Appellant, a home improvement business, purchased certain materials from appellee, a home siding wholesaler. As the open account grew, appellee Mastic added service charges on the overdue amounts. Appellee filed this suit to recover the balance, $37,581.80, which includ-' ed previously billed service charges totaling $1,382.08. The lower court, sitting as a jury, found appellee was entitled to recover the full amount sought. For reversal appellant contends the trial court erred in finding the charges were not usurious and, further, in finding appellant had failed to prove the materials were damaged as a setoff.
The appellee’s monthly statements showed the following terms: “Past due amounts will be subject to service charges. EFFECTIVE ANNUAL RATE 12% OR MAXIMUM ALLOWED BY LAW ... net 30 days.’’ The materials were purchased over a period of months from October 25, 1977, to March 23, 1978. The first service charge, billed by separate invoice on February 20, 1978, was $241.83, which is 1% of $24,183.36, the amount then over 60 days old. By a separate invoice in April, $241.83 was added as a March service charge. Both service charges were later included in the April monthly statement. The April and May service charges were $449-21 each, or 1% of the account 60 days past due each month. These service charges were reflected on the June monthly statement. The June service charge of $370.14, which was again 1% of the amount 60 days past due, was cancelled, however, when the account was turned over to the company’s attorney. The June monthly statement reflected a payment of $10,000 with the resulting balance. The service charges were imposed at varying intervals between invoice date and billing date.
The appellant argues that once the service charge was billed, it was billed as that particular month’s service charge and was based on 1% of the amount past due. Consequently, on a per annum basis, the interest charged would be 12% or in excess of the 10% legal rate in Arkansas. Appellant also adduced evidence from a C.P.A. that the service charge on a monthly or daily basis exceeded the lawful rate of 10%.
The appellee admits its computer is programmed to charge its customer 1% per month on past due accounts or a 12% annual interest rate since this ia legal rate of interest in most states where it does business. Appellee denies, however, that the charges are usurious because its method of billing was a “partial billing” based on a ledger-type account. In support of this policy, appellee’s assistant treasurer and credit manager testified:
. . . [T]he first sixty days during which Mastic [appellee] was entitled to receive Ten Percent there was no billing whatsoever, so that when the first billing came out, the actual effective rate at that point would have been just roughly about Six Percent and then as each month goes by you add an additional partial billing, it gradually moves up toward the allowable rate of Ten Percent. This is why we put a flag on the account and start monitoring it at the sixth partial billing in order to be sure that the total billing for service charges which have been rendered to the customer does not exceed that which they would be entitled to at the Ten Percent rate.
The account was turned over to its attorney on the sixth month (June), and this action resulted. Appellee sought to recover the unpaid service charges, except for June, as part of the total balance past due. As of that time, according to appellee’s calculations, the annual rate billed appellant was at most 8.7% on the total amount due.
To constitute usury, the evidence must be clear and convincing that there was an intent to charge more than 10% interest on the open account. Bunn Lbr. Co. v. Weyerhaeuser Co., 268 Ark. 445, 598 S.W. 2d 54 (1980). Here the case was tried as an issue of fact by a circuit judge, sitting as a jury, after the effective date of Rule 52 of the Arkansas Rules of Civil Procedure. Therefore, the standard of review on appeal is not whether there is any substantial evidence to support the finding of the court, but whether the judge’s findings were clearly erroneous (clearly against the preponderance of the evidence). Taylor v. Richardson Const. Co., 266 Ark. 447, 585 S.W. 2d 934 (1979). It is unnecessary that both parties intend that an unlawful rate of interest be charged; if the lender alone charges or receives more than is lawful, the contract is void. Cagle v. Boyle Mortgage Co., 261 Ark. 437, 549 S.W. 2d 474 (1974). The intent required is not an intent to violate the usury laws, but an intent to receive or reserve a rate of interest that proves to be usurious. First Amer. Nat'l. Bk. v. McClure Const. Co., 265 Ark. 792, 551 S.W. 2d 550 (1979).
The appellee argues that the amount of interest charged did not exceed the maximum amount allowed by law when computed over the entire length of time of the charges, and any method employed to compute these charges is irrelevant if the dollar amount charged does not exceed the dollar amount that appellee is entitled to charge on all past due balances when figured on an annual basis. Also no contract existed between the parties for a usurious amount of interest. Therefore the usury penalty is not applicable.
We first observe that we are unimpressed by appellee’s argument that no contract actually existed on the open account between the parties. See Redbarn Chemicals v. Bradshaw, 254 Ark. 557, 494 S.W. 2d 720 (1973); and Bunn Lbr. Co. v. Weyerhaeuser Co., supra. Appellee’s reliance on Winkle v. Grand Nat'l. Bank, 267 Ark. 123, 601 S.W. 2d 559 (1980) is misplaced. It contends that the “life of the loan” concept was applied there and is applicable here. There, however, notes and security agreements were in issue. Here, there is no way to determine the “life of the loan” since this is an open account. Redbarn, supra, and Bunn, supra, deal with an open account. In Redbarn we said:
. . ..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 [1%] 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 . . .
Here the balance of the open account, billed monthly, varied as debits were added, including service charges. Only one payment was made which was reflected on the June statement with the resulting balance. Further, no evidence existed in either Redbarn or here that the debtor knew the charges were being made on any basis other than monthly. Here the terms of the interest appearing on the monthly statements merely gave notice to the purchaser that a service charge or interest would be assessed, which would be 12% “or maximum allowed by law.” There is nothing in the invoices, monthly statements, or other evidence that appellant was ever made aware that appellee’s practice was to partial bill and eventually flag the account at the end of 6 or 7 months to avoid billing service charges which would total in excess of the 10%, the lawful rate, or that a higher rate of interest would be applied by appellee in the earlier months and then decreased as the rate of interest neared the maximum allowed by law.
As indicated, here there were monthly computerized statements billing appellant for a 1% service charge. The monthly statements included the amounts billed on these separate invoices. Suit was filed to collect these monthly service charges as part of the total balance due. Despite appellee’s testimony that its method of billing was a “partial billing” and its practice was to “flag” the Arkansas accounts to avoid a 12% annual interest, the evidence is clear and convincing that appellee sought by its monthly billing and this action to collect 1% per month on past due open accounts. Certainly the debtor, appellant, was unaware of appellee’s silent intention to “partially” bill and “flag” its account to avoid exceeding the legal rate of interest. Furthermore, we reject the practice of appellee as evidenced by the invoices ■ reflecting the billing of service charges. The credit manager of appellee testified that they used a system of underbilling during the first of the period as an incentive to pay the account. Although the invoice states “net 30 days”, the witness explained by an example that they customarily did not bill a service charge for some two and one-half months after he claimed that the accrual of interest actually began. He attempted to explain the inconsistency by saying that appellee “waived” the service charge if the account was paid before the service charge was billed. We disapprove this double system as a method of avoiding usury laws of this state. In the circumstances, we hold the transaction constituted usury and, therefore, the trial court’s finding to the contrary was clearly erroneous.
In view of this determination, it is unnecessary to consider appellant’s contention that the evidence justified a setoff for damaged materials.
Reversed and dismissed.
Fogleman, C.J., Hickman and Mays, JJ., dissent. -