139 Ala. 369 | Ala. | 1903
The purpose of the bill in this case was the foreclosure of a mortgage given by appellees to secure a debt for a loan of money. It is admitted that the contract was usurious in its inception, and it is further admitted that one payment of usurious interest was made on the debt. After this payment was made an extension was granted, the parties agreeing that thereafter only legal interest should be paid. It is now contended by the’ appellant that such agreement and extension purged the contract of the taint of usury, except on the first payment of interest which was usurious and which-he says should have been applied as a credit on, and pro tanto a reduction' of, the principal debt. The parties, however, did not do this in their agreement of extension.
The. loan was for f1,500 and for one year, the note was for $1,650, ten per cent, per annum on the amount of the loan being calculated and included in the note. At the maturity of the note, $150.00, the amount of the interest on the loan was paid, and thereafter under the extension agreement, $120.00 was paid annually as and for interest at 8 per cent, on the original loan of $1,500. Applying the tlieoi’y of appellant, the first payment of usurious interest of $150.00, when applied as a payment on the original loan of $1,500.00, would reduce the principal debt to $1,350.00, and the charge thereafter, and talcing of $120.00 per annum as interest, was in excess of the legal rate of 8 per cent, per annum. It is well settled that the mere renewal of a note between the same parties does not purge the original transaction of the taint of usury. In Masterson v. (Jrubbs, 70 Ala. 406, it is said: “The illegal taint (of usury) can be purged, or eliminated, however, in either of two ways; first, by a renewal of the note or contract, after it has passed into the hands of a bona fide purchaser for value, without, notice of the usury; secondly, by a reformation of the contract, by which the usurious interest, is expnnyed by remitting the excess, and only lawful interest is retained or exacted.” Here there was no bona fide purchase for value without notice
The decree will be affirmed.