Griffin Smith, Chief Justice.
The litigation resulting in this appeal stems from a controversy regarding the balance claimed to be dne on a note attached to a conditional sale contract executed by Kenneth L. Schuck June 4th, 1949.
H. E. Garrett operates a motor sales business and delivered to Schuck a 1947 model Buick automobile, listed by the seller as a used unit. The contract shows the total time price to have been $2,328, of which $600 was paid. The note and contract were printed in a single form with perforations for easy detachment. As to the note, Schuck’s promise was to pay Garrett Motor Sales the principal sum of $1,728 in 24 installments of $72, “. . . with interest on each installment after its maturity at the highest lawful rate.” Failure to pay according to the tenor of the note at the timé specified matured all unpaid installments at the holder’s election. The first note was due July 10, 1949.
Schuck and his wife completed their negotiations for the car after banking hours on Saturday — probably around four o’clock. Schuck testified that he had arranged for credit at Worthen Bank & Trust Co. whereby deferred payments could be made on a satisfactory interest basis; but, inferentially, the negotiations were tentative and the necessary fund to pay Garrett in full would not be available until the car could be pledged as security. Schuck was positive that the only price quoted was $1,795. It is not disputed that he traded an old. car to Garrett for $400 and paid $200 in cash, leaving, as Schuck said he believed, a balance of $1,195.
In the hurry to close the deal papers were signed under an arrangement whereby Conditional Sales Contract No. 35680 was executed by Schuck. It is one of Murdock Acceptance Corporation’s forms printed on blue paper bearing the monogram, “A Finance Service to Fit Your Needs.” Murdock’s name does not appear on the front of the document. Neither is it to be found on the attached note, upon which the words “Negotiable instrument,” and “Be sure to sign on back in proper places,” are printed in blackface capital letters. The back of the note contains two indorsement forms, with, recourse, and without recourse, each followed by “Pay to the order of Murdock Acceptance Corp.” On the back of tbe contract proper, as distinguished from the note, certain statements are addressed to Murdock Acceptance Corporation, the one pertinent here being the dealer’s recommendation, and assignment without recourse.
The contract recites that it is signed in duplicate and that one copy was retained by the purchaser on June 4th —the day executed. Garrett contends that with delivery all writing and figures were filled in, and that the misunderstanding springs from Schuck’s refusal to concede that the cash price and the time price were different. Schuck insisted that the duplicate given him was printed on pink paper and that the figures now charged to him were $1,795 less $600. Garrett’s explanation of the pink paper is that it was a slip used by a buyer in procuring state registration. However, he said that Murdock’s present contracts are unlike the one used in 1949. Schuck testified that he lost the duplicate obtained when the car was purchased.
When Murdock acquired the note it had not been detached from the contract. The Acceptance Corporation’s forms were left with Garrett and other dealers. The contract here shows ‘ ‘ Total time price, $2,328; paid [on delivery], $600; deferred balance, $1,728, payable [to Murdock] in installments of $72, . . . commencing July 10, 1949.” Garrett concurrently executed a bill of sale containing a covenant that the car was “clear from encumbrances.” Schuck did not apply for a certificate of title until February 1, 1950, but the State Revenues Department at that time, on information Schucks says he supplied, registered the car under Schuck’s name with notations that it was subject to a lien dated June 4, 1949, for $1,195. In his assertion that the only price mentioned by Garrett was $1,795 and that the balance should have been $1,195, Schuck was corroborated by his wife who testified that she heard all of the conversations, and that the duplicate Schuck received showed $1,795, less the down payments of $600. In summation, Schuck testified, in respect of the balance of $1,195, that he knew a charge of some character would be made for carrying tlie paper, and for insurance. Within a week he received the formal papers showing the presumptive obligation to pay $72 for 24 months, but did not complain until the amount he thought he actually owed had been discharged.
In explaining, on cross-examination, an obviously obscure answer in which the word you was used, Schuck replied that he had in mind “the people that lent me the money.” Question: “Nobody loaned you any money, did they?” A. “That is what they say, [but] not what I think.” Q. “There was no transfer of money, was there — you saw no money?” A. “I saw the benefit of the money.”
We think the entire question relating to usury— alleged in Schuck’s complaint — depends upon the true character of the transaction. Although Garrett did not deny Schuck’s statement that when the deal was pending the prospective purchaser remarked that he could finance the obligation through the bank at a cost of about $50, and that the reply was that the finance corporation’s charges would be but slightly more — not over $50 additional — Garrett did admit that an agreement as to price, was reached, and that Schuck was told that the accommodating company would not carry in excess of two-thirds of the total cash price. Schuck then said he wanted the longest permissible extension — at that time 24 months — and he understood that the monthly payments would be $72. A question put to Garrett was: “[Did you tell him] it would cost $72 a month for 24 months ? ” A. “ And we never figured the payments until the deal was closed.” Q. “When you told [Mr. and Mrs. Schuck] the amount of the monthly payments over a period of 24 months, did they take time to consider them?” A. “I don’t know what they were considering, but they took a considerable amount of time.”
On cross-examination Garrett unhesitatingly conceded that the cash price quoted Schuck was $1,795, and that the balance was $1,195. There was this explanation in response to an inquiry whether separate prices were quoted: “When I sold him — when the car — when the deal was completed — when I filled this out right here, I don’t remember whether I told him it was $2,328, or how that was. I told him he was paying $600 down and the balance would be 24 at $72; I don’t remember whether the unpaid balance of $1,728 was brought out or not, [but] I am pretty sure it was. But the contract, the basis on which I traded, was $1,795. . . . We have one price marked cash and the other credit. We are in the wholesale business. We have a retail price and another price we can make. Naturally we are in it to make what—
When asked how much money Murdock returned (the term “kickback” was objected to) Garrett replied: ‘ ‘ They gave me a check for, let me see, about $66. ’ ’ Question: “You are sure it wasn’t $95.70?” A. “I would have to figure it.” After some hesitation during which computations were seemingly made, the witness replied that he “got a legal reserve” of $91.40.
In substance, the testimony was that if the purchaser whose contract and note Murdock acquired paid in full, a “special reserve” of $24 was payable, in addition to $67.40.
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Griffin Smith, Chief Justice.
The litigation resulting in this appeal stems from a controversy regarding the balance claimed to be dne on a note attached to a conditional sale contract executed by Kenneth L. Schuck June 4th, 1949.
H. E. Garrett operates a motor sales business and delivered to Schuck a 1947 model Buick automobile, listed by the seller as a used unit. The contract shows the total time price to have been $2,328, of which $600 was paid. The note and contract were printed in a single form with perforations for easy detachment. As to the note, Schuck’s promise was to pay Garrett Motor Sales the principal sum of $1,728 in 24 installments of $72, “. . . with interest on each installment after its maturity at the highest lawful rate.” Failure to pay according to the tenor of the note at the timé specified matured all unpaid installments at the holder’s election. The first note was due July 10, 1949.
Schuck and his wife completed their negotiations for the car after banking hours on Saturday — probably around four o’clock. Schuck testified that he had arranged for credit at Worthen Bank & Trust Co. whereby deferred payments could be made on a satisfactory interest basis; but, inferentially, the negotiations were tentative and the necessary fund to pay Garrett in full would not be available until the car could be pledged as security. Schuck was positive that the only price quoted was $1,795. It is not disputed that he traded an old. car to Garrett for $400 and paid $200 in cash, leaving, as Schuck said he believed, a balance of $1,195.
In the hurry to close the deal papers were signed under an arrangement whereby Conditional Sales Contract No. 35680 was executed by Schuck. It is one of Murdock Acceptance Corporation’s forms printed on blue paper bearing the monogram, “A Finance Service to Fit Your Needs.” Murdock’s name does not appear on the front of the document. Neither is it to be found on the attached note, upon which the words “Negotiable instrument,” and “Be sure to sign on back in proper places,” are printed in blackface capital letters. The back of the note contains two indorsement forms, with, recourse, and without recourse, each followed by “Pay to the order of Murdock Acceptance Corp.” On the back of tbe contract proper, as distinguished from the note, certain statements are addressed to Murdock Acceptance Corporation, the one pertinent here being the dealer’s recommendation, and assignment without recourse.
The contract recites that it is signed in duplicate and that one copy was retained by the purchaser on June 4th —the day executed. Garrett contends that with delivery all writing and figures were filled in, and that the misunderstanding springs from Schuck’s refusal to concede that the cash price and the time price were different. Schuck insisted that the duplicate given him was printed on pink paper and that the figures now charged to him were $1,795 less $600. Garrett’s explanation of the pink paper is that it was a slip used by a buyer in procuring state registration. However, he said that Murdock’s present contracts are unlike the one used in 1949. Schuck testified that he lost the duplicate obtained when the car was purchased.
When Murdock acquired the note it had not been detached from the contract. The Acceptance Corporation’s forms were left with Garrett and other dealers. The contract here shows ‘ ‘ Total time price, $2,328; paid [on delivery], $600; deferred balance, $1,728, payable [to Murdock] in installments of $72, . . . commencing July 10, 1949.” Garrett concurrently executed a bill of sale containing a covenant that the car was “clear from encumbrances.” Schuck did not apply for a certificate of title until February 1, 1950, but the State Revenues Department at that time, on information Schucks says he supplied, registered the car under Schuck’s name with notations that it was subject to a lien dated June 4, 1949, for $1,195. In his assertion that the only price mentioned by Garrett was $1,795 and that the balance should have been $1,195, Schuck was corroborated by his wife who testified that she heard all of the conversations, and that the duplicate Schuck received showed $1,795, less the down payments of $600. In summation, Schuck testified, in respect of the balance of $1,195, that he knew a charge of some character would be made for carrying tlie paper, and for insurance. Within a week he received the formal papers showing the presumptive obligation to pay $72 for 24 months, but did not complain until the amount he thought he actually owed had been discharged.
In explaining, on cross-examination, an obviously obscure answer in which the word you was used, Schuck replied that he had in mind “the people that lent me the money.” Question: “Nobody loaned you any money, did they?” A. “That is what they say, [but] not what I think.” Q. “There was no transfer of money, was there — you saw no money?” A. “I saw the benefit of the money.”
We think the entire question relating to usury— alleged in Schuck’s complaint — depends upon the true character of the transaction. Although Garrett did not deny Schuck’s statement that when the deal was pending the prospective purchaser remarked that he could finance the obligation through the bank at a cost of about $50, and that the reply was that the finance corporation’s charges would be but slightly more — not over $50 additional — Garrett did admit that an agreement as to price, was reached, and that Schuck was told that the accommodating company would not carry in excess of two-thirds of the total cash price. Schuck then said he wanted the longest permissible extension — at that time 24 months — and he understood that the monthly payments would be $72. A question put to Garrett was: “[Did you tell him] it would cost $72 a month for 24 months ? ” A. “ And we never figured the payments until the deal was closed.” Q. “When you told [Mr. and Mrs. Schuck] the amount of the monthly payments over a period of 24 months, did they take time to consider them?” A. “I don’t know what they were considering, but they took a considerable amount of time.”
On cross-examination Garrett unhesitatingly conceded that the cash price quoted Schuck was $1,795, and that the balance was $1,195. There was this explanation in response to an inquiry whether separate prices were quoted: “When I sold him — when the car — when the deal was completed — when I filled this out right here, I don’t remember whether I told him it was $2,328, or how that was. I told him he was paying $600 down and the balance would be 24 at $72; I don’t remember whether the unpaid balance of $1,728 was brought out or not, [but] I am pretty sure it was. But the contract, the basis on which I traded, was $1,795. . . . We have one price marked cash and the other credit. We are in the wholesale business. We have a retail price and another price we can make. Naturally we are in it to make what—
When asked how much money Murdock returned (the term “kickback” was objected to) Garrett replied: ‘ ‘ They gave me a check for, let me see, about $66. ’ ’ Question: “You are sure it wasn’t $95.70?” A. “I would have to figure it.” After some hesitation during which computations were seemingly made, the witness replied that he “got a legal reserve” of $91.40.
In substance, the testimony was that if the purchaser whose contract and note Murdock acquired paid in full, a “special reserve” of $24 was payable, in addition to $67.40. Emphasizing his pleasant relations with the finance corporation, Garrett testified that Murdock [“Would give me] $71.40 any time I requested it, and the rest I have to wait for. Any car could be turned back and the loss — that $24 — would be wiped out. ’ ’
Garrett considered the payment a discount: — ‘‘ They paid me $1,195, plus this $71.40. . . . The balance due me [by Schuck] was $1,728, and I sold [Murdock] the paper for $1,195 plus the reserve they paid me.” A later explanation was: “At the time I sold them the paper they gave me this — they gave me $1,276.40 and $24 for — ”. ... To this testimony Garrett added: “At the end of the year they always make you a little present — I never did even figure it.” Murdock required Garrett to cheek the credit rating of purchasers before the finance corporation would handle the paper.
An insurance policy sent to Schuck covers comprehensive liability and collision or upset, with $50 deductible, for which the two-year premium was $208. It shows actual cost [of the car] when purchased, including equipment, $1,795, encumbered with $1,728. The difference of $67 is not accounted for by any affirmative testimony.
First. — Our cases are in harmony regarding the right of a seller to ask one price where cash is paid, and a higher price if credit is extended. The usury law is directed to an excessive charge for money. It is not necessary that both parties to a loan contract intend that an unlawful rate of interest be paid, for the contract is void if the lender alone charges or receives more than 10%. Wilson v. Whitworth, 197 Ark. 675, 125 S. W. 2d 112. Mutuality is not essential if the lender has the intent to receive more than the maximum mentioned in Art. 19, Sec. 13 of the Constitution, and the intent is reflected in the contract. Cases distinguishing money from property in making charges to which attention is directed by appellees (the Murdock Corporation and Garrett) are General Contract Purchase Corporation v. Holland, 196 Ark. 675, 119 S. W. 2d 535; Garst v. General Contract Purchase Corporation, 211 Ark. 526, 201 S. W. 2d 757; Cheairs v. McDermott Motor Co., 175 Ark. 1126, 2 S. W. 2d 1111; Harper v. Futrell, 204 Ark. 822, 164 S. W. 2d 995; Smith v. Kaufman, 145 Ark. 548, 224 S. W. 978. Other decisions are of a kindred character.
In/the Garst Case, supra, there was reference to the Harper-Futrell decision holding that a conditional sales contract was not void because computations on an interest basis yielded more than ten percent per annum. It was said that the carrying cost was not based on a loan of money, but was “a part of the . . . price which the purchaser agreed to pay.” The cause was remanded for submission to a jury.
Appellees ’ contention, advanced by Garrett, that the note was increased from a net balance of $1,195 to $1,728 when it was ascertained that the sale was to be a credit transaction, is contradicted by the dealer’s recommendations and the language of Garrett’s assignment, in stating to Murdock that “. . . . the face value of said contract is owing by said buyer and that there is no defense thereto; that the listed cash selling price was the amount for which said property was sold to said buyer, not including brokerage and insurance charges.”
If this representation be correct — and it was the basis on which Garrett’s transfer to Murdock was made —the automobile was-not sold at an advanced price by reason of the time factor.
Under the contract Murdock could have waited until the last note fell due, or longer, if the corporation chose, and a higher demand for credit. We think it very likely that “twenty-four notes at $72” were discussed, but reasonable inferences suggest a probability that Schuck had in mind the only capital price that had been discussed and that it did not occur to him that the multiplied notes exceeded $1,795. Certainly there is no indication that in these conversations anyone contemplated that insurance and carrying charges would absorb the credit of $600 to which the buyer was admittedly entitled.
Second. — Murdock Acceptance Corporation was not an innocent purchaser. Garrett determined the credit rating of customers whose notes were to be taken by Murdock, although the latter had a right to reject where Garrett’s judgment was in error. The agreements for refunds, and for the so-called reserve, were according to a pattern of intent showing mutuality of interests. The corporation’s forms, in blank, were left with Garrett, and the seller not only parted with possession of the car before the notes passed to Murdock, but a certificate asserting that the motor company had not retained title and that it did not have a lien on the property was executed for presentation to the Department of Revenues. Although the information given by appellant in procuring the evidence of title registration, if considered in this litigation, would be in the nature of a self-serving declaration (not objected to), nevertheless Schuck stated that the balance due [inferentially] as of June 4, 1949, was $1,195.
Third — The Notes, Interest, etc. — In the absence of any contractual provision for interest other than 10%
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after maturity, we think it important to ascertain the difference between $1,276.40, plus insurance of $208— that is, the full amount Murdock was out — and what the corporation claims it was entitled to collect. Appended computations deal with this differential of $243.60. The first tabulation (left) begins with the total of $1,484.40 and assumes that the initial $72 note, when paid at the end of thirty days, was partly principal and partly interest. On a ten percent basis the yield would be $151.16, so the excess is $92.44. It equals $22.44 of the 23d note, and all of the last note. The second table (right) shows that the actual interest was 15.025%.
We conclude that there was an unauthorized charge in the nature of a device to evade usury, and the contract is unenforcible. So are the notes. ' Payments aggregating $1,152 were made before the suit was filed and the company’s right to retain this money is not questioned. The trial court directed certain deposits by Schuck pendente lite, which of course will be returned to appellant. All costs will be borne by the appellees.
Reversed.
Mr. Justice Ward dissents. Mr. Justice McFaddin concurs.