In consideration of plaintiff's promise to pay $720 to defendant in twelve monthly installments, defendant promised to advance $600. Plaintiff's obligation was to be cancelled in case of his death, and his obligation to pay installments was to be suspended while plaintiff was disabled because of illness or accident. Plaintiff warranted his good health and agreed that the contract was neither usurious nor one of insurance. The contract having been executed, plaintiff sought recovery under the Texas usury statute. The trial court held that of the $120 paid in excess of the loan, $60 was for maximum legal interest, $12 for maximum legal service charge, and $48 for the issuance of an insurance contract, that there was no usury, but that since the contract was issued in violation of Texas insurance law, $48 should be returned to the plaintiff. On appeal, held, the contract is neither usurious nor one of insurance, since it " ... does not provide for the payment of a sum of money in the event of death, sickness, etc .... " Moreover, "the parties stipulated ... that the contract was not to be construed as a policy of insurance." And since "the contract does not provide for a beneficiary, is not assignable, and does not provide for the payment of premiums," it is merely a contract of waiver in which the defendant conditionally promises to waive his rights. Upon motion for rehearing by plaintiff and filing of a brief as amicus curiae by the District Attorney of Dallas, the court reaffirmed its holding that the contract was not one of insurance, but asserted the question to be immaterial since plaintiff's death would legally have cancelled the debt and it would be inequitable to allow plaintiff to recover the $48 when he had received the protection contained in defendant's conditional promise. Denton v. Ware, (Tex. 1950) 288 s.w. (2d) 867.
Wendell B. Will,
INSURANCE-LOAN CONTRACT WHICH PROVIDES FOR CANCELLATION OF DEBT IN EVENT OF NAMED CONTINGENCIES AS AN INSURANCE CONTRACT,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol49/iss5/15