Brief in Opposition to Petition for Writ Certiorari — Boswell v. Sosebee

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OPINIONS BELOW

JURISDICTION

QUESTIONS PRESENTED

‘ CONSTITUTIONAL PROVISIONS INVOLVED.

STATEMENT.

ARGUMENT

I. The Petition for Writ of nee was filed after

ninety days

II. The aneged federal question was raised too late in

the state court.

III. The alleged denial of equal protection is Plainly

without merit

IV. The alleged denial of due process is plainly

without merit

v. There are no special and important reasons for

granting the petition

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CITATIONS

CASES: :

American Railway Express Co. v. Kentucky,

278 U. S. 269 (1927)

Beck v. Washington, 369 U. S. 541 (1962)

Boast v. Masters, 235 Ark. 393, 361 S. W. 2d 272 (1962

Chicago, Indianapolis and Louisville Railway Co. v. McGuire,

196. U. S. 128 (1905)

Dunbar v. State Building & Loan Assdeiation,

171 Ark. 232, 284 S. W. 2d (1926)

Milwaukee Electric Railway & Light Co. v. Wisconsin,

252 U. S. 100, 106 (1920)

Sosebee v. Boswell, 242 Ark. 396, 414 S.W.2d 380 (1967)

Stein v. New York, 346 U. S. 156 (1953)

Toledo Scale Co. v. Computing Scale Co., 261 U. S. 399 (1923) _._

STATUTES:

28 U.S.C. 52101 (e)

CONSTITUTIONAL PROVISIONS:

U. S. Constitution, Amendment 14.

Arkansas Constitution, Article XIV, Section 13

MISCELLANEOUS: g N

U. S. Supreme Court Rule 22

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No. 578

~ SUPREME COURT OF THE UNITED STATES

October Term, 1967

Rarmonp T. BoswEtL, TRUSTEE FOR BLayLock

INVESTMENT Corporation, Ino. __Petitioner

wo.

A. L. SoskRER, Bernice SosERRER, an

Vatizy View Drvxror nns, Ino. ___Respondents —

ON PETITION FOR A WRIT OF CERTIORARI

TO THE SUPREME COURT OF ARKANSAS °

BRIEF FOR RESPONDENT. IN OPPOSITION

OPINIONS BELOW

The opinion of the Arkansas Supreme Court is re-

ported in Sosebee v. Boswell, 242 Ark. 396, 414 S.W.2d 380

(1967). The petition for rehearing was denied on May 29

1967 by an unreported order without opinion. (Patines. for ;

Certiorari, p. 26.)

JURISDICTION

This Court does not have jurisdiction to grant the writ

of certiorari because the petition and the certified record

were not filed within ninety (90) days after the judgment

of the Arkansas Supreme Court. 28 U.S.C. §2101(c) and

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Rule 22 of this Court provide the ninety-day limitation, pa

this Court has held that the requirement is jurisdictional.

Toledo Scale Co. v. Computing Scale Co., 261 U. S. 399

(1923). The petition for rehearing in the Arkansas Su-

preme Court was denied on May 29 and ninety. days from

that date was August 27, 1967, but the Petition for Certio-

rari in this Court was not filed until September 5, 1967. .

The Petition for Certiorari should, therefore, be denied

without considering the points raised in the remainder of

this response.

' QUESTIONS PRESENTED

1. Was a mortgage company’s scheme to collect 8150

‘liquidated damages from a borrower, A. L. Sosebee

- et al., respondents herein, if the borrower did not success -

fully solicit for it hew loans on each lot being developed in

a subdivision, insulated by the equal protection of the laws

requirement of the U. S. Constitution, Amendment 14, from

operation of the Arkansas Constitutional prohibition

against usury, simply because the Arkansas Supreme Court

had held in 1926 in a case involving altogether different

parties and altogether different facts, that a savings and

loan association’s plan to require a customer to maintain

a bona fide savings account did not constitute a sham device

designed to evade the Arkansas usury law.

ä 2. Was a mortgage company’s scheme to collect $150

‘‘liquidated damages from a borrower, A. L. Sosebee

et al., respondents herein, if the borrower did not success-

fully solicit for it new loans on each lot being developed in

a subdivision, insulated by the due process of. law require-

ment of the U. S. Constitution, Amendment 14, from opera-

tion of the Arkansas Constitutional prohibition against

usury, simply because the Arkansas Supreme Court had

never been presented with the identical scheme used by the

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mortgage company, where the Arkansas Supreme Court

applied its long-established principle that any unfair ad-

vantage obtained by a lender from a borrower in addition

to the stated interest will be considered as interest.

_ CONSTITUTIONAL PROVISIONS INVOLVED

U. S. Constitution, Amendment 14, regarding equal

protection of the laws and due process of law is involved,

plus application by the Arkansas Supreme Court of the

prohibition against usury in Arkansas Constitution, Article

XIV, Section 13 (Ark. Stats. Ann: Vol. I). .

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STATEMENT

This litigation involves a single, rather complicated

arrangement between a mortgage company and one of its

borrowers which the Arkansas Supreme Court found to be

in violation of the Arkansas constitutional ban against

usury. |

On May 24, 1965 8 mortgage company made a

loan to Respondents A. L. Sosebee et al. to develop a sub-

division. The mortgage company: devised a unique and

complicated plan whereby the borrower was required in

addition to paying the stated rate of interest to pay $150

for each lot developed as ‘‘liquidated damages’’ if the bor-

rower failed to solicit free for the mortgage company the

permanent loan on each lot sold. The borrower had no

control over where the lot buyers obtained the loans and

could not, therefore, prevent the forfeiture of the $150.

The mortgage company ’s agent admitted that the purpose.

ol the arrangement was to compensate for what it deemed

to be an inadequate interest rate.

The Arkansas Supreme Cougs held:

If this transaction is not usurious, then any trans-

action can be dressed up so as not to constitute usury

although it would be clear that it was merely a scheme

to evade the usury laws. (Opinion of Arkansas Su-

preme Court, page 25 of Petition for Certiorari.)

It was not until after the Arkansas Supreme Court

_ decision that the mortgage company thought to claim that

its rights under the United States Constitution, Amendment

14, would be violated by the relief requested by the borrower

throughout the State Court proceedings.

The mortgage company did not file this Petition for

‘ Certiorari until September 5, 1967, which was ninety-eight

(98) days after the Arkansas Supreme Court denied a peti-

tion for rehearing. No extension of time had been requested.

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Petitioner mortgage company now claims that the hold-

ing of the Arkansas Supreme Court violated its right to

_ equal protection of the laws under the United States Con-

stitution, Amendment 14, simply because the Arkansas Su-

preme Court had held forty-one (41) years earlier that a

savings and loan association could require a loan customer

to maintain a bona fide savings account without violating

the usury law. The mortgage company also contends that

its rights to due process of law under the U. S. Constitution,

Amendment 14, were violated because it did not anticipate

the ruling of the Arkansas Supreme Court despite the exist-

ence of a long line of cases in the Arkansas Supreme Court

holding that any unfair advantage obtained by the lender

over the borrower in addition to the stated interest will be

_ deemed to be interest,

Respondent borrowers, A. I. Sosebee et al., contend

that this Court has no jurisdiction to hear the case because

the Petition for Certiorari was not filed with this Court

within ninety (90) days after the Arkansas Supreme Court

judgment. The borrowers also contend that the writ should

not ‘be granted* because the federal question was raised too

late in the state proceedings, is plainly without merit, and

is of no importance to anyone except the litigants, who have

Ane hearing in the Arkansas Court.

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ARGUMENT

1. THE PETITION FOR WRIT OF CERTIORARI»

WAS FILED AFTER NINETY DAYS

Respondents Sosebee et al. wish to emphasize ‘before

> ‘proceeding with this argument their contention that this

Court has no jurisdiction because the Petition for Certio-

rari was not filed until September 5, 1967, which was ninety-

eight (98) days after the Arkansas Supreme Court denied

the petition for rehearing on May 29, 1967. No extension

of time was requested. 28 U. a. C. 92101 (0). U. 8. Supreme

Court Rule 22.

II. THE ALLEGED FEDERAL QUESTION WAS

RAISED TOO LATE IN THE STATE COURT

” Petitioner mortgage company concedes in its petition,

page 4, that the so-called federal question sought to be re-

viewed was not raised until the petition for rehearing in

the Arkansas Supreme Court, despite the fact that the argu-

ment was plainly available since the respondent borrower |

had requested the very ‘‘unconstitutional’’ relief obtained

from the Arkansas Supreme Court in its pleadings, at the

trial, and on appeal to the Arkansas Supreme Court. The

_. Arkansas Supreme Court would surely have wanted to hear

any arguments that the relief requested by the borrower

would violate the U. S. Constitution, and the mortgage com-

pany's failure to make the argument before the Court’s

decision can only be explained by the fact that the so-called

. federal question is not substantial and was a mere after-

_ thought.

To promote orderly litigation, the Arkansas a

Court, like most courts, refuses to hear questions raised for

the first time on a petition for rehearing, Boast v. Masters,

235 Ark. 393, 361 S.W.2d 272 (1962), and its denial of- the

_ petition for rehearing without an opinion (Petition, page

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26) can be based upon this sound, non- federal ground. This

Court has previously adopted the sensible rule that it will

presume such denials of petitions for rehearing without an

opinion are based upon the adequate non- federal ground

and will not entertain petitions for certiorari where the

alleged federal questions are not timely raised in the state

courts. Chicago, Indianapolis and\Louisville ene Co. v.

| McGuire, 196 U. S. 128 (1905). .

For failure to raise the alleged federal question before

a petition for rehearing in the state pourt, the Petition for

Certiorari should be denied.

III. THE ALLEGED DENIAL OF EQUAL

PROTECTION IS PLAINLY WITHOUT MERIT

” Petitioner claims that it was denied equal protection

of the laws by the Arkansas Supreme Court’s holding that

its scheme to collect $150 as ‘‘liquidated damages on each

lot in a subdivision was a mere scheme to evade the usury

law, simply because an Arkansas Supreme Court more than

forty years earlier, in a case involving altogether different

parties and altogether different facts, had held that a sav-

ings and loan association's requirement that a loan cus-

tomer maintain a savings account was a bona fide, fair

arrangement, and not a violation of the usury law. The

early case was Dunbar v. State Building d Loan Associa-

tion, 171 Ark. 232, 284 S.W. 2d (1926). } ä

The opinion of the Supreme Court in the present case

(Petition, pages 7-13) clearly points out the many peculiar

distinguishing facts which caused it to hold that this mort-

gage company’s scheme was a mere disguised effort to

collect additional interest and evade the usury law. Impor-

tant in the Court’s opinion were many facts not present in

the old savings and loan association case, such as the mort-

gage company’s admission at the trial that a scheme was

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devised in order to compensate for the inadequate interest

rate, the fact that the alleged consideration for the ‘‘liqui-

datéd damages was of no value to the borrower, and the

fact that the arrangement was craftily drawn by the mort-

gage company to give the appearance that the liquidated

damages could be avoided, when in fact the borrower had

no control over where the buyers of the lots would obtain

their business. 3

; Because decisions by the state courts in cases widely

separated i in time, vastly different in factual situations and

involving a-multitude of considerations are almost impos-

sible to compare for the purpose of determining if the vari-

ous litigants have been treated exactly alike and because

old decisions may be overturned by later litigation, this

Court had adopted a very common-sense interpretation of

Amendment 14 to the effect that it does not apply to the

. alleged different treatment of different litigants at differ-

ent times in different factual situations by state courts. As

Mr. Justice Brandeis said in Milwaukee Electric Railway

ome Co. v. Wisconsin, 252 U. S. 100, 106 (1920) :

the 14th Amendment does not, in guarantee-

ing 3 ma of the laws, assure uniformity of

judicial decisions . . . any more than, in guaranteeing

due process, it assures immunity from judicial error

. . „ the company seeks here to base rights on a later

decision between strangers, which, it alleges, is irrecon-

cilable on a matter of law with a decision theretofore

rendered against it. The contention is clearly unsound.

Mr. Justice Brandeis’ 6s was followed by this Court

in Stein v. New York, 346 U. S. 156 (1953) and Beck v.

Washington, 369 U. S. 541 (1962). 8

The mortgage company ’s scheme was declared in vio-

1 lation of the usury law not because of alleged unequal treat-

ment with a savings and loan association, but because it was

litigated by different parties forty-one years later over

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altogether different facts. There was, therefore, no denial, 7

of equal protection of the laws. ;

IV. THE ALLEGED DENIAL OF DUE. PROCESS

IS PLAINLY WITHOUT MERIT

Petitioner mortgage company also claims that it was

denied due process of law simply because it did not antici-

pate that the Arkansas Supreme Court would hold its

scheme to be a mere sham. designed to collect excessive

-interest under false labels, despite the fact that the Arkan-

sas Supreme Court had held many times, in accord with

the general law in this country, that any unfair advantage

obtained by a lender from a borrower at the time of making

a loan will be treated as interest in applying the usury law.

The Arkansas Supreme Court cited many of these cases

establishing the principle, and its decision was simply an

application of the well-settled principles to the unique

scheme designed by this mortgage company for the respond-

ents-borrowers. 8 f

Because so many variable factors are involved in the

. process of a state court decision, this Court has adopted the.

common-sense interpretation of the Fourteenth Amendment

that it does not prevent a state from applying its law for

the first time to the peculiar set of facts before it. Ameri-

can Railway Express Co. v. Kentucky, 273 U. S. 269 (1927).

V. THERE ARE NO SPECIAL AND IMPORTANT

REASON S FOR GRANTING THE PETITION ;

The petitioner mortgage company does not even allege

that there are special and important“ reasons for grant-

ing certiorari, and it is attempting to have this Court review

a case where the alleged federal question is plainly without

merit, and the outcome of which is of no concern to anyone

but the litigants. The complicated and unique scheme · de- é

vised by the mo

ge company on May 24, 1965 to collect

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from respondent-borrower excessive interest has appar-

ently never been duplicated and probably never will be.

Because of the many circumstances causing the Arkansas

Supreme Court to declare the arrangement usurious, the

case is unlikely to have any value as precedent one way or

the other.

Petitioner —— company alleges that the Arkansas

Supreme Court decision is probably not in accord with

applicable decisions of this Court,“ but no conflicting deci-

sions are cited and respondents do not know of any such

decisions of this Court.

This case simply involved the application of established

principles to another unique factual situation, and there are

no special and important reasons for this Court to spend its

time analyzing the evidence when it is apparent that the

Arkansas Supreme Court fully and fairly considered the

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CONCLUSION

‘Petitioner mortgage company failed to file this Peti-

tion for Certiorari within ninety days after the judgment

of the Arkansas Supreme Court, and this Court, therefore,

has no jurisdiction. The alleged federal question was raised

too late in the state proceedings, the alleged federal ques-

tion is plainly without merit, and there are no special or

important reasons for this Court to review the judgment

of the Arkansas Supreme Court. For these reasons, it is

respectfully submitted that this Petition for a Writ of Cer-

tiorari should be denied.

Respectfully submitted,

WLAN J. Surrn

1100 Boyle Building

Little Rock, Arkansas 72201

Attorney for Respondents

Of Counsel: 3

O. M. Youne | |

1101 Union Life Building

Little Rock, Arkansas

and cm

Gzorce Prxz, In.

1100 Boyle Building

Little Rock, Arkansas

September 19, 1967