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October 20, 1983


Appeal from a judgment of the Circuit Court for Iowa County: James P. Fiedler, Judge.

Gartzke, P.j., Bablitch, J. and Dykman, J.

The opinion of the court was delivered by: Dykman

Aetna Finance Corporation, d/b/a Thorp Finance Corporation, appeals from a judgment which concluded Thorp had charged a usurious interest rate and awarded the plaintiffs, Bonnie and Glen Clark, $13,469.30 damages. The Clarks cross-appeal from that portion of the judgment which awarded them a $4,490 contribution to their attorney fees. We affirm the damages award, reverse the attorney fees award and remand for an award of reasonable attorney fees expended by the Clarks in the trial court and on this appeal.

On November 23, 1977, the Clarks borrowed $12,155 from Thorp. Thorp charged them interest on the note at an annual rate of 18%, the maximum legal rate under secs. 138.09(7) (b)2 and 422.201(3), Stats. (1977). *fn1 As a prerequisite of the loan, Thorp required the Clarks to pay judgments of $961.05 which constituted liens against their real estate. The $961.05 was to be paid from the $12,155 loan. Thorp issued a check for $961.05, made out to Glen Clark and the Credit Bureau of Monroe. Clark endorsed the check and returned it to Steiner, the branch manager of the local Thorp office. Steiner sent the check to the credit bureau, which endorsed the check but returned it to Thorp because it did not want to act as a collection agency. Steiner cashed the check and kept the money.

In June 1978, while preparing to sell their home, the Clarks discovered that the judgments had not been paid. They contacted Thorp, which eventually discovered that Steiner had endorsed and cashed the check. Thorp issued the Clarks a new check for $961.05 on July 12, 1978. Thorp did not offer at that time to pay the interest which had accrued on the judgments since November 23, 1977, nor did it offer to refund the interest the Clarks had paid to Thorp which was attributable to the stolen funds. The Clarks would not accept the check. Glen Clark testified that he asked Thorp's new branch manager to pay the accrued interest on the judgments and to pay the additional abstracting fees he had incurred because the judgments had not been paid, but that the manager said nothing could be done.

On August 29, 1978, the Clarks paid off the loan by returning the July 12 check and writing Thorp a personal check for the balance outstanding on the loan. Thorp's calculation of the payoff amount was based on the assumption that the Clarks had received the full $12,155 they borrowed in November 1977. Thorp did not deduct the stolen $961.05 from the amount of the loan when it calculated the payoff amount.

A certified public accountant and Thorp's branch manager both testified that had Thorp calculated the payoff figure using the amount the Clarks actually received, the payoff figure would have been smaller. The C.P.A. testified that Thorp charged the Clarks $137.56 too much, which, over the length of the loan, resulted in payment of an annual interest rate of 19.54%.

The Clarks paid the judgment liens, including the additional interest which had accrued, on August 29, 1978. The C.P.A. testified that interest accruing at 7% on $961.05 from November 23, 1977, to August 29, 1978, would equal $51.42.

On August 30, 1978, Thorp discovered the Clarks had not endorsed the July 12 check and reopened the loan account. Thorp did not credit the check against the Clarks' account because it was unendorsed. In October 1978, Glen Clark made a qualified endorsement of the check and Thorp closed the account.

The trial court determined that because Steiner acted within his apparent authority in asking Glen to endorse the check and return it to him, Thorp was bound by Steiner's fraudulent acts in cashing the check and keeping the money. It determined that because the Clarks had not had the use of $961.05 from the date of the loan to the date the loan was paid off, Thorp charged the Clarks interest at 19.54%. The trial court concluded that the Clarks were entitled under sec. 425.305, Stats., to recover the payments they had made on the loan, the check with which they paid off the loan, and the stolen funds, for a total of $13,469.30. *fn2 It also awarded the Clarks one-third of that amount as an attorney's fee.

The issues on appeal are as follows:

(1) Did Thorp charge a usurious rate of interest?

(2) Did Glen Clark's endorsement of the July 12 check constitute an accord and ...

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