Lindsay v. United States Savings & Loan Co.
127 Ala. 366
Ala.
1899
Check Treatment

Lead Opinion

SHAEPE, J.

Priоr to the adoption of the present Code the statutes relating to interest and usur'y declared with reference to usurious contracts that they “cannot he enforced except as to the principal.” Accordingly in suits for the enforcement of such contracts wherever thе defense of usury ha-s been -set up and -sustained, courts of equity as well as of law have constantly refused assistance to the suitor except upon the assumpticm that the principal exclusive of all interest constituted the entire debt. The provision, however, was newer construed as interfering with the equitable principle 'which requires that one who seeks equity must do equity, or as interdicting its application to a borrower who in the attitude of -a -complainant sedes relief from usury. In the numerous cases involving-usurious mortgages extending from Pearson v. Bailey, 23 Ala. 537 to Turner v. The Merchants Bank, 126 Ala. 397, our courts have followed the gеnerally prevailing and well settled rule that- such *370remedy will be afforded to a complainant only upon tlie condition of his paying the amount equitably due which is considered to be, the sum loaned with legal interest.

The authority of a court of equity to impose those terms is not conferred by stаtute, nor is it exercised for the purpose of enforcing any contractual right. “Such authority belongs to the court by virtue of its general equity jurisdiction; and unless a statute exists providing that the party may have relief Avitliout tlie interposition of those terms, the rule will be invariably enforced.” — Tyler on Usury, 437.

The power of the legislature to prohibit courts of equ.ty from applying the maxim in cases involving usury is undoubted, and the question before us is aa'Iiether the change in the Avoiding of the statute referred to, Avrought by tlie adoption of the present Code has not effected such prohibition. The ‍‌‌​‌‌​‌​‌‌‌​​​​​‌‌​‌‌‌‌​‌‌‌‌​​​​‌​‌‌‌‌‌‌‌​​​​‌​‌‍piаmsion noAV is. that 'usurious contracts “cannot be enforced either at Iuav or in equitj'- except as to the principal.” — Code, 8 2(530. It is apparent that the insertion of the Avoids “either at Iuav or in equity” does not expressly affect the scope, of the statute as it stood before the change.

it is insisted for appellant that some change in effect, as Avell as in AArords, ivas intended, and that unless the altered provision be construed as divesting courts of equity of the right to require such condition of borrowers, nothing has been accomplished by the alteration, and the doing оf a useless thing must be imputed to the legislature. The assumed consequence does not folloAV. Statutes are often found in separate enactments and in Code revisions as Avell Avhieli are merely declaratory of principles, already recognized as existing at common laAAg оr in equity, or which have groAvn out of the construction placed by the courts upon some previous statute; and it frequently occurs in the revision of statutes, that'changes in their phraseology are made with no other intention than to render their meaning more definite and certain.

The cаse here under consideration involves a revision, and not the construction of a subsequent independent enactment upon the subject of a former one,

*371In Landford v. Dunklin, 71 Ala., on page 609, it is said: “No rule of statutory construction rests upon better reasoning than that, in the revision of statutes, alteration of phraseology, the omission or addition of words, will not necessarily change the operation or construction of former statutes The language of the statute as revised, or the legislative intent to change the former statute must be clear before it can be pronounced that there is a change of such statute in construction and operation.”

In Bradley v. State, 69 Ala. on page 322, the principle is thus stated: “In the amendment, or revision, or in the reenactment of statutes, changes of phraseology, the omission of words deemed superfluous, or the addition of words rendering the intention more clear, are not infrequent. The construction or operation of the statute is not varied because of such changes. Before the courts can pronounce that the law is changed, the legislative intention to change it must be evident; language must be employed, which" is not susceptible of any other just construction.” For 'the same doctrine see Dudley v. Steele, 71 Ala. 423; Sutherland on Stat. Con., § 256; Sedgwick ‍‌‌​‌‌​‌​‌‌‌​​​​​‌‌​‌‌‌‌​‌‌‌‌​​​​‌​‌‌‌‌‌‌‌​​​​‌​‌‍on Con. Stat. pp. 229, 365.

The principle of constimction above quoted applied to the present statute, forces the- conclusion that the alteration was intended to and has effect only to declare a rule as applicable to courts of equity, which in those courts, had previously existed either by judicial construction of the statute, or upon the general but variable doctrine that equity follows the law; either of whiсh sources of authority might have become a subject of dispute in the absence of a more definite statute. The change resulting from the revision imports no prohibition against the exercise of the right in equity to require that one who in the attitude of a 'complainant asks, not to enfоrce a contract, but to be relieved from a stipulation he has made to pay money, shall pay the borrowed money with legal interest as a condition to having such relief.

The bill does not attack or seek to rescind the contract because of misrepresentations made to her re-*372spouting tlie required rate of interest. Upon the ground of usury al-one the complainant has sought and obtained relief. To hold that in doing equity she should pay less tham the legal rate because her obligation was-bounded by the mortgage stipulation for six per cent, interеst on the loan proper, would be in effect to hold that no usury existed- — -a result which would be inconsistent with the fight to any relief.

Affirmed.





Dissenting Opinion

HARALSON, J.,

dissenting. — On a former appeal in this case, following the former decision of Falls v. U. S. Savings, Loan & Building Co., 97 Ala. 417,— identical in its legal aspects as to the transaction here involved, — it was held that ‍‌‌​‌‌​‌​‌‌‌​​​​​‌‌​‌‌‌‌​‌‌‌‌​​​​‌​‌‌‌‌‌‌‌​​​​‌​‌‍the cоntract was usurious, a. rate of interest exceeding 8 per cent, having been received. — Lindsay v. U. S. Savings & Loan Asso., 120 Ala. 156. The chancellor in his opinion on the trial below says: “It is alleged and shown, that the contract contained in the mortgage, or the loan, is usurious,” and this is not denied by the defendant. He also says: “The sole questiоn now 'for determination is, ‘Does the present Code, by section 2630,. abrogate the long established rule of courts of equity, which requires a borrower, coming into such court to have a usurious •contract purged of illegal interest, to pay the amount borrowed with legal interest?’” That sectiоn reads: “All contracts for the payment of interest upon a loan •or forbearance of goods, money, things in action, or upon any contract whatever, at a higher rate than is prescribed in this chapter are usurious, and cannot be enforced either at law or in equity, except as to the principal.” In the former statutes, the words “either at law or in equity” did not appeal', and were added when the Code of 3896 was adopted. On the 19th December, 1898, the complainant amended her bill, by setting up this amendment of said section, as relieving her from liability to aсcount in the cause for anything more *373than a payment of the residue of the principal unpaid, and to have all the payments she had made deducted from the principal. Before this amendment, as appears, the statute simply provided, that no usurious contract could bе enforced except as to the principal; and this provision against usury was not limited as to its enforcement to courts of law, but applied also to courts of equity on a bill filed to enforce the usurious contract. A bill filed to enforce the contract, was necessarily рrosecuted by the lender. It was further held, that where one borrowed money at a usurious rate of interest, and gave a mortgage to secure it, and after-wards resorted do a count of equity for relief against the usury, lie was denied relief, except on the condition of paying the рrincipal and legal interest; but where the payee or mortgagee became the actor in a court of equity, he was required to offer to abate the whole interest, since the principal was all he was entitled to recover, and without such abatement, his presence in a court of equity, as held, was without clean hands. Hawkins v. Pearson, 96 Ala. 371; Dawson v. Burrus, 73 Ala. 111; Uhlf elder v. Carter, 64 Ala. 527; McGehee v. George, 38 Ala. 323; Hunt v. Acree, 28 Ala. 580. This rule'of denying a borrower relief in equity against usury in a mortgage to secure the debt, was not by virtue of any statute on the subject, but originated with courts of equity as a condition prescribed by them, on which they would exercise their discretion.in granting relief to the mortgagor or borrower. It was an invention of their own, and within their discretion as conceived, in the interest of equity. — 1 Story’s Eq. Jur. (12th ed.), § 301; M. K. & T. Trust Co. v. Krumseig, 172 U. S. 357. Judge Story states the distinction observed by a court of equity between the lender and the borrower thus: “The ground of this distinction is, that a court of equity is not positively bound to interfere in such cases by an active exercise of its powers; but it has a discretion on the subject, and may prescribe the terms of its interference, and he .who” seeks equity at its hands may well be required to do equity.” 1 Story Eq. Juris., § 301. The Supreme Court of the *374United States answering the question, Can a borrower of money upon usurious interest successfully seek the aid of a court of equity in collecting the debt, rendered void by statute, without making an offer to repay the loan with lawful interest, say: “Undoubtedly the general rule is that courts of equity have a discretion on this subject, ‍‌‌​‌‌​‌​‌‌‌​​​​​‌‌​‌‌‌‌​‌‌‌‌​​​​‌​‌‌‌‌‌‌‌​​​​‌​‌‍and have prescribеd the terms on which their powers can be brought into activity. They will give no relief to the borrower if the contract be executory, except on the condition that he 'pay to the lender the money lent with legal interest. Nor if the contract be executed, will they enable him to recover any more than the excess he had paid, over the legal interest.” Missouri, K. Trust Co. v. Krumseig, 172 U. S. 351. Speaking further in the same case upon the exercise of this discretion, the court said: “It would seem that no argument is necessary to establish the proposition that when substantial rights, resting upon a statute which is clearly within the legislative power, come in cоnflict vith mere forms and modes of procedure in the courts, the latter must give way, and adapt themselves to the forms necessary to give effect to such lights. The flexibility of chancery methods, by which it moulds its decrees so as to give appropriate relief in all cases- within its jurisdiction, enаbles it to do this without violence to principle. If one or the other must give way, good sense unhesitatingly requires that justice and positive l-ights, founded both on valid statutes and valid contracts, should not be sacrificed to mere questions of mode and form;” citing Holland v. Challen, 110 U. S. 15.

The chancellor construed the stаtute as amended, as having made no change in respect to this principle of equity procedure, and required the plaintiff to pay S per cent, on the loan. This construction proceeds on the ground, that the 'Statute is directed against him who seeks to enforce the usurious сontract; and inasmuch as a mortgagor or other debtor against whom a bill is filed to enforce the collection of a debt, is not one seeking to enforce its collection, he is not' included within the technical provision of the statute, and stands *375where lie did before its amendment, with nо rights thereunder to avoid paying the legal interest, which he may, in any cast1, as is urged, be required in a court of equity to pay, on a subsisting though usurious contract. If this were true, the amendment means nothing, and the legislature is put in the category of doing a useless thing. Amendments of statutes ordinarily suggest, and are prima facie еvidence of a legislative intent to cure some defect in the statute amended. The supposed defect in this statute consisted in the fact, that under it, according to the ■construction placed on it by the courts, a borrower of 'money seeking, whether as plaintiff, or defendant, by thе form of his pleading, in a court of equity, to avoid his usurious contract as to the interest, could not do so, and might be required to pay legal interest in addition to the principal. Without violent construction of the intention of the legislature, we may fairly assume that this was the defect they intended to reach by the amendment, and to make all usurious contracts voidable as to the interest, when properly pleaded by the debtor whether in a court of equity or law; for at last, a debtor by such defense is doing no more 'than preventing the enforcement of such a contract against him. What is the difference in principle between not allowing such a contract enforced at the instance of the lender, and in forbidding its enforcement at the instance of the borrower? It always did rest for enforcement, at law or in equity,— when the lender was proceeding, — upon the borrower, whether he objected or not; and but for this ancient rule in equity, the principle would have been as applicable in chancery to the'one as to the other. To destroy that inequality of the parties in equity as was supposed, the statute was framed making the non-enforcement of usury apply in all courts, when invoked by the borrower, as well as by the lender. Not to so construe it, would seem to be a technical rather than a substantial ruling, — a petitio prineipii. The construction of the 'statute gives some field of operation to the amendment. A statute ‍‌‌​‌‌​‌​‌‌‌​​​​​‌‌​‌‌‌‌​‌‌‌‌​​​​‌​‌‌‌‌‌‌‌​​​​‌​‌‍is to be so cоnstrued as that it may have effect agreeably to the intention of the *376legislature. As Ivas been well said, “Judges, in construing laws, are to inform themselves of the previous state of the law, and the mischief to be remedied, and make such construction as will advance the remedy and suppress the mischief. * * * The intention of the law is to be gathered from the cause of necessity of enacting it.” — Dubose v. Dubose, 38 Ala. 241. It is, again, a familiar rule, that “a construction which leaves a sentence or clause of a statute no field of operation, should be avoided, if any other reasonable cоnstruction of the language can be given.” — Lehman v. Robinson, 59 Ala. 235; The sole object of the amendment was to suppress usury, and leave no one to be victimized by it, when he seeks to avoid it, — passed in the interest of public policy, and for the prevention of extortion by the favored xmt of those not so fortunate as they.