Ramsay v. Warner

97 Mass. 8 | Mass. | 1867

Hoar, J.

This case was tried by consent of parties before a judge without a jury, and after a finding of the facts by him in lieu of a verdict, comes before us upon his report of questions of law. It is an action upon promissory notes and an account; and the only questions at issue arise upon two of the notes. To the note of six hundred dollars the defence of usury was set up, and the judge has found that usurious interest was reserved in the note, and has deducted from the amount due upon it the forfeiture prescribed by the statute. The plaintiff contends that the. forfeiture has not been incurred, because the unlawful interest has never been received, and he had offered to accept the amount actually due, computing only the lawful interest. This position cannot be maintained. All the cases cited by the plaintiff’s counsel to sustain it are suits to recover the penalty where interest has been paid. There, until an actual payment of unlawful interest, the cause of action does not arise, and there is a locus penitentice to the defendant. But where a plaintiff seeks to enforce a contract usurious in its inception, the law gives the defendant the right to deduct the penalty, and the plaintiff can. not deprive him of this right by offering to renounce the part of the contract which contained the usury. He must sue upon the contract as it was made, and no part of it is capable of enforcement by suit, except with the liability to the defence which the law has attached to it. The finding of the judge was therefore right upon this point.

The note of three hundred dollars was barred by the statute of limitations, unless it was kept in force by means of payments made upon it. The case finds that the defendant made certain payments, which, if made upon this note, would have been sufficient to prevent the operation of the statute ; that they were made generally on account of the defendant’s indebtedness to the plaintiff, and were not applied by the defendant to any particular debt; that at the times when they were made, the note was not barred by the statute; but that the plaintiff made no application of them until he filed his declaration, when the note was barred, unless the application then made of these payments would prevent the operation of the statute.

By Gen. Sts. c. 155, § 13, it is enacted that, “ in actions of contract, no acknowledgment or promise shall be evidence of a new or continuing contract whereby to take a case out of the operations of the provisions of this chapter” (for the limitation of actions), “or to deprive a party of the benefit thereof, unless such acknowledgment or promise is made or contained by or ir. Home writing signed by the party chargeable thereby.” In § 17 there is a proviso, that this shall not “ alter, take away, or lessen the effect of a payment of any principal or interest made by any person.” These statute provisions are substantially the same as those of the English statute of 9 Geo. IV. c. 14, § 1, under which it has been uniformly held that, in order to take a case out of the statute of limitations by a part-payment, it must appear that the payment was made on account of the debt for which the action is brought, and also that it was made as part-payment of a greater debt; because the principle upon which a part-payment takes a case out of the statute is, that it admits a greater debt to be due at the time of the part-payment. Parke, B., in Tippets v. Heane, 1 C. M. & R. 253. Waters v. Tompkins, 2 C. M. & R. 723. Mills v. Fowkes, 5 Bing. N. C. 455. Burn v. Boulton, 2 C. B. 476. The doctrine of these cases has been approved and adopted in this commonwealth. Pond v. Williams, 1 Gray, 630. Roscoe v. Hale, 7 Gray, 274.

The rule as to the application of payments, where there are several debts, is this, that the debtor may, if he chooses, in the first instance, appropriate the payment; solvitur in modum solventis; if he omit to do so, the creditor may make the appropriation ; recipitur in modum recipientis. If the creditor makes the appropriation, he may do it to a debt barred by the statute of limitations; but such an appropriation will not have the effect to take the debt out of the operation of the statute. It seems to be regarded as a mere permission of law to the creditor thus to apply it, and not an intentional payment on that account, which is necessary to involve the admission of the whole debt, and the implied renewal of the promise to pay it. The debtor is not presumed to have intended to renew a promise which is no longer legally binding upon him, although he has put ii in his creditor’s power to satisfy pro tanto a claim upon which be had lost his legal remedy.

But when there are several ascertained and admitted debts, none of which are barred by the statute, and a payment is made without an application of it by the debtor, we think a different rule applies; and that the payment, when applied by the creditor, has all the effect upon the debt to which it is applied, that it would have if it had been made by the debtor expressly on account of it. This distinction between debts barred by" the statute at the time when the payment is made, and those not then barred, was expressly recognized in Pond v. Williams, ubi supra. The debtor must be held to intend the full effect of a payment upon whichever debt the creditor may elect to apply it. It was said by Erie and Crompton, JJ., in Walker v. Butler, 6 El. & Bl. 506, that where there are two debts and a general payment, there is generally evidence for a jury of payment on account of both.

The fact that the application does not appear to have been made until the suit was brought is not material. The creditor had a right to make it at any time. Mills v. Fowkes, ubi supra. And when it is made, it takes effect from the time of the payment, and not from the date of the application. This would obviously be so in respect to the stopping of interest by reason of the payment, and we can see no reason why it should not relate back for all purposes.

The rulings at the trial having been right, judgment must be entered accordingly. Each party will be entitled to costs; the plaintiff, as the prevailing party on that part of the case to which no defence has been established, and the defendant by virtue of the statute upon the defence of usury to the note of six hundred dollars. Brigham v. Marean, 7 Pick. 40.

The only question in the second case, the amount for which the conditional judgment shall be entered, is settled by the decision in the preceding case.

The third action is brought to foreclose a mortgage given to secure the note of six hundred dollars mentioned in the preceding case. The note having been found to be usurious in its inception, the usury is a defence in the suit upon the mortgage to the same extent as upon the note. Hart v. Goldsmith, 1 Allen, 145. Minot v. Sawyer, 8 Allen, 78. Conditional judgment will therefore be entered for the sum reported as found by the judge at the trial, with interest thereupon; and the defend ant will have judgment for his costs.