51 Minn. 485 | Minn. | 1892
Laws 1879, ch. 66, relating to interest, is amended by Laws 1887, ch. 66, by adding a provision “that all contracts hereafter made shall bear the same rate of interest after they become due as before, and any provision in any contract, note, or instrument providing for an increase of the rate of interest upon maturity, or any increase therein after the making and delivery thereof, shall work a forfeiture of the entire interest thereon.”
The effect of this provision is to make such contracts usurious upon their face, as respects all interest reserved thereby.
The collection of the interest in such cases cannot be enforced by suit or the foreclosure of a mortgage, upon default in the payment of an installment of interest agreed to be paid in such usurious instrument. The maker is not in default by his neglect or refusal to pay the same, and a foreclosure by advertisement, therefore, is without legal warrant and void. Jordan v. Humphrey, 31 Minn. 495, (18 N. W. Rep. 450.)
The note in controversy here contains a provision for an increased rate of interest after maturity, and is so far in violation of the statute referred to. The mortgage given to secure the same contains a provision authorizing the mortgagee or his assigns to foreclose upon default in the payment of the interest, and at his or their option to declare the principal sum due in case of such default. But there is no basis for declaring' a default for the nonpayment of usurious interest, and the aid of the statute providing for foreclosure cannot be invoked in such case. The foreclosure in this ease cannot, therefore, be upheld, and since the note on its face carried to the defendant, who is the assignee of the note and mortgage, the notice of the illegal reservation of interest, he is not protected as a bona fide purchaser.
Judgment affirmed.
(Opinion published 53 N. W. Rep. 767.)
