9 P.2d 819 | Cal. | 1932
The third amended complaint in this action is declared by plaintiffs and appellants to state a cause of action in equity for an accounting and for a preliminary injunction against defendants meanwhile, based upon the alleged presence of usury, fraud and unsoundness of mind of one of the plaintiffs, all respecting a certain loan transaction. Defendants demurred to the complaint on general and special grounds. The demurrer was sustained with leave to amend, but this privilege plaintiffs declined. Judgment, therefore, passed for defendants; hence this appeal.
Plaintiffs borrowed $27,500 from the defendant Mortgage Security Corporation of America, a foreign corporation, giving therefor a series of thirty promissory notes, all dated *289 May 15, 1926, in amounts of $500 and $1,000, due at stated periods over the years from 1928 to 1936, inclusive, and bearing on their face interest at five per cent shown by interest coupons thereto attached. On the same day a second series of nineteen promissory notes, maturing at quarterly periods between July 15, 1926, and January 15, 1933, were also issued by plaintiffs. These notes aggregated the sum of $4,585; twelve were of the denomination of $297; two of the denomination of $130; two of $135; one of $131; one of $136 and one of $224.
Each note of both series is payable to bearer and is secured by a deed of trust in elaborate form on Los Angeles real property, executed by plaintiffs as joint tenants, naming defendant Security Title Insurance and Guaranty Company, a corporation, as local trustee, and Union Trust Company of Maryland, as foreign trustee. The provision for the payment of said promissory notes is that plaintiffs are to pay to the Mortgage Security Corporation of America, which is in turn to deposit the funds with the Union Trust Company of Maryland, the sum of $286 each month, beginning June 15, 1926, and continuing until May 15, 1936, on which last-mentioned date plaintiffs are to pay the additional and final sum of $11,000. Presumably these amounts, if paid when due, would be sufficient to retire, pay and discharge the various promissory notes executed by plaintiffs.
The cause of action attempted to be set up in count number one of the complaint here under review is predicated upon the averment that the above-mentioned transaction is usurious. Just how this occurs is not clearly set forth, but it is conceded that if the contract is lived up to by both parties according to its terms, no usury will result, provided the whole period of forbearance is taken into consideration when testing the transaction for the presence of usury. This test, however, is challenged and claim arises under the averment that inasmuch as plaintiffs made the monthly payments required, beginning June 15, 1926, and up to and including April 16, 1929, paying a total of $9,438, they paid up to that date the sum of $3,146 in interest, which is usury. How this figure is arrived at does not appear, but it is further alleged that on June 10, 1929, the Mortgage Security Corporation filed with the local trustee its declaration that, under the said written instrument, by reason of plaintiffs' *290 default, all payments called for by said obligation were then due and payable, the total amount due being $27,494.75. A notice of default and election to sell under the deed of trust was duly recorded on June 11, 1929. From this situation it is further contended that usury is present because the amount paid as interest between the making of the obligation and the day of default is more than $12 on each $100 for one year.
The first question is: What is the period to be considered when testing a transaction for the presence of usury? In Haines v.Commercial Mortgage Co.,
The case of Easton v. Butterfield Live Stock Co., 48 Idaho, 153 [
A similar holding is found in Conservative Loan Co. v.Whittington et al.,
[1] It is also elementary that the contract must in its inception require a payment of usury or it will not be held a violation of the statute and it may not be judged after some default of the borrower, which default alone authorizes penalties or forfeitures which, if exacted in the beginning, *291
would have been a violation of the statute. (Conservative LoanCo. v. Whittington, supra; Clement Mortgage Co. v. Johnston,
[3] Counsel in his brief, although not in his pleadings, seems to make the point that in the case before us, by reason of the acceleration of the maturity date of the obligations, it has been defendants' purpose not only to collect the principal of the sum loaned and the interest accrued up to the time of the default, but that it is also their purpose to collect in addition thereto the entire amount of interest provided for in the obligation for the whole period of forbearance. Unfortunately, however, appellants do not bring themselves to a position where they may rely upon this assertion. This is because they have not pleaded that prior to the institution of the action they tendered to defendants the correct amount due upon the obligation and that such tender, when made, was refused. This, except under peculiar circumstances not here present, is an elementary requirement before relief of this character can be had. (See Kelley v.Owens,
[4] It is true that plaintiffs' complaint contains this allegation: "That when the amount due to the defendants or any of them under and by reason of the said deed of trust and notes is ascertained the plaintiffs are and will be ready, able and willing to pay the said amount to the parties entitled thereto." This allegation is insufficient. (Hammond v. Wallace, supra,
at p. 532; Herman v. Haffenegger,
[5] The last observation also furnishes sufficient ground for the disposition of both the second and third causes *292 of action in plaintiffs' complaint. Cause of action number two purports to claim that plaintiffs were promised by the defendants that the interest rate on said promissory notes would in no event exceed six per cent per annum and that the fact that it did was fraudulently concealed from them, due to their ignorance of business transactions. Manifestly plaintiffs are in no position to take advantage of such a defense, were it otherwise good, in the absence of a previous offer to pay the amount admittedly due on the obligation.
[6] Count three purports to be based upon the allegation of unsoundness of mind on the part of plaintiff husband. As already pointed out, the husband and wife held the property as joint tenants. There is no sufficient allegation of any lack of competency on the part of the wife. Moreover, when the allegations respecting competency of the husband are studied, it will be seen that at most they are only sufficient to invoke the provisions of section
This discussion might be extended, but our view is to no further purpose as the complaint appears on its face to be entirely without merit.
The judgment is affirmed.
Curtis, J., Shenk, J., Seawell, J., Langdon, J., and Waste, C.J., concurred. *293