BIRD v. BENTON & BROTHER

Supreme Court of Georgia1907-01-17

127 Ga. 371

Summary · law.co

Holding. The judgment is reversed because the trial court erred in instructing the jury on a theory of lawful time-and-cash pricing when the undisputed evidence established that the parties had agreed to an interest-based arrangement at an illegal rate.

The defendant purchased a mule for $125, paying $40 in cash and executing a promissory note for $94.20—representing the $85 balance plus $9.20 in additional charges. The defendant testified that a member of the seller's firm explicitly stated the addition equaled 12.5% annual interest on the deferred amount, and this testimony went uncontradicted by the seller's representative when he took the stand. The trial court instructed the jury that if a transaction involved separate time and cash prices, the arrangement would not constitute usury, even though the evidence showed the parties had actually agreed to an interest-based arrangement rather than a legitimate price differential.

The state recognizes a lawful distinction between charging different prices for cash versus credit sales. However, the court has consistently held that when a sale occurs at a stated cash price and additional payments are deferred in exchange for interest exceeding the legal rate, the contract becomes usurious. Here, the undisputed evidence demonstrated that the parties had agreed to interest charges, not a dual pricing structure. By submitting an instruction premised on the existence of separate prices—a theory lacking evidentiary support—the trial court improperly allowed the defendant to benefit from a legal theory the facts did not support.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Distinction between lawful dual pricing for cash versus credit sales and unlawful interest-based deferrals
Usury when additional charges on deferred payment constitute interest exceeding legal rates
Propriety of jury instructions unsupported by evidence at trial

Procedural posture

The defendant appealed from a judgment entered after jury trial, challenging the trial court's jury instruction regarding the lawfulness of time and cash prices in the mule purchase transaction.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Beck, J.

(After stating the facts.)

The first, second, and third headnotes deal sufficiently with the assignments of error there passed on.

In the remaining ground of the motion for a new trial which it is necessary to notice, error was assigned upon the following charge of the court: “If from the evidence you believe there was a time price and a cash price on a mule, and the cash price was $125, and defendant paid $40 at the time he bought the mule, and gave his note for $94.20 balance, this would not be usury.” It is not contended by plaintiffs in error that this excerpt from the •charge is not substantially correct, but the criticism made upon it is that there was no evidence to authorize it, and the record constrains us to agree with him as to the justness of the criticism made. The defendant testified that the price of the mule for the purchase-money of which the notes were given was stated to be $125, and that he paid $40 and gave a note, bearing interest from maturity, for the balance, which would have been $85, but the note itself showed that it was for $94.20, — that is, $9.20 additional, which was practically 12 1/2 % of the balance due; and the note was made payable on the 1st day of October, 1903, which was less than one j’ear from the date of its execution. He also testified that Mr. Benton, a memberof the plaintiffs’ firm, said to him that “he would only charge me 12 1/2 % interest on said note.” * This testimony- of the defendant is nowhere»controverted. Benton was on the stand and testified in the case, but did not deny the defendant’s testimony as to the 12 1/2 % interest being charged. In reference to this part of the transaction the latter merely said, “I took his note for the balance, $94.20, time price.”

This court has given full recognition to the doctrine that it is lawful and not usurious to charge one price for property sold for cash, and a higher price for the same property if sold on credit. It has also steadily maintained the principle that if the contract is for the sale of property at a cash valuation, and certain payments are to be deferred in consideration that a greater rate of interest than that allowed by law .is to be paid by the purchaser, the contract would be usurious. See Rushing v. Worsham, 102 Ga. 825, and eases there cited. It must be observed that in the case at bar one of the parties to the contract of sale testified positively that the amount added to the deferred payment was for interest at the rate of 12 1/2 % per annum. And in this he is corroborated by the. •exact figures representing the amount of said payments, and to some extent by the testimony of the plaintiff himself, who admits that there was nothing said about “cash or time price.” And he did not contradict the statement of the defendant .that it was explicitly agreed that the amount added as aforesaid to the remainder of the purchase-price was at the rate of interest of 12 1/2 % per annum. Such being the evidence upon this particular issue, the judge should not have submitted the issue embodied in the portion of the charge just quoted, as it gave to the defendant the advantage of- a theory which was unsupported by proof.

Judgment reversed.

All the Justices concur, except Fish, O. J., absent.