Ross v. Peyerk
Michigan Court of Appeals
2022 WL 1714582 (2022)
- Written by Eric Miller, JD
Facts
In 2008, the Ross Trust (plaintiff) borrowed $650,000 from the Peyerk Trust (defendant), secured by a mortgage on the Ross Trust’s property. The mortgage note provided for annual payments of $95,435.76, with an interest rate of 12 percent. The note further stipulated that missed payments would be added to the principal balance and that interest would accumulate on each new balance—a practice known as compounded interest. The Ross Trust made one annual payment of $95,435.84 and another of $135,586.39 (for a $231,022.23 total). Then the Ross Trust went into default. The Peyerk Trust demanded payment of $835,217.48. The Ross Trust brought a quiet-title action against the Peyerk Trust. The Ross Trust alleged that the Peyerk Trust had violated Michigan’s criminal usury statute, which prohibited interest rates in excess of 25 percent per year. The trial court held that the effective interest rate charged by the Peyerk Trust exceeded 25 percent and that the amount payable by the Ross Trust should be limited to $418,977.77—that is, the remaining principal on the original $650,000. The Peyerk Trust appealed to the Michigan Court of Appeals, arguing that the annual interest rate was in fact 12 percent. At this point, the Peyerk Trust claimed that the total balance owed by the Ross Trust was $2,871,628.24.
Rule of Law
Issue
Holding and Reasoning (Per curiam)
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