Brown v. Pilini

Holden, C.J.,

(dissenting in part). I concur in affirming that part of the decree which calls upon the defendant Pilini to account for the balance remaining in the reserve account. This aspect of the decree allows the plaintiff to recover $7,637.30 with interest of $4,230.23. I dissent from the Court’s affirmance of the remainder of the decree which orders the defendant to pay the plaintiff

“(c) Ten per cent of the sum of $127,-287.75 which was paid by the said Brown to the said Pilini as usury mentioned in Findings Nos. 9 and 10, amounting to $12,728.77
(d) Interest on said sum of $12,728.77 from April 25, 1958, the date of the Plaintiff’s Bill of Complaint to the date of this Decree, September 9, 1968, amounting to the sum of $8,023.65.”

In the first place, the aggregate amount of the payments to Pilini on the combined conditional sales agreement was paid entirely by Brown’s customers. Excluding the reserve fund, as the chancellor has done by his decree, no part of the total payment of $127,287.75 was paid by the plaintiff. It was collected from the conditional vendees.

It appears from the plaintiff’s own testimony that none of the loans, either as to principal, interest or handling charges, have been paid by the plaintiff. Yet the usury statute in effect at the time of these transactions, provided that when “a greater rate of interest than is allowed by law is paid, the *333person paying the same may recover the amount so paid above the legal interest, with interest thereon from the time of payment, in an action of contract on this statute.” 9 V.S.A. § 34 (Repealed 1967), No. 377 (Adj. Sess.) § 2 eff. March 26, 1968.

The right to recover under this statute is strictly personal. It is confined to the person who pays the usury. Lafountain v. Burlington Savings Bank, 56 Vt. 332, 336; Spaulding v. Davis, 51 Vt. 77, 79; Lamoille County National Bank v. Bingham, 50 Vt. 105, 106. The persons paying the usury in all of the transactions, represented in the total payments to the defendant, were the plaintiff’s customers. Hence, recovery by the plaintiff, who was only secondarily liable on the notes and has parted with no usury, is not permissible under 9 V.S.A. § 34. Cady v. Goodnow, 49 Vt. 400, 402.

The premise of the majority opinion is that usury resides in the so-called handling, or finance charge, collected by the defendant. Yet, as the majority opinion points out, the parties are agreed that this was a proper charge as between Brown and his customers. Although paid by these same customers, it becomes illegal interest in the hands of the defendant. And it is ordered repaid to one who didn’t pay it. This creates an anomaly in the law which I find unacceptable.

Beyond that, at the outset of their dealings it was agreed between the plaintiff and the defendant that Pilini was to receive the handling charges. The plaintiff so testified. The plaintiff first laid claim to the handling charges midway during the trial. The special master called this to his attention as a variance in his prior testimony: — “Mr. Brown, I think you are changing your testimony. You previously testified Pilini was entitled to 6% plus 10% for doing it, which you said was handling charge.” After some equivocation, the plaintiff responded: “That was the original agreement, yes Sir.” Nonetheless, he then indicated he wished to change his position to claim the handling charge.

The master has made no finding to support the plaintiff’s claim that he was entitled to the finance charge. To the contrary, findings 14 and 31 are in accord with the evidence as first stated in the plaintiff’s testimony. As I see it, if the handling charge was proper for Brown to collect from his customers, it was an equally appropriate collection in the hands of Brown’s assignee.

*334The conduct of the parties followed this pattern. The total of $28,761.92, which the plaintiff collected from his various customers, was paid over to the defendant with no reservation or withholding of the handling charges.

These considerations persuade me that the chancellor’s order, which awards recovery by the plaintiff of payments made by his customers, should not be affirmed. It is not supported by the record and is contrary to the usury statutes in effect at the time such payments were made. I would reverse and vacate paragraph 4(c) and (d) and affirm the other provisions of the decree.