Zapalac v. Travelers Ins. Co. , 84 S.W.2d 818 ( 1935 )

On Motion for Rehearing. As shown by the original opinion of this court affirming the judgment of the district court, distinguished counsel for appellant, at the time this cause was submitted on oral argument, was of the opinion that if the motion for rehearing then pending in the Supreme Court in the case of Lincoln Nat. Life Ins. Co. v. Anderson, 80 S.W.2d 294, should be overruled, then we should affirm this case. Such motion for rehearing was overruled [see (Tex.Com.App.) 81 S.W.2d 1112], and we affirmed this case. Since that time counsel has changed his mind, as he had the right to do, and in motion for rehearing prays that our former judgment be set aside and the judgment of the trial court reversed and rendered.

Appellee sued appellants, seeking a judgment on certain notes and foreclosure of deed of trust lien on land. The defense was usury, and the claim of usury apparently hinged upon the contingency that the indebtedness sued on is a renewal of an old indebtedness, and that both the old and new contracts are usurious because of certain provisions in the acceleration clauses which appellants contend authorize the collection of interest at a higher rate than the law permits, and that the contract, as to interest, is void.

The first deed of trust in question executed to secure the payment of notes to the Texas Farm Mortgage Company by appellants in its acceleration clause provided in the event of default "then the whole amount of the indebtedness secured in and by this instrument may be declared due." The companion second deed of trust securing the payment of interest provided, in event of default, "the whole sum of money hereby secured shall become due and payable."

The first deed of trust executed to secure the notes renewing the above obligation provides "the whole of the indebtedness secured in and by this instrument" may be declared due. The companion second deed of trust, securing payment of interest, provides "the whole sum of money hereby secured shall become due and payable."

The following similar provisions in notes and deeds of trust authorizing the acceleration of maturity, in event of default, under like circumstances have been held not to taint a contract with usury:

"Then the whole sum of money hereby secured" shall become due. Walker v. Temple Trust Co. (Tex.Com.App.) 80 S.W.2d 935.

"The whole sum of money secured hereby." Dugan v. Lewis, 79 Tex. 246,14 S.W. 1024, 12 L. R. A. 93, 23 Am. St. Rep. 322.

"The whole indebtedness and all sums secured by this mortgage, to-wit, the principal and interest then accrued."

"The whole sum of money hereby secured."

"The principal sum hereby secured and all interest thereon to the date of payment thereof."

"The whole sum of money hereby secured shall become due and payable." (This provision referred solely to interest notes.)

"The principal sum hereby secured and all interest thereon shall at the option of the holder become immediately due and payable."

"The whole indebtedness and all sums secured by this mortgage, to-wit, the principal and interest then accrued on said bond."

"The whole sum of money hereby secured shall become due and payable." Lincoln Nat. Life Insurance Co. v. Anderson (Tex.Com.App.) 80 S.W.2d 294; Id. (Tex.Com.App.) 81 S.W.2d 1112.

"The whole of the indebtedness secured in and by this instrument."

"The whole sum of money hereby secured." Travelers Ins. Co. v. Greer (Tex.Civ.App.) 83 S.W.2d 1020.

"The said principal sum hereby secured, and all interest thereon to the date of payment thereof" shall become due.

"The whole sum of money hereby secured" shall become due. Northwestern Nat. Life Ins. Co. v. Whittington (Tex.Civ.App.) 81 S.W.2d 173.

In giving effect to the established rule that where a contract is of doubtful meaning, a construction that will make it legal must be adopted if it can reasonably be done giving effect to all of its provisions, the Supreme Court has held that phrases to the same effect as those used in the accelerating clauses in these contracts did not authorize the collection of unearned interest.

A distinction is made between such phrases in the accelerating clause as "entire indebtedness," "the whole of the debt," "with interest as agreed," and words of like import and words that expressly authorize the collection of notes representing unearned interest. Dunlap v. Voter (Tex.Civ.App.) 72 S.W.2d 1109; Burnette v. Realty Trust Co. (Tex. Civ. App.) 74 S.W.2d 536; Deming Inv. Co. v. Giddings, 120 Tex. 9, 30 S.W.2d 287; Bothwell v. F. M. State Bank Trust Co., 120 Tex. 1,30 S.W.2d 289, 76 A. L. R. 1480; Walker v. Temple Trust Co (Tex.Com.App.)80 S.W.2d 935; Moore v. Cameron, 93 N.C. 51; Lincoln Nat. Life Ins. Co. v. Anderson (Tex.Com.App.) 80 S.W.2d 294; Id. (Tex.Com.App.) 81 S.W.2d 1112; Odell v. Commerce Farm Credit Co. (Tex.Com.App.)80 S.W.2d 295; Mary Donnelly Zapalac v. Travelers Ins. Co. (Tex. Civ. App.) 84 S.W.2d 820, and Mrs. E. K. Wellfare v. Realty Trust Co. (Tex. Civ. App.) 85 S.W.2d 1067, (opinions by Chief Justice Leslie) this day decided.

We adhere to our conclusion in the original opinion and overrule the motion for rehearing.

Overruled.