96 Tenn. 361 | Tenn. | 1896
This bill was filed to enjoin the collection of a note or paper writing, which is in the following words and figures :
“$331.00. Nasi-iville, Tenn., March, 17, 1893.
“On or before November 1, 1893, after date, I promise to pay to L. F. Butler & Co., or order, at First National Bank, Nashville, Tenn.,'three hundred and thirty-one dollars for value received, with interest at the rate of six per cent, per annum from the date hereof, and ten per cent, after due until paid,, together with ten per cent, attorney’s feés, if*363 sued upon or placed in the hands of an attorney for collection. Failure to pay interest annually, or to comply with any condition named, renders this and all other notes growing out of same claim due and payable at option of payee. This note is given for certain labor and goods and materials furnished in the erection of an improvement upon my real property in the nature of a windmill and attachments, by the payee, pursuant to previous written order in that behalf and the execution, delivery, and acceptance of this note shall not in any way or manner be deemed a waiver of any lien the payee may have therefor upon said real property in said written order described.
“W. F. BANG.”
The bill filed was against the Phelps & Bigelow Windmill Company, the Kalamazoo National Bank, and the City Savings Bank of Nashville. Its allegations were that the mill was not as represented and was worthless, and that complainant had given notice of this fact; that Butler & Company were but agents of the Windmill Company, and the Kalamazoo bank was virtually the same as the company, and not an innocent holder of the note; that the Nashville bank simply held it for collection; that the windmill company was a foreign corporation, and had not complied with the law as to registration of its charter. The City Savings Bank answered simply that it held the note for collection, and knew nothing of the other matters alleged.
Two points were raised in the Court of Chancery Appeals that appear not to have been made previously. One that the note is non-negotiable, and the other that it is usurious on its face, and therefore illegal and void. The Court of Chancery Appeals did not decide whether the note was negotiable or not, nor whether it was without consideration, but was of opinion that it was upon its face illegal, usurious, and void, and we think that in this the Court was clearly correct. This is not a case .similar to that of Garritty v. Cripp, 4 Bax., 86, and Brown v. Gardner, 4 Lea, 157; Bank v. Mann, 10 Pickle, 17, 22.
The substance of these cases is that a purchaser
In the case at bar the instrument provides for a credit till November 1, 1893. At that date, by the terms of the instrument, the amount of the original debt and six per cent, interest became due. Any indulgence after that date is the ‘‘ forbearance of the debt,” and, inasmuch as it is provided that for this forbearance ten per cent, must be paid, it is clearly usurious under our statute. See, also, Craeme v. Adams, 14 Am. Repts., 130; Rogers v. Oneal, 6 L. R. A., 427.
There is a class of cases holding that a stipulation for interest in excess of the legal rate, after maturity, shall be regarded not as usurious, but in the nature of a penalty to enforce prompt payment. But this holding has been expressly disapproved in Richardson v. Brown, 9 Bax., 242-249, as not in harmony with our laws defining usury. See same case, 1 Leg. Rep., 349, 352-354.
Clearly, the note in this case cannot be enforced under the cross bill of the Kalamazoo bank. Can it be canceled under the condition in which we find
In Cox v. Waggoner, 5 Sneed, 542, it is laid down as a correct rule of practice that, when a bill contains a prayer for general relief, but fails to make out a case for equitable interposition on1 behalf of the complainant, which is, however, clearly disclosed in the answer and proof, a Court of Equity will proceed to grant such relief as if the right thereto appeared on the face of the bill; and the authorities are numerous that relief to complainant may be predicated upon matters appearing in the answer and proof, and not in the bill. See Rose v. Mynatt, 7 Yer., 31-37; Bailey v. Bailey, 8 Hum., 230; Neal v. Robinson, 8 Hum., 435; Mulloy v. Young, 10 Hum., 297; Bartee v. Thompkins, 4 Sneed, 623.
The Court of Chancery Appeals granted relief upon the statements in the defendant’s answer in accordance with these cases, but we think the case cannot be rested upon this basis without more. Under the pleadings .the c^se is presented to us in a singular shape. The complainant, by his original bill, seeks to avoid and cancel the note upon the
But in this case the defendant not only answers, but with it, and as a part of it, files a cross bill setting out the note with its illegal provisions, and prays for its enforcement. The cross bill being a part of the answer, and incorporated with it, puts the defendant in the attitude of seeking to enforce the note in its illegal • shape. Defendant bank can have no recovery, except it is entitled to such recovery on the instrument in its original illegal shape, and can neither reform it nor have a recovery upon the original consideration, as it was not a party to
"VVe think the proper decree in the case is to declare the note illegal and void, and dismiss the defendant’s cross bill seeking to enforce it. The bill of complainant must also be dismissed, since he has not made out his case as to a failure of the original consideration. The costs will be equally divided between complainant and defendants.