Garrett v. Coast and Southern Federal Savings and Loan Association
California Supreme Court
9 Cal. 3d 731, 511 P.2d 1197 (1973)
- Written by Daniel Clark, JD
Facts
Coast and Southern Federal Savings and Loan Association (Coast) (defendant) issued home loans secured by deeds of trust to thousands of borrowers (plaintiffs). Coast’s loan agreements contained a provision charging borrowers an additional fee if the borrowers were late on payments. The loan agreements defined the fees as additional interest at the rate of 2 percent per year on the unpaid principal balance of the respective loans. A class of approximately 5,000 borrowers who had paid such fees sued Coast to recover their payments. The borrowers alleged that the fees ran afoul of California Civil Code § 1671. The trial court sustained Coast’s demurrer, finding that the borrowers had failed to state a proper cause of action. The borrowers appealed.
Rule of Law
Issue
Holding and Reasoning (Wright, C.J.)
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