J.T. KALLMAN, J.
Plaintiffs appeal by leave granted the order of the Menominee Circuit Court denying plaintiffs' motion for summary disposition on their usury claim.
On July 7, 1978, plaintiffs executed a retail installment sales contract with Miles Homes for building materials and plans to construct a residential home. The cash price listed on the installment
On August 9, 1978, plaintiffs executed a mortgage to Miles Homes, a division of Insilco Corporation, on their real property. This mortgage secured the subject matter of the sales contract, i.e., the building materials and specifications for plaintiffs' residential home. Prior to the mortgage executed in favor of Miles Homes, plaintiffs executed two separate mortgages on the same property to the Bank of Stephenson.
On December 23, 1982, all of the existing mortgages were assigned to defendant Miles Finance Corporation, including the mortgages with the Bank of Stephenson as mortgagee. Plaintiffs have failed to make payments on any of these obligations since December 3, 1984.
On October 3, 1986, plaintiffs filed a complaint against the defendants, alleging that the sales contract interest rate was usurious and requesting injunctive relief.
On December 5, 1986, plaintiffs filed a motion for summary disposition on their usury claim alleging the sales contract interest rate was governed by the general usury statute, MCL 438.31 et seq.; MSA 19.15(1) et seq., which provides for a maximum interest rate of seven percent. Defendants argue that it is regulated by the Retail Installment Sales Act (RISA), MCL 445.851 et seq.; MSA 19.416(101) et seq., which allows an interest rate of up to ten percent per annum pursuant to MCL 445.857(1)(b); MSA 19.416(107)(1)(b) on a retail installment sales contract. After a hearing
The issue presented in this case is one of first impression: Does the RISA create a statutory exception to the general usury statute regulating the legal rate of interest which may be charged on obligations collateralized by a real estate mortgage?
The relevant inquiry is whether the Legislature purposefully intended to exclude from the ambit of RISA a mortgage on real estate given as security for building materials used in the construction of a new home on the basis that the RISA defines a retail installment contract as
This Court finds that the trial court correctly denied plaintiffs' motion for summary disposition on the basis of the interpretation of the following statutes.
The usury statute, MCL 438.31; MSA 19.15(1), generally sets the legal rate of interest at no more than seven percent. However, by its own terms § 1
Plaintiffs argue that, because the mortgage in question is a second or junior mortgage, the interest rate cannot exceed seven percent because defendant is not a regulated lender, relying on Bebee v Grettenberger, 82 Mich.App. 416; 266 N.W.2d 829 (1978). However, the heart of plaintiffs' argument is that the RISA does not provide an exception to the general usury statute given the statutory definition of a retail installment contract cited above, and we are unpersuaded by this argument.
MCL 445.852(a); MSA 19.416(102)(a) defines "goods" under the RISA as follows:
Since the Home Improvement Finance Act, MCL 445.1102(g); MSA 19.417(102), excludes from its definition of "goods" chattels used in the construction of new homes, it would follow that the Legislature intended that new home construction be
A specific statute shall control over a general statute where the two deal with the same subject. Imlay Twp Primary School Dist No 5 v State Bd of Ed, 359 Mich. 478, 485; 102 N.W.2d 720 (1960); Hisaw v Hayes, 133 Mich.App. 639, 645; 350 N.W.2d 302 (1984). Further, the transaction was clearly a retail installment transaction pursuant to MCL 445.852(f); MSA 19.416(102)(f), which states:
Therefore, we hold that the RISA, as a specific statute, controls the transaction at bar to exclude it from the seven percent interest limitation under the general usury statute. A careful reading and synthesis of MCL 445.1102; MSA 19.417(102), MCL 445.852(a) and (g); MSA 19.416(102)(a) and (g) leads us to this conclusion.
MCL 445.857(1)(b); MSA 19.416(107)(1)(b) states that the interest rate on a retail installment sales contract shall not exceed ten percent when the principal balance exceeds $500. Therefore, the 9 1/2 percent interest rate contained in the retail installment sales contract, secured by the note and mortgage, is proper.
In Hartwick Lumber Co v Perlman, 245 Mich. 3; 222 NW 147 (1928), our Supreme Court, at a time prior to the enactment of the RISA, was presented with a similar factual situation. Perlman wanted to construct a store and apartment building on his
Prior to the enactment of the RISA, our Supreme Court had no difficulty with a time price differential contract for building materials secured by a second mortgage on the real estate as evidenced by the Hartwick case cited above. Moreover, our Supreme Court has held that "[u]nless the sale and purchase of property is a mere pretense, the seller may charge a greater price for goods bought on credit than for cash without rendering the transaction usurious." Attorney General v Contract Purchase Corp, 327 Mich. 636, 643; 42 N.W.2d 768 (1950). The sale of goods in the case at bar is not a mere pretense, but rather a valid sale of goods in the construction of real property as defined by the RISA, MCL 445.852; MSA 19.416(102).
In construing interest statutes, the Court must look beyond the form to the true nature of the transaction to determine whether it is usurious. Paul v U S Mutual Financial Corp, 150 Mich.App. 773, 780; 389 N.W.2d 487 (1986); Barck v Grant State Bank, 137 Mich.App. 440, 444; 357 N.W.2d 872 (1984), lv den 421 Mich. 858 (1985). The substance of the transaction, rather than the form, governs. Heberling v Palmer's Mobile Feed Service, Inc, 119 Mich.App. 150, 154; 326 N.W.2d 404 (1982), lv den 417 Mich. 995 (1983). Time price differential credit contracts have been a long-standing expressed exception to the general usury statute, MCL 438.31; MSA 19.15(1), Hartwick, supra, and we hold that they still are.
The fact that the RISA fails to specifically list real estate mortgages as a method of securing a retail installment sales contract should not be interpreted as an intentional omission by our Legislature. Legislative intent can be inferred from a recent amendment of the RISA which allows such contracts with time price differentials on mobile home sales. MCL 445.852(a), (c); MSA 19.416(102)(a), (c). This Court has held the maxim "expressio unius est exclusio alterius" is only an aid in interpreting legislative intent. It cannot govern where legislative intent is opposed to its application. Chesapeake & O R Co v Public Service Comm, 59 Mich.App. 88, 101; 228 N.W.2d 843 (1975), lv den 394 Mich. 818 (1975).
Excluding real estate mortgages as security for repayment in cases such as this, where the chattels
We affirm the decision of the Menominee Circuit Court.