Opinion
Rehearing Granted Feb. 19, 1931.
In Bank.
Action by E. H. Liebelt against Thomas Carney, sometimes known as the Thomas Carney Company. Judgment for defendant, and plaintiff appeals.
Judgment of superior court affirmed.
Superseding opinion of District Court of Appeal in 289 P. 872.
Appeal from Superior Court, Alameda County; Warren V. Tryon, Judge.
COUNSEL
Edison MacLeod, of Oakland, for appellant.
John M. Dvorin, of Los Angeles, for respondent.
OPINION
PRESTON, J.
Action to recover the statutory penalty provided by section 3 of the Usury Act (St. 1919, p. lxxxiii, Act 3757, Deering’s General Laws). Defendant had judgment; plaintiff has appealed.
The transaction took the form of an advancement by defendant of the sum of $1,624.31, to discharge the final payments due from plaintiff to General Motors Acceptance Corporation for the purchase of two trucks under a conditional sales contract. Defendant to secure repayment of the sum advanced took from the Acceptance Corporation an assignment of the conditional sales contract; procured registration of the trucks in his own name as owner; then took a bill of sale of the trucks from plaintiff; then issued to plaintiff an inflated conditional sales contract, dated December 16, 1926, naming the sum of $3,531.88, reciting, however, the fictitious payment of $1,000 on account thereof, leaving the true amount claimed by defendant from plaintiff for said advancement as $2,531.88, which was to be paid in monthly installments over a period of approximately one year. Immediately upon the execution of this additional sales contract, defendant assigned it to Commercial Securities Corporation, Cons., with a written guaranty to said purchaser of all the covenants therein to be kept and performed by plaintiff. Plaintiff made all the payments due under this contract except the last one of $931.88, which fell due December 16, 1927. To take care of this payment, the above-described process was repeated; the $931.88 became $1,131.88; a new conditional sales contract to cover another twelve months’ period was issued for this item and immediately assigned by defendant to the Merchants’ Security Company.
It must be noted that the possession of the trucks never at any time passed from the plaintiff to defendant. Title was conveyed to the latter at all times for the purpose of security. Stripping the transaction of its entanglements, it is too clear for controversy that it was but a thinly disguised loan heavily charged with usury. Rosemead Co. v. Shipley Company, 207 Cal. 414, 278 P. 1038; Blodgett v. Rheinschild, 56 Cal.App. 728, 206 P. 674; San Joaquin Finance Corp. v. Allen, 102 Cal.App. 400, 283 P. 117.
But the foregoing observations do not entitle plaintiff to recover from the defendant, for the evidence shows that, immediately upon execution of said two contracts, the assignments above noted were made. The evidence also shows without conflict that each and every payment called for under said contracts was made to one or the other of the above-mentioned corporations and not to the defendant. This fact prevents the plaintiff from recovering, and such holding follows from the plain construction of the act itself, which provides that the penalties may be collected from the person ‘who shall have taken or received’ the payment. We cannot say that the written guaranty made by the defendant should alter this rule. There was no showing of collusion or relation of any other kind between defendant and either of the assignees.
Appellant urges that only three cases could be found on this subject, and that these cases hold that the penalty may be collected from the party who makes the contract; they are Sanford v. Kane, 133 Ill. 199, 24 N.E. 414, 8 L. R. A. 724, 23 Am. St. Rep. 602; Taulbee v. Hargis, 173 Ky. 433, 191 S.W. 320, Ann. Cas. 1918A, 762; Harbaugh v. Tanner, 163 Ind. 574, 71 N.E. 145. We have examined each of these cases, and, without stopping to discuss them, we would say in passing that they are not parallel to any extent with the situation we have before us. Upon our own volition, however, we have found a number of cases giving to stautes and Constitutions, which read almost identically with our statute, the construction here given. In Anderson v. Tatro, 44 Okl. 219, 144 P. 360, 361, the court construed a provision of the Constitution of that state which allowed the recovery of double the amount of interest paid ‘from the person, firm, or corporation taking or receiving the same’ (Const. Okl., art. 14, § 3), and it was there held that, where payments were made to the assignee, such assignee alone must answer to the penalities and that the maker of the usurious obligation was not a proper party to the action.
This doctrine was followed again by the Oklahoma Court in the case of First Nat. Bank v. Sensebaugh, 58 Okl. 462, 160 P. 455, wherein the court construed section 5198 of the United States Revised Statutes (U. S. Comp. Stats. 1913, § 9759 [12 USCA § 86]); the wording of this statute being similar to the Oklahoma constitutional provision above mentioned and to our own statute. It was there again held that, inasmuch as the interest was paid to the assignee, the maker of the contract was not a proper party to the action. To the same effect, see Webb v. Galveston, etc., Co., 32 Tex.Civ.App. 515, 75 S.W. 355, and Western Bank & Trust Co. v. Ogden, 42 Tex.Civ.App. 465, 93 S.W. 1102.
It is proper, of course, to here note that the instrument assigned was not a negotiable instrument under the law merchant, and, if it had been, an exception to the rule above announced might be made. Schlesinger v. Lehmaier, 191 N.Y. 69, 83 N.E. 657, 16 L. R. A. (N. S.) 626, 123 Am. St. Rep. 591. See, also, Culver v. Osborne, 231 Ill. 104, 83 N.E. 110, 121 Am. St. Rep. 302; Harbaugh v. Tanner, supra, and Kock v. Block, 29 Ohio St. 565.
Plaintiff having brought his action against the wrong party, it therefore follows that the judgment for defendant must be and it is hereby affirmed.
We concur: WASTE, C. J.; CURTIS, J.; LANGDON, J.; SEAWELL, J.; SHENK, J.; RICHARDS, J.