbarn’s testimony, contradicting evidence was adduced by the debtors. Bradshaw, Jr., testified that when he claimed certain credits which Redbarn refused to recognize, Redbarn’s agent Wheatly threatened to impose a 1% monthly interest charge if Bradshaw did not pay the account as rendered. Wheatly was not called as a witness to deny Bradshaw’s testimony. According to Bradshaw’s recollection, the next monthly statement that he received after Wheatly’s threat was the one containing the excessive charge. Unquestionably that testimony constituted substantial evidence upon which the trial court could find that the charge was deliberate. Furthermore, a Redbarn witness admitted that the company had made other similar overcharges in Arkansas.

An honest mathematical miscalculation may be shown to avoid a charge of usury. Cox v. Darragh Co., 227 Ark. 399, 299 S.W. 2d 193 (1957). On the other hand, a factual finding of usury is often made even though the creditor insists that he made an innocent error. Ford Motor Credit Co. v. Catalani, 238 Ark. 561, 383 S.W. 2d 99, 11 A.L.R. 3d 1494 (1964); Holland v. C. T. Doan Buick Co., 228 Ark. 340, 307 S.W. 2d 538 (1957); Brooks v. Burgess, 228 Ark. 150, 306 S.W. 2d 104 (1957). This being a law case, the controlling test on appeal is whether the trial court’s judgment is supported by substantial evidence. Holland supra; Fields v. Sugar, 251 Ark. 1062, 476 S.W. 2d 814 (1972). The testimony that we have narrated is manifestly substantial in quality.

We are not impressed by the suggestion that the usurious charge was made by Redbarn unilaterally, without the debtors’ knowledge or acquiescence. The unpaid account was of long standing. For more than two years its amount was in excess of $10,000. There is no suggestion in the record that the Bradshaws expected to be financed by Redbarn without any interest charge. According to the proof, monthly computerized statements, including a service charge, had been sent by Redbarn for a full year before the excess charge was imposed. After the date of the excessive charge the Bradshaws were credited with seven payments upon the account, the largest being a $3,000 payment on February 11, 1971. On November 2, 1971, in the month before Redbarn filed this suit, Bradshaw, Jr., wrote a letter in which he recognized his debt of $11,479.91 to Redbarn and outlined the steps that he was taking to make payments on the debt. Thus the trial court was justified in concluding from the overwhelming weight of the evidence that the Bradshaws were aware of the monthly finance charges, that they voiced no objection to those charges, and that they made payments upon the account with knowledge that the charges were included.

Secondly, Redbarn argues that no evidence except the April, 1970, statement (or invoice) may be considered, because counsel stipulated at the beginning of the trial that “the defense of usury raised by the defendant pertains to one invoice only, that invoice being dated April 28, 1970 . . . . This invoice ... is the only invoice in issue pertaining to the defense advanced by the defendant.” In our opinion the plain language of the stipulation merely excluded all the other invoices from consideration and did not exclude other evidence. Moreover, counsel for both sides so construed the stipulation in the trial court, for they both adduced relevant proof in addition to the invoice itself.

Thirdly, Redbarn introduced proof tending to show that if all its twelve monthly finance charges during the calendar year 1970 were added together, the overall interest rate would be only 9.69%, despite the excessive charge in April. That theory of the case is not supported by the proof. There is no suggestion that interest was charged by the year rather than by the month. In fact, an annual charge would have been impossible, because the amount of the open account varied from month to month as debits were added and credits were given. The creditor’s intention was undoubtedly to impose a finance charge upon each monthly balance. Hence the present argument is actually an effort to retroactively purge the account of the taint of usury, which cannot be done. See the Catalani and Brooks cases, supra.

There is also a cross appeal. When Redbarn filed its complaint in December, 1971, it attached the defendants’ harvested crops. In the following month the attachment was dissolved, on the defendants’ motion, for want of any statutory ground to support it and without loss to the defendants. They now contend that they should be awarded an attorney’s fee for their successful defense of the attachment.

Our longstanding rule has been to deny counsel fees in such a situation, but in Young v. Farmers Bank & Tr. Co., 248 Ark. 613, 453 S.W. 2d 47 (1970), we expressed a willingness to re-examine our position in an appropriate. case. This, however, is not such a case. In jurisdictions allowing such fees the award is made only for the defense of the wrongful attachment as distinguished from the defense of the main case on its merits. See Great American Indemnity Co. v. Sweetwater Mining Co., 74 Nev. 219, 326 P. 2d 1105, 65 A.L.R. 2d 1422 (1958), and especially the A.L.R. annotation. Here the record provides us with no basis for fixing a fee with respect to the attachment only. Apparently an evidentiary hearing was held, but if so the testimony that was taken is not in the record. Hence it would be academic for us to re-examine our rule at this time, for the record does not justify the allowance of a fee even if one were proper.

Affirmed.

Jones, J., dissents.