Alabama Cash Credit Corporation v. Bartlett

• Decision Date: 27 October 1932
• Docket Number: 6 Div. 181.
• Citation: 144 So. 808,225 Ala. 641
• Parties: ALABAMA CASH CREDIT CORPORATION v. BARTLETT ET AL.
• Court: Alabama Supreme Court

144 So. 808

225 Ala. 641

ALABAMA CASH CREDIT CORPORATION v. BARTLETT ET AL.

6 Div. 181.

Supreme Court of Alabama

October 27, 1932

Rehearing Denied Dec. 15, 1932.

Appeal from Circuit Court, Jefferson County; Romaine Boyd, Judge.

Action to recover usury by Lucy Bartlett and J. C. Bartlett against the Alabama Cash Credit Corporation. From a judgment for plaintiffs, defendant appeals. Transferred from the Court of Appeals.

Reversed and rendered.

Lange Simpson & Brantley, of Birmingham, for appellants.

Usurious interest could not be recovered after entire debt had been paid, where payment was not made under fraud, mistake, or duress.

M. B Grace, of Birmingham, for appellee.

H. M Cook, of Birmingham, amicus curiæ.

FOSTER J.

The common-law principle in respect to the recovery of usurious interest after the entire debt has been paid has been often referred to and followed in those states which have adopted the common-law rule that a contract to pay usurious interest is "illegal and void," either in whole or in part. There was held to be in such a situation a kind of constructive duress conclusively presumed, and the ordinary rule that a voluntary payment cannot be recovered by the payer in the absence of fraud, mistake, or duress in fact was in that way made consistent, though there was no duress in fact. Gross v. Coffey, 111 Ala. 468, 20 So. 428; 27 R. C. L. 269, 270; 39 Cyc. 1030; L. R. A. 1918B, 585.

But the right to recover usury never so constructively existed unless the usury law of the state made the contract illegal and void, as distinguished from a statute which merely prohibited the enforcement of such a contract.

In Gross v. Coffey, supra, this court definitely placed this state among those whose laws merely prohibited the enforcement of the contract, and therefore denied the right of recovery. It has through all its history been consistent in holding to this settled distinction.

A local law, not now in effect, for Jefferson, Etowah, and Walker counties, in which such usurious contracts were declared void, has on this theory been held to be such as to sustain such an action. Cooledge v. Collum, 211 Ala. 203, 100 So. 143; Bullard Inv. Co. v. Ford, 18 Ala. App. 167, 89 So. 837.

So that the controlling question as affects this case is whether the statute, either directly or by necessary implication, declares such contracts illegal and void, within the contemplation of this principle.

That such contracts as to the interest are void ab initio is declared in McCormick v. Fallier, 223 Ala. 80, 134 So. 471, 475. The court was not there dealing with an executed contract, but the suit was upon a negotiable note by a holder in due course, and the question was whether the defense of usury was good as to him. It was controlled by the clause in the statute, "Nor shall the borrower *** at a usurious rate of interest ever in any case in law or equity be required to pay more than the principal sum borrowed." In other respects the statute was substantially as when the court construed it in Gross v. Coffey, supra. It showed an apparent...