58 Iowa 728 | Iowa | 1882
The place of trial of the cause was changed in the first place to the District Court of Appanoose county-upon the defendant’s application, and afterwards upon the defendant’s application to the District Court of Davis county. The place of trial was then changed to the District Court of Jefferson county upon the application of the jfiaintiff. The defendant’s plea-to the jurisdiction was filed in that court. The national
The plaintiff during the transactions in question was a dealer in stock and grain.' To aid him in his business he borrowed money of the defendant bank. ITis first indebtedness to the bank was incurred March 20, 1875. He closed his transactions with full payment, December 22,1877. During that time, a period of about two years and nine months, he borrowed of the bank a little more than $40,000. But during that time he made large deposits, some of which he checked out and used, and some of which were applied toward the payment of the money borrowed. On the 30th of May, 1876, he had a settlement with the bank. The amount due was found to be less than $8,000. On that day the plaintiff gave'the defendant his note for $2,733.94 payable in sixty days, and his note for $5,000 payable in ninety days. The notes were drawn just large enough, as we understand, to cover the amount agreed to be due, and also the interest agreed to be paid for the time the notes were to run respectively. The note for $5,000 was paid within the two years last prior to the commencement of the action, that is, subsequent to. December 21, 1876.' The other note was paid before the two years, or prior to December 21, 1876. The plaintiff claims that the note for $5,000 embraced all the usurious interest agreed to be paid prior to the time it was given. The defendant contends that it embraced no part of such interest. The court so found.
The notes above described were the last of a series of renewal notes which covered in part the earliest indebtedness, and were all tainted with usury, unless the usurious interest agreed to be paid, had been paid by the application of the plaintiff’s deposits. The practice between the plaintiff and defendant was to have occasional settlements. At those settlements, the interest on the notes held by the bank against the defendant for loans, was computed to the time of settle
The defendant’s evidence tended to show that it was understood between the parties that the payments were to be applied first upon the interest. The plaintiff’s evidence tended to show that there was no such understanding. He does not, however, claim that there was'an understanding that the payments were to be applied solely on the principal, but simply that there was no understanding of any kind.
The idea of the court, doubtless, was that in the absence of any agreement, the defendant might make such application as it saw fit; that the defendant did make an application, and that that application must stand unless it was contrary to the agreement of the parties, and that the plaintiff had failed to show that it was. In our opinion the ruling of the court in tbiff respect is not free from error. If there was no agreement between the parties (a question which the evidence leaves in great doubt) it appears to us that it cannot be said that the defendant made an application of the payments primarily to the interest. We have looked in vain through the
We are aware-that there is a little evidence tending to show that the defendant made an entry of credit of payments, in what it calls its interest account,'showing a discharge of the interest by the payments. The defendant’s books were not introduced, though called for by the plaintiff, but such we, understand is substantially the testimony of the bank officers. But we must bear in mind that the plaintiff’s indebtedness was represented by his promissory notes. He was in no proper sense a party to an interest account. We do not think that he could be affected by a mere entry made therein. Especially do we think that such an entry could not be allowed to give a character to the transaction between the plaintiff and defendant, different from that which it bore upon its face, and different from that whieh the plaintiff had a right to suppose it bore. We must hold then that what the defendant did, and what the plaintiff assisted the defendant in doing, was to make a pro rata application of the payments, unless their acts must be held to mean something different by reason of being interpreted in the light of some agreement or of some rule of law. If the agreement was that the payments were to be considered as applied first, inpayment of'the interest, then they must be so considered, unless such agreement would be controlled by some rule of law.
We will proceed first to consider whether there is any rule of law that prevents us from holding that' the application was a pro rata application.
Where a partial payment is made in a general way upon, a
Where a partial, payment is made upon a promissory note bearing usurious interest, and an action is brought to recover the balance due upon the note, the law applies the payment first upon the prificipal, and this is so though it appears to have been the intention of the debtor, at the time the payment was made, that it should^ be applied upon the interest. Garth v. Cooper & Smith, 12 Iowa, 364.
In our opinion neither of the above rules is applicable to the case at bar. The first is not for reasons too manifest to require any discussion. That the last is not might be thought to admit of some doubt. But it should be borne in mind that this is not an action where the debtor is seeking merely to protect himself against the enforcement of a usurious contract, but where, after the contract has been fully performed, he is seeking to recover usurious interest paid, and not only that but a forfeiture by way of penalty. Section 5198 of the Revised Statutes of the United States, after providing for the rate of interest which may be taken by national banks, contains a provision which is in these words: “ In case a greater rate of interest has been paid, the person by whom it has been paid, or his legal representatives, may recover back in an action in the nature of debt, twice the amount of the interest thus paid, from the association taking or receiving the same, provided such action is commenced within two years from the time the usurious transaction occurred.” The usurious transaction must be held to have occurred when the usurious interest sought to be recovered was paid. Where a payment upon the indebtedness has been made under such circumstances that it may fairly be inferred that it was the intention of 'the debtor to make, and of the creditor to receive, payment upon the interest, we think a right of action must be held to
As to whether there was any.agreement, as the defendant contends, which should give them a different character, it is not our province to determine. The action is at law and not triable de novo. Under the undisputed evidence and rules of law, we think that the payments must be held to have been applied jm'o rata, unless, as the defendant contends, the agreement was that they should be considered as applied first upon the interest. The burden then is upon the defendant to establish such agreement, and herein we think the court erred.
The views expressed cover, we think, all questions likely to arise upon another trial so far as they have been presented in argument.
On the defendant’s appeal the judgment is affirmed, and on the plaintiff’s
Eeversed.