75 Ind. 318 | Ind. | 1881
The appellant sued the appellees upon a promissory note. The defendants Adams and Morgan answered, admitting the execution of the note, but averring that they executed the same as sureties only, and that, knowing this fact, the payee had made an agreement with the principal debtor for an extension of time for the payment of the note. The note bears date July 5th, 1871, and is payable to the plaintiff twelve months after date, “with interest at ten per cent, after maturity until paid.” Upon a trial by jury, the appellant demurred to the evidence adduced by said defendants. The court overruled the demurrer and gave judgment accordingly. The error assigned upon this ruling is the only one in support of which the counsel for the appellant has cited authority or made any argument.
There can be no doubt, on the evidence set forth in the demurrer, that the appellees were, and were known by the payee of the note to be bound as sureties only, and that they gave no consent to any agreement for an extension of the time of payment to the principal debtor. The only question is, whether the evidence is such as reasonably wai’rants an inference of a valid and binding contract for an extension of the time of payment. We give so much of the evidence as bears on this point:
George Whitman testified : “I gave this note as principal, and the'other defendants, Ferguson, Adams and Morgan, are sureties for me; the interest for twelve months was put in the note ; at the time I gave the note to Elijah Lemmon, I received from him two thousand dollars; the balance is interest put m the face of the note; I don’t remember that there was any contract with the sureties about, the rate of interest, except as stated in the note; there was nothing said in the presence of the sureties about the rate of interest, that I know of; I don’t think any of the sureties were present when the money was paid to me,
Cross-examination: “At the date of the note in suit, twelve per cent, was added in as interest; the amount I paid in July, 1873, I paid as one year’s interest for the then past year, and in -July, 1874, the amount I paid Mr. Lemmon again was paid as interest for the then past year ; all that I paid was on past interest; I did not pay any of it as interest in advance ; the note bore ten per cent, interest after maturity,
• The mortgage referred to was put in evidence, but it describes lands in township number two, instead of one as stated by the witness. There is other evidence indicating that the mortgage misdescribed the land in this respect. Besides the note in suit, the mortgage, which bears date August 5th, 1874, purports to secure a second note for $2,500, bearing date June 15th, 1872.
Directing our attention to the transaction of July 5th, 1873, the jury might, not unreasonably, have said that, as described by the witness, it amounted to this: The creditor said to his debtor, you allowed me twelve per cent, the first year, and put it into the face of the note ; for the year now passed since its maturity, the note calls for only ten per cent., and you never promised to pay me any more ; but do you now pay me the interest due, and fifty dollars in addition, to make it up to twelve per cent, for the past year, and I will let the note run another year, and so long as you pay the extra sum from year to year, the note may run ; the debtor assented, and paid the interest and the extra fifty dollars ; and in 1874 the same transaction, upon the same understanding, was repeated ; and in this instance, possibly the payment was made before the 5th of the month, by from one to four days. Stated more succinctly, the parties each time agreed for another year’s extension, in consideration of the payment then made of fifty dollars in excess of the stipulated interest, for the past year, and of the agreement of the debtor to pay a like extra sum upon the interest for the ensuing year, and from year to year thereafter, so long as the debtor should choose to do it.
The fact that the fifty dollars were applied to the interest for the past year does not affect the question. The debtor was under no obligation or promise, written, oral or im
In Harbert v. Dumont, 3 Ind. 346, it was held that such an agreement for an extension of time, made under the interest law of 1845, which did not authorize the recovery or recoupment of the interest, was valid, because beneficial to the recipient of the usurious interest. In Shaw v. Binkard, 10 Ind. 227, it was held that such an agreement did not discharge the surety, because, under the law then in force, the taking of usurious interest was punishable by fine, and the interest recoverable by the debtor, and the contract for extension thei'efore not binding. In Redman v. Deputy, 26 Ind. 338, followed by Calvin v. Wiggam, 27 Ind. 489, interest at the rate of ten pér centum in advance, for a stated time, was paid, and the surety was discharged, it being held that the payment of legal interest in advance was a sufficient consideration, and the contract was not invalidated on account of the usurious excess.
The ruling on the second paragraph of the answer in Abel v. Alexander, supra, does not, as counsel claim, cover the question. The consideration for the extension there alleged, as the plea was construed, by the court, did not include the payment made and credited, but only “the agreement and promise of Alexander to continue to pay interest on said note at the rate of fifteen per cent.” The construction placed upon the plea was too narrow, but the decision, having been expressly based upon a stated construction of the answer, is not .authority for a conclusion in reference to a different construction. It may properly be observed in
From, this review of the cases, it may fairly be said that the question under consideration is an open one, in this State, to be decided on reason and principle.
It is well settled that only the debtor and those bearing to him certain relations of privity or of identity of interest, can take advantage of the right to recover or to recoup usurious interest which has been paid. Studabaker v. Marquardt, 55 Ind. 341. To hold, therefore, that secret agreements between the principal debtor and the creditor, such as were made in this case, may be made and carried out for years, both parties obtaining what they bargained for, and yet to say that in respect to the sureties the agreements were not valid, because ultimately the debtor may, if he shall choose to do it, claim a credit for the usurious payments, or the sureties themselves may claim the same credits, if they chance to learn of the facts, would tend manifestly to promote deceit and injustice. It would, moreover, be in violation of the spirit of the law which favors the surety, and demands of the creditor the practice toward him of the utmost good faith. There is no conceivable equity in favor of such a rule, and the only legal basis for it is a bare technicality, which, in most cases, is false and wrongful in its application. It declares that to be no consideration which the debtor made a sacrifice to pay, and which the creditor accepted as desirable and sufficient, and of which, in many, and perhaps in most, cases, he gets the full benefit.
But even this technical doctrine which reverses the theory of creation, that all things were made of nothing, and makes
In Billington v. Wagoner, 33 N. Y. 31, the plaintiff claiming and insisting that the agreement was void, on the ground that it was usurious, and, therefore, did not amount to a consideration to extend the time of payment, the court said: “But assuming that the agreement, made by the plaintiff with the principal debtor, was usurious, and therefore, in the language of the statute, void, can the plaintiff interpose that objection? The defendants claim it to be a valid and binding agreement. They- are estopped from ever hereafter setting up that it was void, and, assuming it to be valid, the consequences resulting therefrom are the discharge of the sureties and the postponement of the plaintiff’s right of action against the principal debtor, until the expiration of the postponed time of payment. Although the statute uses the language that any usurious note, contract, etc., shall be void, yet it is not always so regarded, as it is in the power of the party who can avail himself of that defence to waive it. * * * But this defence or objection to the contract, that it is void on account of usury, can only be alleged or set up by the party bound by the original contract to pay the' sum borrowed, or his sureties, heirs, devisees or personal representatives.” Reynolds v.Ward, 5 Wend. 501.
In La Farge v. Herter, 4 Barb. 346, the court says : “It does not lie in the mouth of La Farge, to set up his own illegal conduct, and to allege that his own bond and mortgage are void for usury; and elect to treat them as void for that reason. It is the victim of the usury, and not the usurer
In La Farge v. Herter, 5 Seld. 241, Ruggles, C. J., said: “The taking of usury is a misdemeanor by statute, and the agreement to take it is in the eye and in the language of the law, corrupt. The parties, however, do not stand in pari delicto. It is oppression on one side and submission on the other. The borrower therefore may set up usury for the purpose of avoiding a contract tainted with it, but the lender can not.”
To the same effect see the following cases, many of which, and especially the more recent, fully support the conclusion which we have announced : Kenningham v. Bedford, 1 B. Mon. 325 ; Billington v. Wagoner, 33 N. Y. 31; Kelly v. Gillespie, 12 Iowa, 55 ; Corielle v. Allen, 13 Iowa, 289 ; Wheat v. Kendall, 6 N. H. 504; Grafton Bank v. Woodward, 5 N. H. 99 ; Danforth v. Semple, 73 Ill. 170 ; Myers v. First National Bank, etc., 78 Ill. 257; Hamilton v. Prouty, 50 Wis. 592 ; Austin v. Dorwin, 21 Vt. 38 ; Turrill v. Boynton, 23 Vt. 142 ; Smith v. Hyde, 36 Vt. 303 ; Berry v. Pullen, 69 Me. 101; S. C., 31 Am. Rep. 248 ; Armistead v. Ward, 2 Pat. & H. (Va.) 504. See, also, Camp v. Howell, 37 Ga. 312 ; Cox v. Mobile, etc., R. R. Co., 44 Ala. 611; Stillwell v. Aaron, 69 Mo. 539 ; S. C., 33 Am. Rep. 517.
It is true, there is a conflict of authority on the subject. Among the cases not in harmony with the foregoing, may be cited, Cornwell v. Holly, 5 Rich. S. C. 47 ; Jenness v. Cutter, 12 Kans. 500 ; Hartman v. Danner, 74 Pa. St. 36 ; First National Bank, etc., v. Lineberger, 83 N. C. 454 ; S. C., 35 Am. Rep. 582; Howell v. Sevier, 1 Lea (Tenn.) 360. Several of these cases rest, to some extent, on the authority of Vilas v. Jones, 1 N. Y. 274, which is shown to be overruled in Billington v. Wagoner, supra.
If the contract were absolutely void, on account of the
The judgment is affirmed, with costs.