





Baker-D v. Howard                                                   







AFFIRMED
OCTOBER 25, 1990

 NO. 10-89-164-CV
Trial Court
# 88-1601-4
IN THE
COURT OF APPEALS
FOR THE
TENTH DISTRICT OF TEXAS
AT WACO

* * * * * * * * * * * * *

          DOYE BAKER,
                                                                                            Appellant
          v.

          DAYMON RAY HOWARD,
                                                                                            Appellee

* * * * * * * * * * * * *

 From 170th Judicial District Court
McLennan County, Texas

* * * * * * * * * * * * *

          In January and February 1987, appellant Doye Baker loaned appellee Daymon Howard
$55,000.00 with four advances of funds that ended on February 18th.  Baker agreed to finance the
loan over a period of seven years, at fifteen percent interest per annum, with monthly payments
of $1,061.32 beginning March 1, 1987.  The loan agreement between the parties was oral, and
it was completed on February 18th.  Baker testified that on that day, "When we were discussing
it, [Howard] asked me what his payments would be on the $55,000.00 at the 15 percent interest,
and I did have an amortization book and we looked it up in an amortization book, and that is
where we came up with a figure of $1,061.00, whatever it is."  Appellee did not execute a
promissory note or any other instrument evidencing the loan.  However, between February 18th
and March 1st, after the terms of the loan had been agreed upon, appellant gave appellee a printed
amortization schedule setting forth the amount of the loan, the rate of interest, and the 84
payments of $1,061.32 each required under the original agreement.  After appellee had made eight
payments and a part of the ninth, he quit paying on the loan.  This lawsuit was filed in May 1988
and tried to a jury in April 1989.  The jury found that the transaction between the parties was a
loan.  The judgment that followed in the case awarded appellant the balance due on the note less
the penalty for usurious interest set forth in Texas Civil Statutes Article 5069--1.06(1) on the trial
court's conclusion that the interest charged on the loan was usurious as a matter of law under the
provisions of Articles 5069--1.02 and 5069--1.04 of the Texas Civil Statutes because the interest
exceeded ten percent and the loan contract was not in writing.
          These statutes
 provide in pertinent parts as follows:
Art. 5069-1.02.  
   Except as otherwise fixed by law, the maximum rate of interest shall be ten
percent per annum.  A greater rate of interest than ten percent per annum unless
otherwise authorized by law shall be deemed usurious.  All contracts for usury are
contrary to public policy and shall be subject to the appropriate penalties prescribed
in Article [5069--1.06].
          Art. 5069-1.04.
   (a) The parties to any written contract may agree to and stipulate for any rate of
interest, . . . that does not exceed:
   (1) an indicated rate ceiling that is the auction average rate quoted on a bank
discount basis for 26-week treasury bills issued by the United States government,
as published by the Federal Reserve Board, for the week preceding the week in
which the rate is contracted for, multiplied by two, and rounded to the nearest one
quarter of one percent; or, as an alternative,
   (2) an annualized or quarterly ceiling that is the average of the computations
under Subsection (1) of this section and is computed pursuant to Section (d) of this
Article.
   (b)(1) If a computation under Section (a)(1), (a)(2), or (c) of this Article is less
than 18 percent a year, the ceiling under that provision is 18 percent a year.  If a
computation under Section (a)(1), (a)(2), or (c) of this Article is more than 24
percent a year, the ceiling under that provision is 24 percent a year.
          Art. 5069-1.06.  Penalties
   (1) 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.
   (2) Any person who contracts for, charges or receives interest which is in excess
of double the amount of interest allowed by this Subtitle shall forfeit as an
additional penalty, all principal as well as interest and all other charges and shall
pay reasonable attorney fees set by the court; . . . . 
          The amortization schedule that appellant gave to appellee set forth near the top of the first
page, "Loan Amount $55,000.00"; "Interest Rate 15.0000%"; "First Payment Due 03/01/87"; and
"Payment Amount $1061.32."  This was followed by the listing of 84 numbered payments of
$1,061.32 each with columns showing the payment due dates, the amount of interest and principal
included in each payment, and the balance remaining on the principal of the loan after the
payment.  However, the schedule was not signed by either party and contained no identifying
information as to the parties to be bound.
          In his single point of error appellant urges on appeal as he did in the trial court that the
amortization schedule, which set forth the loan agreement of the parties, including the fifteen
percent interest rate, satisfied the requirement in Article 5069--1.04(a) for a "written contract" that
permits an agreement for a rate of interest above ten percent that is not usurious.  We disagree. 
The question of whether or not the unsigned amortization schedule was the written contract of the
parties or merely a memorial of the prior oral agreement of the loan transaction was a fact issue
for the jury, turning on the intent of the parties.  Simmons And Simmons Construction Co. v.
REA, 155 Tex. 353, 286 S.W.2d 415 (1955).  This fact issue was not submitted to the jury in our
case.  The judgment carries the implied finding of the trial court that the schedule was not the
written agreement of the parties.  Rule 279, Vernon's Tex.Rules Civ.Proc.  Evidence we have
recited supports this finding, showing that the loan agreement was entirely completed, including
the amount of the monthly payments, several weeks before the schedule was supplied to Howard
by Baker.  Additionally, the schedule was not sued on or pleaded by either party.  Under the
evidence, the trial court was justified in determining that the parties merely intended and used the
amortization schedule as evidence of the prior completed oral contract of the loan transaction upon
which they acted.  As mere evidence of the oral contract, the schedule was not a "written contract"
within the meaning of Article 5069--1.04(a).  
          The maximum legal rate of interest that the parties could have agreed upon orally for the
loan in question was ten percent per annum.  Article 5069--1.02, ante.  Because the fifteen percent
rate agreed upon and used by the parties was not "in excess of double the amount of [legal]
interest," the proper penalty to be assessed against appellant, and the one used by the trial court,
was the requirement that appellant forfeit to appellee "three times . . . the amount the total interest
contracted for. . . exceed[ed] the amount of interest allowed by law," plus attorney's fees.  Article
5069--1.06, ante.
          The total amount of interest at fifteen percent per annum that was charged on the loan of
$55,000.00 was $34,151.13.  This was based upon a loan period of seven years that called for
monthly payments of $1,061.32 each.  In computing the penalty, the trial court assumed a loan
of $55,000.00 bearing interest at ten percent per annum for a term of seven years.  This
assumption called for 84 monthly payments of $916.06, and it produced a total interest charge of
$21,697.14.  Thus, by subtracting $21,697.14 from $34,151.13, the court determined that the
amount of usurious interest was $12,453.49 and used this figure in calculating the penalty to be
assessed against appellant.
          In his single crosspoint on appeal, appellee contends that since the evidence conclusively
established that the monthly payments agreed to and paid by him were $1,061.32 each, the trial
court should have determined the amount of interest that would have been charged on a loan of
$55,000.00 bearing interest at ten percent per annum and being repaid in monthly installments of
$1,061.32 each.  This would have called for repayment of the loan in sixty-eight payments,
producing a total interest charge of $17,305.13.  Thus, under appellee's argument, the usurious
interest charged by appellant was $16,806.00 ($34,151.13 less $17,305.13).  We disagree with
appellee.
          The undisputed evidence shows that the loan agreement made by appellee and appellant
centered upon the amount of the loan ($55,000.00), the term of the loan (seven years), and the
interest rate (finally settled at fifteen percent).  Appellee testified that he agreed that he would
"repay that $55,000.00" with "monthly payments, seven years," that he would pay interest, that
he did not know the interest would be "fifteen percent until [appellant] brought me the
amortization," and that he "agreed to pay him fifteen percent."  Appellant testified, "I would
finance the $55,000.00 to him over a period of, I believe it was seven years, at fifteen percent
interest."
          Appellee centers his method for computing the usurious interest on the amount of the
monthly payment.  However, the parties' agreement was not built on this payment.  The amount
of the payment merely resulted from the amortization of the loan agreement that centered on the
amount of the loan, the term and rate.  We agree with the trial court that the proper method for
determining the amount of usurious interest charged is to substitute the legal rate of interest for
the usurious rate in the loan agreement made by the parties.
          The parties' points and contentions are overruled.
          The judgment is affirmed.
 
                                                                                                                             
                                                                                 VIC HALL                                  PUBLISH                                                         Justice
