Article XVI, Section 11 of the Texas Constitution

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As amended November 6, 2001:

The Legislature shall have authority to define interest and fix maximum rates of interest; provided, however, in the absence of legislation fixing maximum rates of interest all contracts for a greater rate of interest than ten per centum (10%) per annum shall be deemed usurious; provided, further, that in contracts where no rate of interest is agreed upon, the rate shall not exceed six per centum (6%) per annum.

Editor Comments

As adopted in 1876, this section read: "The legal rate of interest shall not exceed eight per cent. per annum, in the absence of any contract as to the rate of interest; and by contract parties may agree upon any rate not to exceed 12 per cent. per annum. All interest charged above this last named rate shall be deemed usurious, and the Legislature shall, at its first session, provide appropriate pains and penalties to prevent and punish usury."

The section has been amended three times. Under authority granted by the amendments to it, the Legislature has allowed annual interest rates higher than ten percent under certain circumstances.

Attorney Steve Smith

Recent Decisions

None.

Historic Decisions

  • Watts v. Mann, 187 S.W.2d 917, 923 (Tex.Civ.App.–Austin 1945, ref'd) ("The portion of the section we are now considering reads: 'the first Legislature after this amendment is adopted, shall provide appropriate pains and penalties to prevent the same.' This is in no sense the language of a grant of power; nor by implication or otherwise a limitation upon or inhibition against use of power. It was, what its language implies, and implies only, a mandate or direction to the legislature . . . . The application of this holding to the instant issue is obvious and requires no elucidation. Sec. 11 of Art. 16 imposes no inhibition against the enactment of the Loan Act. If it is invalid, it must be held so upon some other ground.")
  • Ex Parte Hughes, 129 S.W.2d 270, 274 (Tex. 1939) ("Our courts of equity, as such, have no jurisdiction to entertain suits to enjoin the commission of acts merely because such acts constitute crimes or penal offenses under penal laws. This is because equity is not concerned with the enforcement of penal or criminal . . . . There is no contention that any constitutional or statutory law directly authorizes an equity action by the State to enforce our usury laws. Also, there is no law, constitutional or statutory, that defines the violation of such laws as an injury to the property or civil rights of the public at large. To the contrary, as we will later demonstrate, our usury laws very carefully create only private rights.")

Library Resources

Online Resources