Benser v. Independence Bank

735 S.W.2d 566, 1987 Tex. App. LEXIS 8289

• Court: Court of Appeals of Texas
• Decided: July 20, 1987
• Docket: 05-86-00648-CV
• Status: Published

Opinions

ON MOTION FOR REHEARING

WHITHAM, Justice.

We grant the motion for rehearing of appellees, Henrietta Allee, Robert E. My-rin, Joseph E. Caperone, Jess S. Epps, Jr., and Donald E. Davis (the Allee parties) and withdraw our opinion of May 20, 1987. The following is now our opinion.

In this usury case, all parties moved for summary judgment. The trial court denied appellant, Albert Benser’s, motion and he appeals from a summary judgment in favor of the Allee parties. The Allee parties are junior lienholders seeking to have Benser’s senior lien declared void for usury. We conclude that a junior lienholder does not have standing to assert any usury claim that a third-party borrower might have against a senior lienholder. Accordingly we reverse and remand.

The borrower, Thomas E. Morris, executed and delivered a note and deed of trust to Metropolitan National Bank. Ben-ser guaranteed payment. Upon Morris’s default, Benser paid the balance due. Metropolitan Bank assigned the note and deed of trust to Benser. Thereafter, Benser initiated foreclosure proceedings under the deed of trust. On August 31, 1984, and prior to foreclosure, Benser and Morris made a renewal and extension agreement and the foreclosure proceedings terminated. Later, on September 24, 1984, Morris executed a note and deed of trust to Independence Bank. The Allee parties guaranteed payment. Upon Morris’ default, the Allee parties paid the balance due. Independence Bank assigned the note and deed of trust to the Allee parties. The Metropolitan Bank and the Independence Bank deeds of trust both created deed of trust liens upon the same property. The Allee parties concede that they are junior lien-holders.

The present case arises from the efforts of both Benser and the Allee parties to foreclose their respective deed of trust liens upon the same property. The usury issues focus on a sum of money Morris paid Benser as a part of the Benser-Morris renewal and extension agreement. Benser maintains that the money paid was the consideration for his terminating the initiated foreclosure proceedings. The Allee parties assert that the money paid was compensation for the use of money and, therefore, interest. TEX.REV.CIV.STAT. ANN. art. 5069-1.01(a) (Vernon 1987). Further, the Allee parties insist that this interest is in excess of the amount allowed by law and, therefore, constitutes usury. Article 5069-1.01(d). Thus, the Allee parties argue that Benser’s senior lien must be declared void. The Allee parties reason that Benser’s senior lien has been extinguished as a result of a usurious transaction in which the interest charged was greater than two times that allowed by law. Benser responds that the Allee parties have no standing, as junior lienholders, to assert any usury claim that Morris might have. For the purposes of this opinion, we assume, but do not decide, that the sum of money Morris paid Benser as a part of the Benser-Morris renewal and extension agreement caused a usurious transaction. Thus, we reach the principal issue.

The dispute centers on whether a junior lienholder is an exception to a general rule. The Allee parties concede that “[t]he general rule is that the penalty provisions of the usury statutes, article 5061-1.01 [sic] et seq., of the Texas Revised Civil Statutes, can be utilized only by the immediate parties to the transaction.” The Al-lee parties state the rule correctly. Rights of redress provided by the usury statutes, article 5069-1.06 of the Texas Revised Civil Statutes, are restricted to those who are original parties to the usurious contract. Micrea, Inc. v. Eureka Life Insurance Co. of America, 534 S.W.2d 348, 354 (Tex.Civ.App.—Fort Worth 1976, writ ref’d n.r.e.). Of course there might be a right to question a usurious contract by one in privity with the borrower, but if so he is obliged to show that it is based upon and derivative from the borrower’s right. The foregoing is more or less “Hornbook Law.” Micrea, Inc., 534 S.W.2d at 354. Article 5069-1.06 provides in plain language that the prescribed penalties be forfeited “to the obli-gor.” Such language evidences the Legislature’s intent that the usury defense remain personal to the debtor. Since statutes of a penal nature are to be strictly construed, the penalty forfeitures provided in Article 5069-1.06 are restricted to the immediate parties to the transaction creating the usury defense. Houston Sash & Door Co. v. Heaner, 577 S.W.2d 217, 222 (Tex.1979), citing, Micrea, Inc., 534 S.W.2d 348. If a usury defense remains personal to the debtor, it follows, and we so hold, that a usurious claim remains personal to the debtor. Thus, we conclude that the Allee parties are without standing to assert any usury claim that Morris might have unless they fall within their asserted exception to the general rule.

As their exception to the general rule, the Allee parties contend that rights of redress provided by article 5069-1.06 are available to junior lienholders who are not original parties to the usurious contract or in privity with an original party to the usurious contract. The Allee parties locate this exception in the following holdings found in two cases decided in the 1890s. A junior mortgagee may set up usury in the senior mortgage. Johnson v. Lasker Real-Estate Ass’n., 2 Tex.Civ.App. 494, 21 S.W. 961, 962 (1893, no writ). A junior mortgagee, or the purchaser under such a mortgage, who has the right to pay off the debt that creates the prior incumbrance, should have the right to discharge such incum-brance by paying only so much of the debt as is recognized by the law to be valid. Maloney v. Eaheart, 81 Tex. 281, 284, 16 S.W. 1030, 1031 (1891). (Maloney reached this holding in the face of a contention that the plea of usury is the personal privilege of the debtor and was not available to the purchaser under the junior mortgage. Ma-loney, 16 S.W. at 1030.) Thus, the Allee parties reason that they have the right to discharge the Benser debt to protect their junior lien, but are required to discharge only the amount recognized by law to be valid. The Allee parties reason further that they may assert usury to establish that none of the senior debt is valid because Benser charged more than two times the interest allowed. Thus, the Allee parties argue that Benser has forfeited all principal as well as interest and all other charges. Article 5069-1.06(2). Hence, the Allee parties insist that Benser’s debt has been discharged, that his senior lien has been extinguished and, therefore, nothing is due Benser because the law recognizes none of his debt to be valid.

Benser replies that the Allee parties’ reliance on Johnson and Maloney is misplaced. Benser points out that the statutory scheme in existence when Johnson and Maloney were decided differed from the present usury statute. The Supreme Court in Maloney described the controlling statutory provision:

Our statutes declare that “all written contracts whatsoever, which may in any way, directly or indirectly, stipulate for a greater rate of interest than twelve per cent per annum, shall be void and of no effect” for the whole rate of interest. Article 2980. They also direct “that the provisions thereof shall be liberally construed, with a view to effect the objects and to promote justice.” See final title, Rev. St.

Maloney, 16 S.W. at 1031. Thus, Benser asserts that the emphasis in the Maloney statutory scheme was the “contract” which the statute declared “void” if usurious. Benser reads the Maloney statute to contain no limitation upon who could seek relief. Hence, Benser tells us that the courts “in deciding Johnson and Maloney could justifiably permit a junior lienholder to invoke the remedy provided by [the statute then in effect].” Benser, however, argues that the focus has shifted from the “contract” to the “obligor” under the present statute in the language:

Any person who contracts for, charges or receives interest which is greater than the amount authorized by this Subtitle, shall forfeit to the obligor three times the amount of usurious interest contracted for, charged or received, such usurious interest being the amount the total interest contracted for, charged, or received exceeds the amount of interest allowed by law, and reasonable attorney fees fixed by the court except that in no event shall the amount forfeited be less than Two Thousand Dollars or twenty percent of the principal, whichever is the smaller sum; provided, that there shall be no penalty for any usurious interest which results from an accidental and bona fide error.

TEX.REV.CIV.STAT.ANN. art. 5069-1.-06(1) (Vernon 1987) (emphasis added). Benser, therefore, reasons that a junior lienholder is not an “obligor” since a junior lienholder owes no obligation to pay the underlying indebtedness secured by the senior lien.

Even today under the Texas usury statutes, article 5069-1.01 et seq., a usurious contract is void. A usurious contract is, of course, void as a matter of law. TEX. CONST, art. XVI, § 11; Tri-County Farmer’s Co-op v. Bendele, 641 S.W.2d 208, 209 n. 2 (Tex.1982) (a case arising under article 5069-1.06). Nevertheless, we conclude that under article 5069-1.06 a junior lien-holder does not have standing to assert any usury claim that a third-party borrower might have against a senior lienholder. We reach this conclusion for two reasons. First, article 5069-1.01 et seq. focuses in article 5069-1.06 upon the offended borrower — “the obligor” — and forfeiture to that “obligor.” Second, we must heed the Supreme Court’s emphasis on the “obli-gor.” Article 5069-1.06 provides in plain language that the prescribed penalties be forfeited “to the obligor.” Houston Sash & Door, 577 S.W.2d at 222. Such language evidences the Legislature’s intent that the usury defense remain personal to the debt- or. Houston Sash & Door, 577 S.W.2d at 222. Since statutes of a penal nature are to be strictly construed, the penal forfeitures provided in article 5069-1.06 are restricted to the immediate parties to the transaction creating the usury defense. Houston Sash & Door, 577 S.W.2d at 222.

In light of these clear and emphatic expressions in Houston Sash & Door, we are unwilling to say that under article 5069-1.-06 a junior lienholder is an exception to “restricted to the immediate parties to the transaction” as put by the Supreme Court. Houston Sash & Door, 577 S.W.2d at 222. We are bound by the pronouncements of the Texas Supreme Court on the law until the court states to the contrary. Jones v. Hutchinson County, 615 S.W.2d 927, 933 (Tex.Civ.App.—Amarillo 1981, no writ). Therefore, we leave it to the Supreme Court to state whether a junior lienholder is an exception to the rule that rights of redress provided by the present usury statutes are restricted “to the immediate parties to the transaction.” Houston Sash & Door, 577 S.W.2d at 222; Micrea Inc., 534 . Consequently, it follows that the Allee parties do not have standing, as junior lienholders, to assert any usury claim that Morris had against Benser because the Allee parties are neither the “ob-ligor” under article 5069-1.06 nor immediate parties to the transaction creating the usury claim. Therefore, we conclude that the trial court erred in granting the Allee parties’ motion for summary judgment.

Although Benser in the prayer in his brief asks that we render judgment that his lien has priority, he does not assign or argue denial of judgment that his lien has priority as error in the trial court. Indeed, Benser’s trial pleadings pray “that [the Al-lee parties] take nothing by this action.” Nowhere in his trial-pleading prayer does Benser seek judgment declaring that his lien has priority. There is no rule or statute that authorizes appellate consideration of errors for which there was no trial predicate that complained of the error. Pirtle v. Gregory, 629 S.W.2d 919, 920 (Tex.1982); see TEX.R.APP.P. 52(a). Furthermore, Benser does not, by an assignment in a point of error or by argument, complain that the trial court erred in failing to grant his motion for summary judgment. When both parties file motions for summary judgment and one such motion is granted, then the trial court’s judgment is final and appealable and, on appeal, this court should determine all questions presented. Tobin v. Garda, 159 Tex. 58, 316 S.W.2d 396, 400 (1958). If reversible error is found, this court should render such judgment as the trial court should have rendered. Tobin, 316 S.W.2d at 400. Where, however, the only error assigned by the appellant complains of the granting of the appellee’s motion for summary judgment and there is no assignment of error that the trial court erred in failing to grant the appellant’s own motion for summary judgment, this court may not render judgment. See Buckner Glass & Mirror v. T.A. Pritchard Co., 697 S.W.2d 712, 714-15 (Tex.App.—Corpus Christi 1985, no writ); Holmquist v. Occidental Life Insurance Co., 536 S.W.2d 434, 438 (Tex.Civ.App.—Houston [1st Dist.] 1976, writ ref’d n.r.e.). Instead, we may only remand the cause to the trial court. Buckner Glass, 697 S.W.2d at 714-15; Holmquist, 536 S.W.2d at 438. Consequently, we conclude that Benser is not entitled to rendition of a judgment declaring that his lien has priority, nor is he entitled to rendition of a take-nothing judgment on his own motion for summary judgment. All assignments of error not brought forward as points of error are waived. Mullinax, Wells, Ball and Cloutman, P.C. v. Sage, 692 S.W.2d 533, 536 (Tex.App.—Dallas 1985, writ ref’d n.r.e.).

Accordingly, we reverse the trial court’s judgment and remand the cause to the trial court.

JUDGMENT

The motion for rehearing of appellees, Henrietta Allee, Robert E. Myrin, Joseph E. Casperone, Jess S. Epps, Jr., and Donald E. Davis filed June 3, 1987, is hereby GRANTED. Our judgment of May 20, 1987, is vacated. The following is now our judgment.

In accordance with this court’s opinion of this date, the trial court’s judgment in favor of appellees, Henrietta Allee, Robert E. Myrin, Joseph E. Casperone, Jess S. Epps, Jr., and Donald E. Davis is REVERSED. The cause is REMANDED to the trial court for further proceedings.

It is ORDERED that appellant, Albert Benser, recover his costs in this court from appellees, Henrietta Allee, Robert E. My-rin, Joseph E. Casperone, Jess S. Epps, Jr., and Donald E. Davis. The clerk of the district court is directed to release to appellant, Albert Benser, his cash deposit in lieu of cost bond.

LAGARDE, J., concurring with opinion.