against usury to be circumvented and evaded in any such manner. The doctrine of stare decisis prevents us from overruling our previous holdings with a retroactive effect;[1] so the case at bar must be affirmed. But the constitutional mandate against usury can no longer be chiseled away by opinions gradually following the previous holdings more and more away from the spirit of the Constitution.
Buying at a credit price, as distinguished from a cash price, has largely disappeared in fact, but is being used as a cloak for usury in many cases by such words as "time price differential", or some other such language. We, therefore, give this caveat to the public generally:
(1) We leave unimpaired the doctrine that a seller may, in a bona fide transaction, increase the price to compensate for the risk that is involved in a credit sale. But there may be a question of fact as to whether the so-called credit price was bona fide as such, or only a cloak for usury.
(2) If the seller, whether he has quoted two prices to the purchaser or not, subsequently transfer the title documents to an individual or company which is engaged in the business of purchasing such documents, at a price which permits the transferee to obtain more than a return of 10% on its investment, then a question of fact arises as to whether the seller increased his cash price with the reasonable assurance that he could so discount the paper to such individual or finance company. If that reasonable assurance existed, then the transaction is in substance a loan, and may be attacked for usury.
(3) When finance companies or purchasers of title paper supply dealers with a set of forms and a schedule for credit price increases, such will tend to show that the dealer had reasonable assurance that such finance company or purchaser of the paper would take the paper at such discount.
- ↑ See Annotation in 85 A. L. R. 262.
