Wishnev v. Northwestern Mutual Life Insurance Co.Annotate this Case
The Supreme Court answered a question requested by the United States Court of Appeals for the Ninth Circuit by holding that the provision in Cal. Civ. Code 1916-2 prohibiting lenders from assessing compound interest "unless an agreement to that effect is clearly expressed in writing and signed by the party to be charged therewith" does not apply to lenders exempt under article XV of the California Constitution.
Article XV sets the maximum interest rates lenders may charge but exempts specified classes of lenders from those rate restrictions and authorizes the Legislature to regulate the compensation these exempt lenders may receive. At issue was whether exempt lenders are required to obtain a borrower's signed agreement in order to charge compound interest on a loan. The Supreme Court held that exempt lenders are not required to obtain a borrower's signed agreement in order to charge compound interest on a loan.