Kinerd v. Colonial Leasing Co.

GONZALEZ, Justice,

concurring and dissenting.

I agree with the court that there is some evidence to support a judgment for Kinerd under the DTPA. However, I disagree with the court that the record before us supports a recovery under both the DTPA and usury statutes. For these reasons, I concur in part and dissent in part.

Kinerd complains that the court of appeals erred in holding that there is no evidence that Colonial committed usury. 733 S.W.2d at 674. He asserts that his agreement with Colonial was a “finance lease,” or, in essence, a loan of $10,000.00, which is the price that Colonial paid Radiator Aid for the equipment. Kinerd also characterizes the amount of Colonial’s anticipated profits, $6,908.20, as interest on the loaned amount.1 Colonial, on the other hand, contends that the transaction was a sale. A sale is not subject to our usury laws, regardless of price. Rattan v. Commercial Credit Co., 131 S.W.2d 399 (Tex.Civ.App.— Dallas 1939, writ ref’d).

In my opinion, the transaction in question is not subject to the usury laws for at least two reasons. First, the agreement was a sale. The trial court even instructed the jury, without objection, that the transaction was a sale.2 Generally, a seller has *193the right to name the price at which the seller is willing to sell. Here, Colonial agreed to sell equipment that it had purchased for $10,000.00 to Kinerd for $16,-909.20, plus an additional $1.00 at the end of the five-year period. Kinerd paid sales taxes on the full $16,909.20. Since Kinerd had no right to prepay any monthly installments or obtain a discount in any manner, and since he was entitled to obtain title only at the conclusion of the payment period, it is clear to me that Colonial and Kin-erd entered into a sale agreement whereby Kinerd agreed to pay $16,910.20 over a 60-month period.

Because the transaction was a sale, it was incumbent on Kinerd to show that credit was extended. A loan of money is an essential element of any usurious transaction. Holley v. Watts, 629 S.W.2d 694, 696 (Tex.1982).

Kinerd points to the jury finding set out in footnote number 3. There is no evidence in the record to support this finding. Pursuant to the parties’ agreement, Kinerd promised to make 60 payments of “$268.40 + 5% Texas [sales] Tax .of $13.42 for a total of $281.82.” All that the agreement shows is that the total consideration for the equipment was $16,909.20. The transaction in question says nothing about principal, interest or any kind of financing charge. The agreement itself is not evidence of a loan of money.

Nor do the circumstances surrounding the transaction show a loan of money. Colonial sold radiator equipment to Kinerd; it did not extend money to Kinerd so that he could then make that purchase. There is nothing in the record about any discussions between Kinerd and Colonial regarding the nature of this transaction. All discussion regarding the transaction took place between Kinerd and Radiator Aid. Even if Colonial had offered Kinerd the property for a cash price of $10,000.00, which it did not, the charges would merely be an exercise of time-price differential, which is not usurious. Tex.Rev.Civ.Stat. art. 5069-1.-01(a). There is no evidence that this transaction was a loan.

Second, even if this transaction can be characterized as a loan, there is no evidence of how much was loaned (principal to be repaid) and at what interest rate.3 The critical element of a claim of usury is that a loan was given on usurious terms. Holley, 629 S.W.2d at 696. The issue submitted to the jury and answered favorably to Kinerd was that he promised to pay Colonial $16,-909.20 “for the use or detention” of $10,000 or less. Presumably this figure was chosen because of the $10,000.00 sales price from Radiator Aid to Colonial. However, in order to uphold the jury’s finding on this issue, we would have to hold that Colonial’s $10,000.00 purchase price was also its selling price. Generally, a seller has the right to name the sales price. There is not one shred of evidence in the record from which to determine what portion of the $6,909.20 is Colonial’s “profit” as opposed to its “interest charge.” Without some evidence of a differentiation between principal and interest, it is impossible to establish that the transaction was usurious.

For these reasons, I would affirm the judgment of the court of appeals as to usury and reverse and remand the DTPA portion of the judgment to the court of appeals for a sufficiency of the evidence review.

. In essence, Kinerd asserts that this was a schizophrenic transaction. To support his claim for usury, he contends that the transaction was a loan of $10,000. On the other hand, to support his DTPA claim Kinerd characterizes the transaction as a sale of goods.

. The jury instruction was as follows: "You are instructed that although the agreement between *193Mike Kinerd and Colonial Pacific signed by Mike Kinerd on March 23, 1979, is called a lease, the transaction is actually a sale and the instrument is a security agreement, securing a sale of goods from Colonial Pacific to Mike Kinerd.”

. The DTPA damages awarded by the trial court are based upon the jury’s finding that Kinerd promised to pay Colonial $16,909.20 for the radiator equipment. In computing Kinerd’s DTPA damages, the trial court treated the entire amount ($16,909.20) as the consideration paid. If the entire amount is "consideration paid,” then, by definition, Kinerd paid no usurious interest.