116 Ga. 235 | Ga. | 1902
Elizabeth S. Herring instituted an action in the city court of Atlanta against J. K McCall. Originally she sought both to recover a judgment on a promissory note, and also to establish a lien in her favor against certain land which she alleged had been conveyed to her, at the time of the execution of the note, to secure its payment. By amendment the plaintiff alleged that the defendant had filed a petition in the district court of the United States for the northern district of Georgia, to be adjudicated a bankrupt, and thereafter prayed said court to enjoin the plaintiff from prosecuting her suit; that such application for injunction resulted in an order allowing the plaintiff to prosecute her suit for the purpose of obtaining a special judgment and having her lien fixed against the property described in the deed, but staying the suit in so far as it sought to obtain a general judgment against the defendant. The plaintiff then struck her prayer for a general judgment, and prayed only for a special judgment fixing her lien for the amounts alleged to be due. The defendant answered, admitting the execution of the deed, but alleging that the same was void because the note which it was given to secure was infected with usury. He alsQ averred that he had filed his petition in bankruptcy and been adjudicated a bankrupt, that the property described in the deed had been scheduled in his petition in bankruptcy, and that plaintiff’s debt was one against which a discharge in bankruptcy would be good; and he set up the bankruptcy proceedings as a defense against the debt. The averments of the plea in relation to the defense of usury set out in detail the facts on which the defendant relied to show that the debt was infected with usury, which will hereafter •be specifically referred to. The plaintiff demurred to the answer and plea, on a number of grounds, among others, that it set forth no legal defense, and failed to show usury; that it does not appear by the answer that the lender retained, received, or shared in the $80 retained as commissions; and that those parts of the answer which set up the bankruptcy of the defendant were insufficient as a defense to the action, and irrelevant. A hearing was had on the demurrer, and the answer of the defendant was stricken; and by direction of the court the jury returned a verdict setting up and establishing a lien in favor of the plaintiff, on the land described in
1. When the case was called in this court a motion was made to dismiss the writ of error, on two grounds: first, that the plea, having been stricken from the files, is not properly a part of the record and should therefore have been incorporated in the bill of exceptions, and not sent up by the clerk as a part of the transcript of the record; second, that there was no sufficient assignment of error, that the assignments in relation to striking the plea could not be understood without the plea, and the other assignments were not specific, and do not point out the errors complained of. It is sufficient to say, in regard to the second of these grounds of the motion to dismiss, that it is without merit. The trial judge directed a verdict, and the bill of exceptions alleges that the court erred in so doing. This was a sufficient assignment of error to call in question the correctness of such direction; and as we shall presently see that the stricken plea was a part of the record, there is no merit in the complaint that there was no sufficient assignment of error.
We are well aware that it has been ruled, in several other States, that when a plea or answer has been stricken, the effect is to take such plea or answer out of the record; that, in order to be considered by a reviewing court, it must come up in the bill of exceptions;. and that sending it up as a part of the record, by the clerk of the trial court, does not make it such. See 2 Cyc. Law & Pr. 1059;. Halpern v. Spencer, 47 S. W. 637; Pelham v. Page, 6 Ark. 535; Harness v. Ross, 13 Ind. 530; Fry v. Leslie, 87 Va. 269; and cases cited in 3 Cent. Dig. 107, §2352, under title “Appeal and Error.”. On the other hand it was ruled in the case of Whiting v. Fuller, 22 Ill. 33, that “An affidavit of merits to a plea is a part of the plea, and is preserved in the record without a bill of exceptions. This is the case also, where a plea is stricken from the files.” In the case of Abbott v. Douglass, 28 Cal. 295, it was ruled that “ an answer, notwithstanding an order to strike it out, is still entitled to its place in the judgment roll.” In Davis v. Honey Lake Water Co. (Cal.), 33 Pac. 270, it was also ruled that “a demurrer, though stricken out, constitutes a part of the judgment roll.” If the effect of dismissing a plea on demurrer is to take it-
2. The trial judge did not err in striking, on demurrer, so much of the plea as set up the facts that the defendant had been adjudica
3, 4. Divested of a great deal of surplusage, so much of the plea as alleges that the security deed was void because the debt it was made to secure was infected with usury, substantially avers the facts to be, that the loan was made through the agent and attorney at law; of the plaintiff, who negotiated the loan; that while the defendant contracted to borrow $1,600 and executed a promissory note for that sum, and agreecl to pay interest at the rate of seven per cent, per annum on $1,600, yet he in fact only received from the plaintiff, as lender, the sum o'f $1,520; that plaintiff’s agent and attorney, with the knowledge and consent of the plaintiff, retained $80 from the principal sum as commissions for negotiating the loan; that the amount of the commission when added to.the interest contracted to be paid exceeds the highest rate of interest allowed by law; that, by retaining the sum of $80 from the principal agreed to be loaned, the lender avoided the necessity of paying commissions to her agent for making the loan, and in this way she was benefited and shared in the commission. The demurrer
The contentions raised by the demurrer, and insisted on as reasons sufficient to justify the court in striking the plea, necessarily lead to the determination of the question whether the avermentsof the plea, when taken to be true, characterize the transaction as a usurious one. If they do, the court erred in striking the plea,, because the deed relied on by the plaintiff as the basis of the establishment of her lien would be void. If they do not, the court committed no error, and the validity of the security deed is unaffected. In the case of Clarke v. Hazard, 111 Ga. 242, Presiding Justice Lumpkin, in the course of a very able opinion which he delivered in that case, and in which he considered the rulings made by this court in a number of cases preceding it, said: “A money-lender can not, in this State, lawfully contract for or reserve any greater rate, of interest than 8 per cent, per annum, and the prohibition is just as strong against doing so indirectly as it is against doing so openly and without pretense. It is now too well settled to admit of doubt, that if the agent of a money-lender, with his knowledge, charges the borrower a commission, it is the same thing in law as if the lender charged it himself. This is so because he gets a bene
• Counsel, however, contend that if the $80 paid by the borrower as commissions is to be treated as interest reserved, then the transaction would not be usurious, for the reason that this amount which was deducted from the face of the note must be treated as the payment of interest pro tanto in advance; that eighty dollars represents one per cent, on the amount contracted to be loaned for the full term, five years; and that as the balance of the interest contracted to be paid amounts to seven per cent., the whole rate of interest, when so treated, aggregates eight per cent., and is within the lawful limit; and that the payment-of one per cent, of interest in advance under these circumstances does not render the transaction usurious. An examination discloses that the adjudicated cases are somewhat in conflict on the question whether a reservation of the highest legal rate of interest in advance renders a loan transaction usurious, but a majority of those which we have had opportunity to consult draw a distinction, in this respect, between what is termed a long and a short loan. Counsel for defendant in error argues that on principle no such distinction exists, and we agree with him. We are unable to see any reason why on principle the reservation of the highest rate of interest in advance on short-term loans does not render the contract usurious. It is perfectly clear that in pure discount, or the absolute purchase, by one, of the .promissory note of another, the laws relating to usury ought not to apply, for the reason that one may give such a price, in the purchase of a promissory note of an individual, as he may see fit, just as he may for a horse, or other article of personal property. In that case the note put on the market by the maker represents property which the maker wishes to sell; and if one choose in open market to buy it, the price concerns no one except the owner and the purchaser. Such a transaction is not, however, the loan of money. But the authorities have gone further in the declaration that certain transactions which they call discount do not render a certain species of loan usuri
Just where the line is to be drawn, so as to determine what is a short and what a long term loan, does not seem to have been settled. The period of one year seems to have been fixed in the case of Tallman v. Trusedell, 3 Wis. 443. But the rule that interest at the highest legal rate may be taken in advance on long loans without rendering the contract usurious is not established by the authorities generally. There are a number of cases so ruling, in many of which the rulings are made on statutes. Certainly there are no decisions of this court which so declare, and we are not aware of
Judgment reversed.