A note and a mortgage securing it, the stated total of whose principal and interest was payable in sixty equal monthly instalments of a specified amount, and which contained a statement of the principal amount, did not violate G. L. c. 140, Section 90B, in that only the total amount of the
interest payable over the sixty months was stated as the "rate of interest or its equivalent in money" or in that a certain day of each month was stated as the "periodic due dates" without specification whether such monthly date pertained to principal or interest or both.
BILL IN EQUITY filed in the Superior Court on May 17, 1962.
The suit was heard by Hudson, J.
Solomon Rosenberg (George H. Young with him) for the plaintiffs.
Benedict Horowitz (Michael J. Antonellis with him) for the defendant.
WILKINS, C.J. On December 8, 1961, the plaintiffs borrowed of the defendant $4,500 secured in part by a five year second mortgage on their real estate in Westport having a dwelling house assessed for less than $10,000 with accommodations for three or less separate households and occupied by them. See Levin v. Smith, 343 Mass. 169 . By this bill in equity the plaintiffs seek an accounting and the repayment of sums allegedly paid in excess of the amounts authorized by G. L. c. 140, Section 90A, inserted by St. 1959, c. 505, Section 1, as amended by St. 1960, c. 446 (see now St. 1962, c. 286), and by G. L. c. 140, Sections 90B-90D, inserted by St. 1959, c. 505, Section 1. The judge ruled that the loan did not violate the statute, and that the plaintiffs are not entitled to attorneys' fees in this suit. The plaintiffs appealed from a final decree that the defendant is indebted to the plaintiffs in the sum of $227.25 [Note p472-1] and costs.
The trial judge found that there was also executed and recorded a chattel mortgage on the automobile; that no payments were made when due on the note and mortgage; that the automobile was not repossessed; that the defendant commenced foreclosure proceedings in the Land Court; and that the plaintiffs repaid the loan with money obtained from the sale of the real estate.
General Laws c. 140, Section 90B, provides in part: "If any note secured by such a mortgage and any such mortgage does not, among its provisions, specify as separate items the principal sum, the rate of interest or its equivalent in money, the period of the loan and the periodic due dates, if any, of principal and interest, the lender shall have no right to collect interest."
The note provided in part:
|Note.............December 8, 1961 For value received, We, Arthur J. Remy and Dorothy M. Remy, jointly and severally promise to pay to the order of Harry Sher, d/b/a Mutual Discount Co. the sum of Six Thousand Eight Hundred Fifty-Six and 80/100 ($6,856.80) Dollars payable in 60 successive equal monthly installments of One Hundred Fourteen and 28/100 ($114.28) Dollars, each. Said payments shall commence on January 8, 1962 and shall continue on the 8th day of each and every month thereafter, the entire amount to be paid in 60 months from this date.|
By Section 90A the maximum rate of interest permitted on the loan is one and one-half per cent monthly. The note prescribes
that equal payments of $114.28 are to be made on the eighth day of each month for sixty months and gives the total amount in dollars which is to be charged in interest. The total of the sixty monthly payments of $114.28 equals the total of principal and interest shown in the note and mortgage. The plaintiffs concede that they can establish that for the first month $67.50 is applied to interest and $46.78 to principal, and that for the final month $1.69 would be applied to interest and $111.69 to principal. Indeed this is expressly prescribed in Section 90A. [Note p474-1] The plaintiffs' contention, as outlined in their brief, is: "it was never intended that the rate or its equivalent should be kept secret and the borrower obliged to make a computation to find out what he owed, the interest he was being required to pay and the amount of principal applied out of each payment. In the instant case the authority by the statute is to charge interest monthly, which should be the unit of time on which the rate should be stated in the note and mortgage, and this requirement is not met by stating the five-year interest total as the equivalent of the rate of interest, and the requirement that the periodic due dates for payment of principal and interest be specified is not met by stating a monthly due date without also stating whether for principal or interest or both."
The assertions cannot be accepted. The statute does not contain the phrase, "the equivalent of the rate of interest," but refers to "the rate of interest or its equivalent in money." We think that the note and mortgage do comply with this requirement. The plaintiffs' argument also ignores Section 90C, which reads in part, "Upon payment of any money by the borrower, the lender shall at the request of the borrower give him a receipt stating the date of payment, the amount paid, the amount applicable to interest on
the loan and the amount applicable to the principal." Such a provision would be wholly unnecessary if the plaintiffs' construction of Section 90B were to be adopted and such information must be included in the note in the first place. We also are of opinion that the reference in the note and mortgage to periodic due dates was a compliance with that requirement of Section 90B.
The ruling that the plaintiffs are not entitled to attorneys' fees was right. We infer that their reliance is on Section 90D, which relates to violation of Section 90A. In any event the plaintiffs have specifically contended only that there was a violation of Section 90B. There was no violation of either Section 90A or Section 90B.
The final decree is to be modified by providing for interest on $227.25 from the date of filing the bill, and, as so modified, it is affirmed with costs of this appeal to the defendant.
[Note p472-1] This sum consisted of amounts found to be improperly charged to the plaintiffs; $2.25 interest overpaid by mistake; $150 paid to Central Secret Service Bureau of Boston and $25 paid to one Francoeur for services in searching for an automobile; and $50 for an overpayment to an attorney for commencing foreclosure proceedings on the real estate after default by the plaintiffs.
[Note p474-1] "Except where the borrower agrees in writing to a different application of his payments, in cases where partial payments are made, the interest shall be calculated to the time of payment, and such payment shall first be applied to interest, and the balance thereafter remaining, if any, shall be applied to principal." We do not pass upon the defendant's argument that the execution of the note was an agreement in writing by the borrower as to the application of payments.