USURY ‑-SALES ‑- CARRYING CHARGES ON CONDITIONAL SALES CONTRACT NOT USURY
Where the parties do not contemplate a loan transaction carrying charges may not be considered as interest or charges so as to bring the transaction within the purview of the Small Loan Act.
- - - - - - - - - - - - -
January 27, 1956
Honorable CharlesO. Carroll
Seattle 4, Washington Cite as: AGO 55-57 No. 197
Attention: !ttMr. Keith M. Callow
In your letter of December 19, 1955, you have requested our opinion as to whether or not carrying charges made on automobile and appliance installment contracts amounting to more than three per cent per month are in violation of the Small Loan Law, and more specifically, RCW 31.08.160, 31.08.200, and 31.08.210.
Our answer is in the negative.
In the case of Hafer v. Spaeth, 22 Wn. (2d) 378, at page 384 et seq., our supreme court has held that carrying charges do not constitute interest, that transactions of this kind are sales of personal property, and that neither the seller nor the vendor contemplate a "loan," either of money or of the [[Orig. Op. Page 2]] particular article. It was also found that there was no intention on the part of either the vendor or the purchaser that the article should be returned.
The Small Loan Law on the other hand contemplates transactions in which a repayment of a sum borrowed is within the contemplation of both parties at the time the transaction is consummated. It may be noted here that in some instances the courts have found that sales of personal property at exorbitant prices were used to exact an unlawful rate of interest, but it has usually been found that such sales have been made in conjunction with a loan of money, said loan bearing a legal rate of interest on its face. These situations, of course, involve primarily questions of fact, rather than law.
We hope this information will be of service to you.
Very truly yours,
B. F. RENO, JR.
Assistant Attorney General