91 So. 258 | Ala. | 1921
Appellant brought this action to recover the balance due on a promissory note. Appellee pleaded the facts shown by the plea on file. Demurrer to this plea being overruled, appellant took a nonsuit, reserving the question raised by the court's ruling for decision in this court.
The ruling under review means that all payments of interest in excess of the statutory rate, whether made in pursuance of the original contract or by subsequent agreement, must be deducted from the principal — this because the statute (section 4623 of the Code) holds the following language:
"Nor shall the borrower of money at a usurious rate of interest ever in any case in law or equity be required to pay more than the principal sum borrowed, and if any interest has been paid the same must be deducted from the principal and judgment rendered for the balance only."
And appellee argues that, if the statute were otherwise interpreted, its purpose would be defeated, because short-time loans, and usurious interest for extensions, would become the rule. But our judgment is that in the case presented by the plea — a case in which the integrity of the original contract is not questioned — payments of interest in excess of the statutory rate should be credited first upon the interest at the lawful rate and any remainder upon the principal; this for the reason that the statute does not intend to impair contracts which at the time of their execution are wholly free of offense against the statute. This conclusion is supported by the reasoning of our cases. Thus in Van Beil v. Fordney,
Reversed and remanded.
ANDERSON, C. J., and GARDNER and MILLER, JJ., concur. *613