126 Va. 359 | Va. | 1919
after making the foregoing statement, delivered the following opinion of the court:
The questions raised by the assignments of error will be disposed of in their, order as stated below.
The legal principles and the rule of evidence governing this enquiry have been long well settled and therefore need no restatement here. The enquiry under consideration is purely one of fact. If the transaction under investigation was in truth an investment in a particular enterprise or business entitling the investor to a share
The cross-bill in question admits liability for the principal sum justly due after the elimination of the usury in accordance with the laws of Pennsylvania, which are alleged as governing the subject, and in effect admits liability also for' legal interest on such principal sum, and thus conforms to the law of the forum—to the rule on the subject which obtained in ancient chancery practice; and therefore, if Seibel occupies such a relationship to the debt in question that he can make the defense of usuiy against the enforcement of it in this suit, the bill in question can be maintained for discovery of the usury and for relief therefrom based on such discovery independent of any statute affording that remedy. Young v. Scott, 4 Rand. (25 Va.) 415; and Munford v. McVeigh, 92 Va. 446, 449, 23 S. E. 857.
So that we are of opinion that in the case before us the’ bill in question can be maintained both under the ancient chancery practice existing as above stated and under the statute last mentioned, if, as aforesaid, Seibel. the plaintiff in such bill, occupies such a relationship to the debt as entitles him to defend against it on the ground that it is usurious.
It is true that the plea of usury is a personal plea which can be made in general only by the borrower himself. But this is not a rule which is universal in its application. It is established by the great weight of authority that a surety on a debt may plead usury, just as the principal may, where the sole consideration of the promise of the .surety is the same as that of the principal debtor, that is, a loan or credit given to the principal debtor. 39 Cyc. 1075. Such is the position of Seibel in the cause before us, the fact being that he was merely an accommodation endorser and as such was a surety on the obligation in question, as is established by the preponderance of evidence in the cause, as set forth in the statement preceding this opinion.
We are of opinion, therefore, that the question last stated must be answered in the affirmative.
Ruckdeschall, in his plea of the statute of limitations, relies on section 2823 of the Code of Virginia. This statute, so far as material, is as follows:
“If an excess beyond the lawful interest be paid in any case the person paying the same may in a suit brought within one year thereafter recover it from the person with whom the contract was made or to whom the assurance was given * * *.”
Sec. 2821 of the Code of Virginia, so far as material, also provides, as construed in Munford v. McVeigh, supra, 92 Va. at p. 454, 23 S. E. 859, as follows: “* * * that where usury is established in an action brought by the lender on an usurious contract, the judgment shall be rendered for the principal sum only.” And the case last cited also holds that under the statute law of this State then in force
Seibel, however, proved in the cause and relies on the statute of Pennsylvania on the subject (2 Stew. Purd. Dig. 1988, § 2), which, so far as .material, is as follows:
“When a rate of interest for the loan or use of money exceeding that established by law shall have been reserved or contracted for, the borrower or debtor shall not be required to pay the creditor the excess over the legal rate, and it shall be lawful for such borrower or debtor, at his option, to retain and deduct such excess from the amount of any debt; and in all cases where any borrower or debtor shall heretofore or hereafter have' voluntarily paid the whole debt or sum loaned, together with interest exceeding the lawful rate, no action to recover back any such excess shall be sustained in any court of this Commonwealth unless the same shall have been commenced within six months from and after the time of such payment * *
The question under consideration therefore leads to another, and that is as follows:
This question must be answered in “the negative on the record before us. As shown by the evidence in the cause,
The next question for our consideration is as follows:
6. Was the usury in the original note purged by the coming in of new parties; the execution of the different forms of obligation; and the frequent change of parties and of their relations to the debt subsequent to the original transaction?
This question is, in substance, was there at any time a novation of the original obligation?
This is purely a question of fact.
We therefore conclude that there was not a novation of the original debt so as to purge it of usury and that the question under consideration must be answered in the negative.
We have still another question to dispose of, which is as follows:
It is settled in Virginia that a judgment by default does not bar the judgment debtor from thereafter setting up the defense of .usury against the judgment when it is sought to be enforced in a court of equity. Greer v. Hale, 95 Va. 533, 28 S. E. 873, 64 Am. St. Rep. 814. We see no difference in principle as affecting the question under consideration, between a judgment which is confessed and one by default; nor do we, indeed, perceive any difference, as affecting such question, between such judgments and any other judgment where the usury was not in fact pleaded or put in issue as a defense in the action which resulted in the judgment.
As said in Brown v. Toell’s Adm’r, 5 Rand. (26 Va.) 543, 16 Am. Dec. 759: “It is competent to a party to an usurious contract, to go into equity for relief * 55 * , even after judgment at law and without assigning any reason for having failed to defend himself at law.” See to same effect, Rankin v. Rankin, 1 Gratt. (42 Va.) 151, and Terry v. Dickenson, 75 Va. 475. But for a contrary holding in Virginia see Hope v. Smith, 10 Gratt. (51 Va.) 221. It has been expressly held in some' decisions in other States that a judgment by confession may be opened where it is alleged to be usurious. 1 Black on Judgments 105; McGuire v. Campbell, 58 Ill. App. 188; Marr. v. Marr, 110 P. A. 60, 20 Atl. 592; Webster v. Smith, 36 Pa. Super. Ct. R. 281. And there are other decisions holding that a judgment does‘not bar the subsequent defense of usury against its enforcement. 23 Cyc. 1200. It may be true that where the confession of judgment is not on a warrant of attorney given as a part of the same transaction as the execution of the obligation in question, a majority of
But one other matter remains to be disposed of.
Therefore, subject to the modification of the form of the decree under review, which will be made by the court below in accordance with the two paragraphs of this opinion next above, such decree will be affirmed with costs to the appellee Seibel, as the party substantially prevailing.
Affirmed and remanded.