The Kissell Company v. Forrest Gressley and Emily Gressley, Husband and Wife, and Mountain View Garden Apartments

In this diversity case, Kissell, a mortgage banking company, appeals from judgment rendered against it for having wrongfully retained a mortgage on a piece of property after a description of that property was erroneously inserted into a mortgage to which Kissell was entitled as security for certain loans. The Gressleys and Mountain View Garden Apartments (hereinafter referred to collectively as Gressley) recovered $119,785.93 in actual and punitive damages on this count. Kissell also appeals from a determination that it charged a usurious rate of interest on the loans. Under Arizona law, a usurer must return to the borrower all interest paid on a usurious loan. Under this count, Gressley recovered an additional $27,850.00.

The facts show that Gressley, a housing developer in Arizona, signed loan agreements totalling $690,000 with Kissell in 1972. Of that amount, $52,000 was used to purchase the land, $73,000 was to be used to develop the land, and $565,000 was to be used to construct apartment dwellings on the land.

The loan agreements called for interest rates ranging between 7%% and 8V2%, or 2% over the prime rate at specified New York banks, adjusted according to which rate…