Caruthers v. Andrews

• Decision Date: 31 December 1865
• Citation: 42 Tenn. 378
• Parties: CARUTHERS, EXR., v. ANDREWS.
• Court: Tennessee Supreme Court

42 Tenn. 378

CARUTHERS, EXR.,

v.ANDREWS.

Supreme Court of Tennessee.

December Term, 1865.

FROM WILLIAMSON.

In this case there was a judgment on demurrer, for demurrer, for defendants, at the November term, 1865, Judge JOHN M. LEA, presiding. Plaintiffs appealed.RANDALL W. EWING, for plaintiffs in error.

DAVID CAMPBELL, for defendants in error.

JOHN C. GAUT, Special J., delivered the opinion of the court.

This is an action of debt, commenced in the circuit court of Williamson, in this state, by James Caruthers, in his lifetime, on the 18th day of April, 1865, against the defendants, upon a bill single in the words and figures following, to wit:

“$600. Six months after date, we, or either of us, promise to pay James Caruthers, or order, six hundred dollars, borrowed money, with ten per cent. interest, until paid, from date, for value recieved from him. Witness our hands and seals, October 5th, 1860.

M. L. ANDREWS,” (seal.)

“M. M. ANDREWS,” (seal.)

At the July term of said court, in 1865, the plaintiff filed his declaration, and made profert of said bill single sued upon. At the same term of the court, the defendants craved oyer of said bill single, and set it out, and plead to plaintiff's action, First, That the defendants did not owe the debt of six hundred dollars in the plaintiff's declaration mentioned, and interest thereon at ten per cent., until paid. Second, That defendants, before the action was commenced, tendered to the plaintiffs the debt and interest in the plaintiff's declaration alleged. Third, That since the commencement of the action, the plaintiff departed this life and cannot prosecute this suit. Fourth, That the bond sued upon and set out on oyer, contains a contract or agreement to pay interest at the rate of ten per cent. per annum, and that said bond and contract, so therein contained, are illegal and void. To all of said pleas plaintiff's attorney demurred. At the November term of said court, the death of James Caruthers was suggested, and the cause revived in the name of his said executors. And at the same term of said court, after said revivor, the demurrer of the plaintiff to said pleas of the defendant, came on for argument, before the circuit judge presiding, who being of the opinion that the act of the legislature, authorizing the taking of conventional interest, is unconstitutional and void, overruled said demurrer and dismissed the plaintiff's action, from which judgment the plaintiffs appealed in error to this court.

We believe that this is the first time that the constitutionality of the act of the general assembly of the state, passed February 21st, 1860 [Acts 1859-60, ch. 41] entitled, “An act to amend the usury laws of this state, and to establish a conventional rate of interest,” has been before this court for adjudication. The question has been argued before us with great ability and zeal on both sides. And we feel the responsibility resting upon us to pass in judgment upon the constitutionality of said act of the legislature. And we feel that we cannot, in the decision of the question now before us, be materially aided by former decisions of this court. Interest for money, as a legal consequence, was unknown to the common law. It was purely a statutory provision, and is founded on a supposition of a loan or forbearance in demanding payment of money actually due. Cherry vs. Mann, Cooke's R., 268, 273. The constitution of 1796 was silent upon the subject of interest, leaving that subject to the sound discretion of the legislature. In other words, there was no constitutional inhibition upon the legislature, upon the subject of interest. Prior to the amended constitution of 1834, the general rate of interest in this state, established by the legislature, was at the rate of six cents per annum. By the 6th section of the 11th article of the constitution of 1834, it is provided that “The legislature shall fix the rate of interest, and the rate so established shall be equal and uniform throughout the state.” The 7th section of the same article of the constitution, further provides that “The legislature shall have no power to suspend any general law for the benefit of any particular individual, nor to pass any law for the benefit of individuals inconsistent with the general laws of the land; nor to pass any law granting to any individual or individuals, rights, privileges, immunities or exemptions other than such as may be, by the same law extending to any member of the community, who may be able to bring himself within the provisions of such law; Provided, always, The legislature shall have power to grant such charters of incorporations as they may deem expedient for the public good.”

The 1st section of the 11th article of the constitution of 1834, provides that “All laws and ordinances now in force in this state, not inconsistent with the constitution, shall continue in force and use, until they shall expire, be altered, or repealed by the legislature.” The 2d section further provides that “Nothing in this constitution shall impair the validity of any debts or contracts, or affect any rights of property or any suits, actions, rights of action or other proceedings in courts of justice.” The legislature of this state, by the act of 1835 [Acts 1835-36], ch. 50, sec. 3, enacted that the legal rate of interest shall be hereafter, as heretofore, six per centum per annum, and at that rate for a longer or shorter period. Other sections of the same statute, made the reserving or taking more than six per cent. per annum, for the loan or use of money, usurious and illegal. The statute of 1794 [Acts 1794, ch. 1, sec. 64--Code, sec. 3137], on appeal from an inferior to a superior court, on affirmance of the judgments below, or a dismissal of the appeal for the want of prosecution, allowing twelve and a half per cent. interest, from the rendition of the judgment by the inferior jurisdiction, remained in full force since the adoption of the constitution of 1834, until repealed by the legislature, during its present session [Acts 1865-66, ch. 17], except that it was suspended by the act of the 1st of February, 1861 [Acts 1st ex. ses. 1861, ch. 6], until the 1st of July, 1863.

The 3d section of the act of 1835, fixing the rate of interest in this state at six per cent, per annum, upon loaned money, and upon such legal liabilities as draw interest, remained the general uniform rate of interest in this state, until the 21st day of February, 1860, when the general assembly of this state enacted what is commonly called the conventional interest law [Acts 1859-60, ch. 41] the first section of which provides, “That whenever any person or persons shall contract for the loan of money, it shall and may be lawful for the lender or lenders, or his or their assignee or representatives, to receive a rate of interest on the sum [same], up to the time payment is made, not to exceed ten per cent. per annum; provided, that the parties shall have so agreed, and such agreement [be] expressed on the face of the contract, whether the same be evidenced by bond, bill, note, or [other] written instrument.” The 2d section enacts, “That the rate of interest now established by law shall continue equal and uniform throughout the state as heretofore; and no greater amount than six per cent. shall be paid on any contract or obligation, unless agreed on by the parties, according to the provisions of the first section of this act; and any contract made contrary thereto, or for any other article than borrowed money, for a greater rate than six per cent., shall be considered as usurious, and subject to all the penalties heretofore [hereafter] prescribed; provided, that it may be lawful to renew debts actually created for the loan of the money at the rate of ten per cent. per annum; but nothing in this act shall be so construed, as to authorize any debt or liability, not originating for money actually loaned, thus to be renewed; and all efforts, by direct or indirect means, to take and receive a greater rate of interest than six per cent. per annum, for any debt, demand, or liability, the origin of which is not for money actually loaned, shall be deemed unlawful, and operate as a release of the debtor from the entire amount of such debt, demand, or liability.” The other sections of said act regulate the privileges of discounting notes, bills, bonds, or other securities, made for the purpose of sale, and amend the usury laws of the state. And said law took effect on the 1st day of September, 1860, and the entire act was repealed the 31st of January, 1861 [Acts 1st ex. ses. 1861, ch 4].

The bill single, sued upon in this action, was executed by the defendants, to James Caruthers, after the 1st day of September, 1860, and before the 31st of January, 1861, when the said act of February 21, 1860, was repealed by the legislature. In the paper sued upon, the defendants admit that the...