142 Ga. 84 | Ga. | 1914
(After stating the foregoing facts.) One of the grounds of demurrer alleges that the petition should be dismissed because of the plaintiffs’ failure to comply with the terms and conditions of a certain agreement, dated November 18, 1911. The material portions of this agreement were as follows: “Now, wherefore, it is agreed between the parties hereto that if said sale be consummated, all of said notes, except the first maturing note for two thousand dollars, shall be assigned by the R. J. & B. F. Camp Lumber Company to the said Citizens Bank of Valdosta, together with such security as may have been given for the payment of the same, and that a sufficient portion of the amount first accumulated by the payment of said notes, from month to month, to cover the amount of the principal and interest upon said five promissory notes shall be held by said bank .until the validity or legality' of said notes and of the said transaction on the ground of usury shall be adjusted and settled between the said Citizens Bank of Valdosta on the one part, and the said R. J. & B. F. Camp- Lumber Company and its Creditors’ Committee on the other part, or, if they shall be unable to come to an amicable agreement about the same, until the adjudi
This case is here on exceptions to the judgment of the court below in sustaining the demurrer to the petition. The demurrer admits the well-pleaded allegations. The petition shows that the lumber company did not owe the bank anything on the principal sum, or any legal interest on the original debt. The principal and the legal rate of interest had been paid in full. There was nothing in the nature of a debt held by the bank against the lumber company, except the notes which represented the alleged usurious interest." This agreement was entered into between the bank and the lumber company, and by its terms the bank was to receive the proceeds of certain notes belonging to the lumber company and apply them to the settlement of the usury note, alleged to be only for the usurious interest. The contest over the usury is the basis of the contract. And the consideration of the agreement to sue within the six months is based upon the note containing the usury. This being the consideration, an agreement to sue for usury within a period less than that fixed by the statute is as illegal and void as the collection of the usury itself. As said by Judge Bleckley, in Tribble v. Anderson, 63 Ga. 56, “Usury stalks like a pestilence through every form of contract, and poisons all it touches.”
The lumber company -arranged to pay the usurious interest, it is true, by placing notes as collateral security with the bank, with authority to collect and appropriate the payment in case of non-agreement of the parties, or failure to sue within the time agreed upon. The surroundings of the case indicate that the agreement was secured through “a kind of moral duress, just as debtors are supposed to pay usury in ordinary cases.” Pope v. Marshall, supra. It was said in that case (78 Ga. 640), “No disguise of language can avail for covering up usury, or glossing over an usurious contract. The theory that a contract will be usurious or not according to the kind of paper bag it is put up in, or according to the more or less ingenious phrases made use of in negotiating it, is altogether erroneous. The law intends that a search for usury shall penetrate to the substance.” It is insisted that the real consideration for the agreement to sue within six months was the releasing of the property held by the bank as security for the note due by the lumber company. But back of it all the chief bone of contention was the
The defendant cites a number of decisions to the effect that the period fixed by statute within which suit may be brought can be lessened by agreement; but these cases all related to contracts— mostly insurance—where the subject-matter was lawful, and they were based upon a valid consideration. In the instant case the consideration was unlawful. The entire balance of the note due by the lumber company to the bank, if the allegations of the petition are true, represented usury, the collection of which is unlawful under our statute. Section 3440 of the Civil Code provides: “No contrivance or arrangement between the parties to any such unlawful transaction, or their privies, shall have the effect to discharge such forfeiture, except it be an actual and full payment of the amount so forfeited,” referring to the forfeiture of the excess beyond lawful interest. Assuming the allegations of the petition to be true, the note held by the bank against the lumber company contains only usury, and is therefore void; and no device or contrivance whatever by which the parties agreed to pay or secure the usurious note is valid and enforceable. Like the note itself, the effort to secure the note, and require the lumber company to bring suit within six months, is absolutely void. Nor could the lumber company waive its legal rights upon a consideration which was usurious and void. See Cleghorn v. Greeson, 77 Ga. 343; Lowry v. Parker, 83 Ga. 341 (9 S. E. 677); Tribble v. Anderson, 63 Ga. 55.
But it is argued that the bank had not applied the money collected from the Garbutt Lumber Company, and which belonged to the plaintiff, to the usurious note of the lumber company up to the. time of bringing the suit, but was merely threatening to apply it. There is no question raised in the record but that the sum claimed to be due to the bank is usurious. The bank has deeds to the plaintiffs’ land to secure that debt. All deeds tainted with usury are void. This is an equitable petition to cancel the deeds as being void because tainted with usury. A court of equity, having' jurisdiction of the case for the purpose of cancelling the deeds if found to be tainted with usury, would also require the money in the hands of the bank, which was collected from the Garbutt Lumber Com