31 Wis. 673 | Wis. | 1873
Tbe following opinion was filed at tbe June term, 1872.
It is a concession fairly due to tbe evidence, we think, that there was reserved and taken by tbe plaintiff upon the loan for wbicb tbe notes and mortgage in suit were given, tbe sum of thirty dollars usury. Such usury was received by tbe plaintiff, or paid to him, by being deducted from tbe sum agreed to be loaned, making the sum actually loaned $2,470, instead of $2,500 as represented by tbe notes and mortgage. Such deduction was exacted by tbe plaintiff at tbe time of the loan.
It is likewise a concession equally due to tbe evidence, as we understand it, that tbe $30 usury so exacted and taken was not in fact paid, or tbe loss thereof suffered or borne, by tbe defendant Schenclc, tbe husband* who made tbe notes and mortgage and appeared in tbe transaction as tbe borrower of tbe money. Tbe $30 was actually paid, or tbe loss from tbe usurious exaction in reality sustained, by Belden, from whom Schenclc purchased tbe farm, a portion of tbe price of wbicb constituted a part of tbe consideration for wbicb tbe notes and mortgage were executed. Belden deducted tbe $30 from tbe price which Schenclc bad agreed and was willing to pay him for tbe farm.
The question involved, therefore, is very clearly and correctly presented by the following ease supposed by the learned counsel for the defendants: “ Suppose A. proposes to buy a farm of B., for which B. asks $2,500 cash. A. will buy it if he can borrow the money to pay for it, and applies to C. for that purpose. C. says, ‘ I will loan you the money if you will pay me thirty dollars in excess of lawful interest.’ A. informs B. that he would like to buy his farm, but is unwilling to stand the thirty dollar shave. B. says, ‘I will stand it.’ On this consideration A. borrows of 0. $2,470, and secures by his note and mortgage the payment of $2,500. C. attempts to foreclose the mortgage, and A. sets up the usury. Is it any answer on the part of C., that in fact B. and not A. lost the thirty dollars ?”
If, in addition to the facts thus supposed by counsel, we suppose the still further or different facts, that B., the seller of the farm, is acting as agent for C., the lender of the money, in negotiating the loan, and, knowing the unlawful exaction and that A. is unwilling to submit to it, submits to and incurs the loss himself by a corresponding deduction from the price of the farm, rather than not make sale of it, we shall have a case more exactly fitting the circumstances of the present one, and illustrating the true attitude and relations of the parties to the transactions.
The question to be resolved, therefore, is that above put by counsel. Will the fact that the usury was in truth paid by B., and not by A., prevent A from setting it up in defense, and avoiding the note and mortgage on account of it ?
Suppose A., being indebted and desirous of borrowing money, applies to C. for a loan, and C. refuses, saying he is unwilling to loan his money at the rate of interest allowed by law, but that he will do so if B., a stranger to the loan, will give him, C., so much money, equalling the amount of usury which he demands; and B. thereupon voluntarily gives him the amount required,
Again, in the case like that put by counsel, let it be supposed that B., instead of saying to A., that he, B., will stand the loss, goes himself to C., and advances or pays the usury demanded, whereupon C. lends the money to A., at a lawful rate of interest, would such a contract be usurious as between 0. and A. ?
We regard the foregoing only as different hypotheses presenting the same question.
The theory upon which laws against usury have been enacted, and the principle which has governed in their interpretation, have always been, that the borrower was at the mercy of the lender and subject to his utmost exactions and avaricious demands, unless protected by laws. In theory the borrower has been put, by such la$s, in the same category with persons under legal disability to contract, such as infants, femes coverts, and persons non compos mentis. He has been declared legally incompetent to make a bargain about money where more than the lawful rate of interest was demanded. The prohibition of all such laws, and of our law, has been and is against the lender’s bargaining for, reserving or taking usury from the borrower, We say “from the borrower,” not because the statute uses these exact words or in terms so enacts the prohibition, but because such is the evident intent and purpose of the statute. Acts of the kind have always been so interpreted and understood. It is to shield from the grasp of the lender, and save the borrower from the injurious consequences of his own weakness and inability, that such statutes have been passed. They are designed for the protection of the borrower, and the protection so given has been extended to those persons standing in his place or representing him and succeeding to his rights, such as heirs-at-law, executors, devisees, sureties, assignees and the like. They are designed for the borrower’s protection and benefit, and the protection and benefit of those thus representing him, when he or they has or have suffered loss or injury from the
A recurrence to these general principles, which are well understood and elementary, seems very clearly to indicate that the payment of usury, if it be properly so called, not 'by the borrower, but by a stranger to the contract, one not connected with the loan nor liable for it, who voluntarily or from any motive advances the sum exacted or sustains the loss where the borrower is unwilling or declines so to do, is not a circumstance of which the borrower can be permitted to take advantage for the purpose of having the contract declared inoperative and void for usury. It seems not to be á case in any manner falling within the true spirit and intent of the law against usury. That law, as we have seen, is intended for the benefit and protection of the borrower who is himself obliged to submit to and suffer by the exactions of the usurer, and not for the benefit or protection of strangers, or those not borrowers or standing in that relation to the lender. The rule is,' that the plea or objection of usury is personal to the borrower or those representing him, a privilege peculiar to him or them, because he or they have or might have sustained injury by reason of the usurious contract; but that no stranger can be permitted to take advantage of or set up the objection. The reason why the stranger can not plead
And it seems to us that the same or a similar reason must be valid against the objection of the defendants in the present case. So far as the usury is concerned, they were strangers to it. They did not pay it, and lost nothing, and can lose nothing by it. The contract entered into between them and the plaintiff, the notes and mortgage executed, were, so far as their pecuniary interests were and are involved, entirely lawful and free from any usurious taint or corruption.
And, upon looking into the authority of particular cases, more or less closely resembling the present, we find the views above expressed to have been very generally, and, so far as we know, universally sustained.
In Little v. White, 8 N. H., 276, it was decided that an administrator who had given his promissory note for a sum due from his intestate, and including certain unlawful interest which the intestate had agreed to pay, could not, in a suit upon the note, sustain a plea of usury on account of the unlawful interest so agreed to be paid by the intestate, and included in it. The ground of the decision was, that the administrator had in fact or presumptively long before been allowed the full sum for which his own note was given, as a payment made by him on account of the estate. “ He stands, therefore,” said the court,
And again, in Bearce v. Barstow, 9 Mass., 45, tbe facts were as follows : A. owing B. a sum of money for a valid considera•tion, and B. owing 0. a sum on which he bad received usurious interest, an agreement was entered into that A. should give to C. a promissory note for tbe sum due from B. to C., including tbe usurious interest, and A. was discharged of so much of his debt to B. In an action by C. against A. upon the note so given, it was held that tbe note was not void by tbe statute against usury, tbe verdict of the jury having negatived any contrivance to evade tbe statute. Tbe argument by counsel there was like that wbicb bas been very ingeniously and forcibly presented here. Counsel said: “ This was a contract made for the payment of money lent, whereby there was reserved or taken above tbe rate of interest allowed by tbe statute. And
And among tbe English decisions cited by the court was that of Lord Kenyon, in Hulme v. Turner, 4 Esp. N. P. C., 11. which was very pertinent to tbe question under consideration. There, the payee of a note given for a usurious consideration had arrested tbe maker, and, to procure bis discharge from arrest, a third person joined the maker of tbe note in another note for tbe amount of the debt; and the chief justice said
And in a late casein the court of appeals of Virginia, Drake's Ex'r v. Chandler, 18 Grattan, 909, the point decided is correctly stated in the reporter’s note in these words: “A., B. and G. execute a bond for one thousand dollars to P. for a loan of money at usurious interest. Subsequently O., J. and W., with B. who signs himself security, execute their bond to P.’ for the amount, principal and interest, of the first bond and another small bond of A., in lieu of these bonds. The usury is purged by the change of the parties, and the last bond executed is valid.” The opinion is valuable as showing that strangers to the usury cannot take advantage of it, and it also refers to and examines several cases not above cited.
Eor these reasons, this court is of the opinion that the judgment appealed from was correct, and must be affirmed.
By the Court.— Judgment affirmed.
A motion for a rehearing was denied at the January term, 1873.