Brown v. Crow

• Decision Date: 20 February 1895
• Citation: 29 S.W. 653
• Parties: BROWN et al. v. CROW.
• Court: Texas Court of Appeals

29 S.W. 653

BROWN et al. v. CROW.

Court of Civil Appeals of Texas.

February 20, 1895.

Error from Travis county court; William Von Rosenberg, Jr., Judge.

Action by Galen Crow against Frank Brown, Jr., and others. From a judgment for plaintiff, defendants bring error. Modified and rendered.

On the 25th day of August, 1893, Galen Crow, defendant in error, instituted this suit in the county court of Travis county against Frank Brown, Jr., Jeff Brown, H. G. Wickes, and Burt McDonald, upon the following promissory note: "$200.00. Austin, Texas, Sept. 12th, 1892. Four months after date, for value received, I, we, or either of us promise to pay Osceola Archer, or order, in Austin city, Texas, at his law office, the sum of two hundred dollars, with interest thereon from date until paid at the rate of ten per centum per annum, interest to be paid semiannually, and in default thereof the same shall become principal and bear the same rate of interest; and, if this note shall be placed in the hands of an attorney for collection after its maturity, we promise to pay the holder thereof ten per cent. additional on the whole amount due, as attorney's fee. Frank Brown, Jr. Jeff Brown. H. G. Wickes. Burt McDonald." Jeff Brown and H. G. Wickes answered, setting up their suretyship. Frank Brown, Jr., and Burt McDonald were duly served, but failed to answer. On the 10th day of October, 1893, judgment was rendered by default against them as principals, and against Jeff Brown and H. G. Wickes as sureties, for $243.27, the gross amount, divided as follows: $221.16, principal and interest, due on the note, and $22.11 attorney's fees; the total amount of the judgment bearing ten per cent. interest per annum from its date. The defendants have brought the case to this court by writ of error.

R. S. Gould, Jr., for plaintiffs in error. Osceola Archer, for defendant in error.

COLLARD, J. (after stating the facts).

Plaintiffs in error, by appropriate assignments of error, complain of the judgment of the lower court upon the ground that, the note contracting for usurious interest, as shown by its terms, the right of the holder to all interest was forfeited, and therefore the judgment could not be rendered for any amount in excess of the principal. By calculation it will be seen that the court's judgment did not include any interest on interest, as stipulated in the note, but it did include the 10 per cent. interest on the principal. At the time the note was executed the highest rate of conventional interest allowed by statute in this state was 10 per cent., the statute also providing that all contracts stipulating for a greater rate of interest than 10 per cent. per annum should be void for the interest only, but that the principal could be received and recovered. Gen. Laws 1892, pp. 4, 5. We think the note sued on in this case upon its face stipulates for usurious interest, not because it provides for compound interest, but because it contracts for the payment of interest at a rate greater than that allowed by the statutes. The mere compounding of interest in a note is not of itself usurious. Mills v. Johnston, 23 Tex. 330; Andrews v. Hoxie, 5 Tex. 194; Miner v. Bank, 53 Tex. 561; Martin v. Bank, 5 Tex. Civ. App. 171, 23 S. W. 1032. But, if interest be provided for which exceeds the highest rate allowed by statute, it will be usurious, by whatever mode it is to be computed. If, by compounding, the limit prescribed by law is not exceeded, there is no violation of law; but if, by compounding, the limit is exceeded, it is a violation of the law. Watson v. Mims, 56 Tex. 451. The form of the contract is immaterial. No device to evade the law will be upheld by the courts. Mitchell v. Napier, 22 Tex. 121; Crozier v. Stephens, 2 Willson, Civ. Cas. Ct. App. § 802. The question is, does the contract or do the facts show an intention to pay or receive a greater interest than is allowed by law? In Martin v. Bank, supra, in which it was decided that compounding interest was not of itself usurious, an examination of the facts will show that the principal debt only bore 10 per cent. interest; that the coupons representing the...