2 P.2d 144 | Cal. | 1931
This cause is now before us on rehearing. We have carefully re-examined the cause and find ourselves unable to reach any other conclusion than that heretofore announced. We adopt a portion of our former opinion, as follows:
"Action to recover the statutory penalty provided by section 3 of the Usury Act (Stats. 1919, p. lxxxiii, Act 3757, Deering's General Laws). Defendant had judgment; plaintiff has appealed. *252 [1] "The transaction took the form of an advancement by defendant of the sum of $1,624.31 to discharge the final payments due from plaintiff to General Motors Acceptance Corporation for the purchase of two trucks under a conditional sales contract. Defendant to secure repayment of the sum advanced took from the acceptance corporation an assignment of the conditional sales contract; procured registration of the trucks in his own name as owner; then took a bill of sale of the trucks from plaintiff; then issued to plaintiff an inflated conditional sales contract, dated December 16, 1926, naming the sum of $3,531.88, reciting, however, the fictitious payment of $1,000 on account thereof, leaving the true amount claimed by defendant from plaintiff for said advancement as $2,531.88, which was to be paid in monthly installments over a period of approximately one year. Immediately upon the execution of this additional sales contract, defendant assigned it to Commercial Securities Corporation Cons., with a written guarantee to said purchaser of all the covenants therein to be kept and performed by plaintiff. Plaintiff made all the payments due under this contract except the last one of $931.88, which fell due December 16, 1927. To take care of this payment the above described process was repeated; the $931.88 became $1,131.88; a new conditional sales contract to cover another twelve months' period was issued for this item and immediately assigned by defendant to the Merchants' Security Company.
"It must be noted that the possession of the trucks never at any time passed from the plaintiff to defendant. Title was conveyed to the latter at all times for the purpose of security. Stripping the transaction of its entanglements, it is too clear for controversy that it was but a thinly disguised loan, heavily charged with usury. (Rosemead Co. v. Shipley Co.,
[2] "But the foregoing observations do not entitle plaintiff to recover from defendant for the evidence shows that immediately upon execution of said two contracts, the assignments above noted were made. The evidence also shows without conflict that each and every payment called for under said contracts was made to one or the other of the *253 above mentioned corporations and not to the defendant. This fact prevents the plaintiff from recovering and such holding follows from the plain construction of the act itself, which provides that the penalties may be collected from the person `who shall have taken or received' the payment. We cannot say that the written guarantee made by the defendant should alter this rule. There was no showing of collusion or relation of any other kind between defendant and either of the assignees.
"Appellant urges that only three cases could be found on this subject and that these cases hold that the penalty may be collected from the party who makes the contract; they areSanford v. Kane,
"This doctrine was followed again by the Oklahoma court in the case of First Nat. Bank v. Sensebaugh,
Further search discloses additional authority to the same effect and no authority to the contrary. The rule is stated in 39 Cyc. 1038 as follows: "The proper party defendant is the person who has received the usury. It is not necessary that a third person to whom the notes executed for the usurious loan were made payable should be joined if he received no part of the usury. But when the usurious note has been transferred to a holder in due course, to whom the maker is compelled to make payment, the original payee is the proper party defendant." This authority cites in support of the text Snyder v. Crutcher, 137 Mo. App. 121 [118 S.W. 489].
The only exception found anywhere to the general rule is that in some jurisdictions the payee of a usurious negotiable note may be sued to recover the usury paid where the instrument has been transferred to an innocent purchaser for value and the maker's right to plead usury as a defense to the note has been thereby destroyed. (Schlesinger v. Lehmaier,
Thirty-nine Cyc. 1035 notes the exception as follows:
"The person who has knowingly exacted the usury is the person compelled by the law to repay it. But when a negotiable note which includes usury comes into the hands of a holder in due course, who, under the statute, may compel payment in full, the maker is generally allowed to recover the usury thus paid to the innocent indorsee from the usurer-payee." Under this text reference is found to a North Dakota statute and also to the Minnesota General Statute 1894, section 2214, which reads in part: "In any case, however, where the original holder of an usurious note sells the same to an innocent purchaser, the maker of such note, or his representatives, shall have the right to recover back from the said original holder the amount of principal and interest paid by him on said note."
In Fredin v. Richards,
It is not pretended that the contract involved in this action was a negotiable instrument. The plaintiff could at any time have set up usury in defense of an action upon said contract. He has simply sued the wrong party. He could have maintained against the assignee the cause of action provided for under said section 3.
The words "directly or indirectly" found in section 2 do not change or qualify the plain meaning of the provisions of section 3 of the act. Section 2 declares void the contract to pay interest to any extent if usury is provided for. It also provides that the nonpayment of interest shall not accelerate the maturity date of the obligation. The act, in a later section, also provides for a criminal prosecution under certain circumstances. But section 3, by its terms, limits the suit for penalties to a debtor who has paid, against the party who is entitled to receive and does actually receive the payment from him.
The judgment is affirmed.
Waste, C.J., Seawell, J., Richards, J., and Shenk, J., concurred.
Rehearing denied. *256