1 Stew. 556 | Ala. | 1828
delivered the opinion of a majority of the Court.
The defendant pleaded the plea of usury, therein detailing the facts on which he relied to sustain his cle-fence, and introduced the testimony of witnesses, and also , , , , . ./ - , his own evidence, under the privilege or the statute concerning usury. To this evidence the plaintiff demurred, and the judgement on the demurrer is assigned as error.
One branch of the defendant’s argument is, that the plaintiff could not legally demur to the evidence, unless he had expressly admitted on the record, every fact which the defendant's testimony conduced to prove. The right of the plaintiff, under circumstances like the present, to demur to the evidence, is believed to be well established by law, and the principle has long since been recognized by the decisions of this Court.
These facts appear from the testimony of indifferent witnesses. The defendant’s own evidence does not vary the case in any very essential degree, except that it explains the intention of the parties in making the contract. He states in addition, that two or three months before he contracted^ the plaintiff proposed to sell the bond to hitn. He at that time declined purchasing it. The plaintiff requested him to speak to Wade, on the necessity of his securing the debt, saying, he would make some abatement of the interest. The defendant asked him if the rate of interest as stipulated was recoverable. The plaintiff replied, he believed it was, and requested him to take the bond and consult a lawyer; and again urged him to purchase it, saying, the.rate of interest was ruinous to the obligors. The defendant took the bond, consulted an attorney, and was advised that the interest was recoverable. The defendant having returned the bond, advised Wade to give new security and take it up. He being
This is all the evidence deemed material in the case; and the question is, does it sustain the plea of usury? and if not, what is its legal effect?
Inasmuch as the original contract was executed in January, 1819, when there was-no prohibition against usury, the bond, which was the consideration of the note sued on, was free from all objections on the ground of usury. The statute relied on is,, the “act to regulate the rate of interest,” passed in December, 1819. The language is such as has been usually employed to prohibit usurious contracts. To constitute usury there must be a loan or forbearance contracted for money or some other article, at a rate of interest exceeding eight per cent per annum. I hold the rule to be universal, and one that will bear the strictest scrutiny, that to constitute usury in theexecution of a security, there must be an intention in some of the contracting parties, to give or promise, receive or secure more than the established rate of interest on the money or' other article lent or forborne. But it is equally true, if a security has been created for the purpose of raising money at an usurious rate, having never been negotiated in the course of business, and it be discounted at such a late of premium by one ignorant of the circumstancés, the instrument is nevertheless void, as against the original debtor; yet in such case, an innocent endorsee may recover of his endorser, the amount of money advanced thereon.
In support of the proposition, that an unlawful rate of premium must be contemplated by the original parties, to avoid the security, the argument may be used which fill
I conceive the true doctrine to be, that if a bond of note has been prepared for the purpose of procuring money at an usurious rate, no matter under what other specious pretext, what the position, or how many names appear upon it, and it be negotiated pursuant to the design, the security is void. No cunning or artifice in the management, by the supposed debtors, nor feigned ignorance in the person discounting it, can vary the case, provided the facts can be discovered. If a person to whom a note is offered for discount be, in fact, ignorant of the circumstances under which it was created, he must ascertain, at his peril, that it has acquired validity, by having been executed on a legal consideration ; or if it prove otherwise, he can only expect indemnity from the person from whom he received it, or under like circumstances from a prior endorser. If the parties to a contract intend indirectly to effect the object of usury, and believe they have used sufficient management to evade the statute, but have misconstrued the effect of their artifice, then there is consistency in applying the forfeiture, and the maxim ig-
It is most clear, that an unintentional mistake in computing the amount of a sum due, would not constitute usury. Then why should an honest misconstruction oí a penal stipulation, for liquidated damages, stand on a dil-. ferent foot? Or, on what principle can a difference be maintained on the question of usury, whether this contract was made by this plaintiff, the original obligors, or any other person ; or whether payment was made for the bond at the time of the purchase, or promised at a subsequent day ? I conceive there can be none. Would any contend that one who has a doubtful claim to any article of property, depending alone on complicated questions of law, by selling in good faith a relinquishment of his claim to one equally cognizant of the facts, would thereby commit usury, provided it turn out that his title fails partially or entirely ? If not, questions relating to penalties and stipulated damages must, as contended by the plaintiff’s counsel, involve the same principle. Few questions in. any country have presented greater difficulty, or more doubtful construction, than the nice discriminations by which they are distinguished. The true character of the stipulations of the bond for which this and the other notes were given, as shewn by previous adjudications, has admitted of the greatest variety of opinion among the most learnedjurists of this State. Then, shall the plaintiff forfeit his true debt, because he, as well as the defendant, construed the contract differently from our subsequent decision? This latter contract was made in March, 1822, before the great penalty questions here had been seriously agitated. From the evidence we are bound to assume the facts, that the plaintiff confidently believed, when he entered into the original contract, that the stipulated premium was recoverable; and that both he and the defendant entertained the same opinion at the time of the. execution of the note sited on.
It cannot be contended, that if this plaintiff, or any other person, had purchased the bond at the same price, and made immediate payment, usury would have been committed. The contrary principle has been fully recognized in the case of Brahan against Reeves, during the present term, and by many other decisions of this Courv
Both parties believing the larger sum recoverable, I think the conclusion is obvious, that the plaintiff was influenced in making the contract, by a doubt as to the ability of the obligors to pay more than the four or five per cent per month, or even so much. It may well be presumed also, that he apprehended some danger of a conveyance of their property, or other desperate means to defeat him entirely, if either of the exorbitant rates of interest continued to run ; and it is rational to suppose, in addition, that under their threatened ruin he felt some restraint of conscience. For, though he at one time refused to renew the bond with the original parties, assigning as a reason that the law under which the contract was made had been repealed, subsequently he proposed to do the same thing, and had the advice of an attorney, through the defendant, that the whole was recoverable. The defendant also having this advice, was greatly apprehensive of ruin to his friends, the obligors, and anxious to relieve them from danger. He declared repeatedly, that he did not intend to profit by the contract; that the obligors should have the bond at the same price: and it is evident that he did not expect to loose materially, if at all,by it. He believed the obligors worth the sum he had contracted to pay, and required only that they should secure him. Other considerations, which I consider decisive on this question, are. that the defendant was not previously a debtor so as to require forbearance. He received no money at the time of the contract; nor is it probable he expected to receive any from the obligors, for any other purpose, or earlier, than to enable him to pay the plaintiff. Nor is it shewn that he has yet received any money under the contract. I think no case has or can be cited, similar to the present, which has been adjudged usurious. Hence I arrive at the conclusion, that the judgement below must .be reversed.
Previous to the usury act of 1819, if the parties consented to incorporate such premium into the body of the contract as part of the principal, and give it the same effect under the immunities of the statute of 1818,1 think they could do so. Perhaps, since the prohibitory act of 1819, where they evidently intended it as a compromise or confirmation, they may have effected the object in relation to such contracts previously existing. But if premiums of this description be made the considerations of subsequent contracts, and the parties proceed under the conviction, as in this case, that they are legally due and recoverable, I hold the contract, pro tanto, void for want of consideration; that it is clearly nudum pactum. In the case of Brahan against Reeves referred to, we decided that money paid on such considerations by one not a party to the original contract,' could' be recovered back. The principles of relief are equally clear when payment has not actually been made, but promised; and I think the advantage is in favor of the latter. The doctrine of defence for want or failure of' consideration is the same, whether entire or partial, provided, in the latter case, the consideration consists of distinct items, or parts, depending on different facts, or principles, and susceptible of definite division and liquidation, This principle is fully sustain
As this view of the case was not discussed, I refrain from further comments upon it, remarking only, that if the amount of principal and eight per cent interest, was the sum due on the bond, and it alone was the consideration of this defendant’s three notes for the larger amount, the excess can be precisely ascertained, and the consideration severed with certainty, and perhaps the discount under a proper issue can be allowed in this action. At an) rate, I am of opinion, that this issue does not present the true merits of the case; and that justice would be rendered more difficult to attain, by rendering judgement for the plaintiff upon it. Under a different issue, the evidence of the defendant would be inadmissible, but I think the other testimony sufficiently shews the consideration; and that the law of the case would be the same without it, or, if not, the defendant, by timely application, would be entitled to relief in Chancery. My opinion therefore is, that the judgement below must be reversed, and the cause be remanded for further proceedings. A majority concur in the result, on various grounds which they can best explain.
In this case I am of opinion, that the judgement should be reversed, and the proper judgement rendered by this Court. But a majority of the Court not being of this opinion, I am necessarily constrained to yield my assent that the case be remanded. In arriving at this conclusion, I am not to be understood as adopting all the reasoning and principles laid down by a majority of the Court, for in some of them I do not concur.
Reversed and remanded.
were al?u«i S''mndnueli an,d.K--!U'-gued at tins terra
hAnte p. 320.