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Evers v. Guaranty Investment Co.
Citations: 244 Ark. 925; 428 S.W.2d 68; 1968 Ark. LEXIS 1443Docket: 5-4578
Court: Supreme Court of Arkansas; May 21, 1968; Arkansas; State Supreme Court
Appellant, a used car dealer, claims reversible error in the trial court's granting of summary judgment to appellee, a finance company, which sought to recover on several past due notes endorsed and guaranteed by appellant. Appellant argues these notes are void, alleging they were part of a scheme by appellee to violate Arkansas usury laws. The trial court granted summary judgment based on the premise that appellant's involvement in the alleged usury scheme precluded him from asserting a usury defense. The court emphasized that when evaluating a summary judgment motion, evidence must be viewed favorably towards the non-moving party, in this case, the appellant. The burden was on appellee to demonstrate the absence of any genuine material fact issues. The record indicated disputed facts regarding the nature of the notes, the transactions between the parties, and the roles played by both appellant and appellee. Appellant claimed he independently negotiated automobile sales before financing and that notes were filled out under varied circumstances, including some being completed at appellee’s office. There was conflicting testimony about whether appellee had ever refused to accept notes from appellant. Consequently, significant material fact issues remain unresolved, indicating that summary judgment may not have been appropriate. Negotiations between the dealer and finance company typically concluded with the dealer contacting the finance company for the monthly payment amount, without any credit investigations conducted by either party. Repossessed vehicles were returned to the dealer for repairs and resale, with proceeds and any losses reimbursed to the finance company. Disagreement arose regarding the discount amount on repossessed vehicles, with one party asserting a fixed rate while another claimed variability. It was indicated that the finance company merely purchased notes for collection, relying on the dealer's endorsement. There is a possibility that these transactions could be interpreted as loans from the finance company to the dealer, potentially rendering them usurious if the discount exceeded ten percent per annum. A reference from the Restatement of The Law of Contracts suggests that selling a third party's obligation at a discount above legal interest rates is not usurious unless the seller assumes payment responsibility, indicating an intended loan. Additionally, if found that both parties engaged in a scheme to secure usurious contracts from customers, neither would have recovery rights against the other. Ultimately, the ruling emphasized that summary judgment for the finance company was inappropriate, leading to the reversal of the decree and remand for further proceedings, with a dissent from Harris, C. J.