Usury—Installment Sales Contracts: Limitation of the Scope of the Time Price Doctrine—National Bank of Commerce of Seattle v. Thomsen, 80 Wn.2d 406, 495 P.2d 332 (1972)

In 1965 Greg Thomsen entered into an agreement with Carter Motors for the purchase of an automobile. In addition to signing a purchase order, Thomsen executed a conditional sales contract which provided that payments were to be made to the National Bank of Commerce (NBC) and showed a time price differential of $242.15, the equivalent of a 14.61 percent annual finance charge. A Carter Motors salesman had requested that Thomsen finance the purchase through NBC, which had supplied the contract form and other documents used in the transaction. Carter Motors immediately assigned the contract to NBC pursuant to a financing agreement which provided that Carter Motors would sell to NBC such conditional sales contracts as NBC approved. Thomsen later defaulted on the contract and, when sued by NBC for the remaining payments, alleged that the 14.61 percent finance charge violated Washington\u27s usury statute. The trial court ruled in favor of NBC, viewing the transaction as a bona fide conditional sales contract outside the purview of the usury statute. On appeal, the Washington Supreme Court reversed. Held: The relationship between Thomsen and NBC was that of borrower and lender; thus, the 14.61 percent annual charge constituted interest in excess of the 12 percent maximum allowed by the usury statute. National Bank of Commerce of Seattle v. Thomsen, 80 Wn. 2d 406, 495 P.2d 332 (1972)