Chandler v. Cooke
| Decision Date | 16 November 1931 |
| Docket Number | 29499 |
| Citation | 163 Miss. 147,137 So. 496 |
| Court | Mississippi Supreme Court |
| Parties | CHANDLER v. COOKE |
Suggestion Of Error Overruled April 18, 1932.
APPEAL from chancery court of Sunflower county HON. J. L. WILLIAMS Chancellor.
Action by R. H. Chandler against Myrtle Cooke, in which defendant filed a cross-bill. There was a decree for defendant in accordance with the prayer of the cross-bill, and plaintiff appeals. Affirmed.
Affirmed.
Somerville & Somerville, of Cleveland, McClellan & Tubb, of West Point, and G. G. Lyell, of Jackson, for appellant.
Though the security given for a debt is tainted with usury it may be purged by the abandonment of the usurious contract and the execution of a new obligation for the amount of the actual debt free from the usury of the old and bearing only legal interest. If the lender will expunge the usury, and the borrower voluntarily assents to repay the sum loaned with lawful interest, it is an act of justice forbidden by no principle of public policy, which constitutes a good consideration for a new contract.
Although a contract be in its inception usurious, a subsequent agreement to free it from the illegal incident shall make it good.
DeWolf v. Johnson, 10 Wheaton 367, 6 L.Ed. 343; Kilbourn v. Bradley (Conn.), 3 Day 356, 3 Am. Dec. 273.
The parties to a usurious transaction may, doubtless, reform it, and by cancelling the usurious security, and giving a new obligation for the real sum which ought to be paid, excluding all usury, the party will be bound.
Vermeule v. Vermeule, 49 A. 608.
It is well settled that parties can cancel and destroy the old contract, purge the consideration of usury, and make it the basis of a new obligation, and thereby bind the borrower, in law and equity, to pay the money actually received, and a legal rate of interest therefor.
When a usurious obligation is settled and abandoned and a new security taken for the debt lawfully due, with lawful interest thereon, such new security rests upon a consideration purged of usury, and is valid. The fact that the lender by such settlement retains the usury already paid will not taint the now contract.
Rushing v. Citizens National Bank of Plainview, 162 S.W. 460; Spofford v. State Loan Company, 94 N.E. 287; Chadbourn v. Watts, 10 Mass. 121, 6 Am. Dec. 100; Smith v. Stoddard, 10 Mich. 148, 81 Am. Dec. 778; Early v. Mohon, 19 John, N.Y. 147, 10 Am. Dec. 204; Note Ann. Cas. 1918a, page 762.
Mrs. Cooke voluntarily assumed this debt on January 23, 1928, and she should not be permitted to go back on her contract because there is certainly no usury in the contract as made by her.
Usury statutes are quasi penal and will not be applied to contracts not clearly within their terms.
39 Cyc. 876; Smythe v. Allen, 6 So. 627, 67 Miss. 146.
Since usury laws are quasi penal the courts will not hold a contract to be in violation of the usury laws unless upon a fair and reasonable construction of all of its terms, in view of the dealings of the parties. It is manifest that the intent of the parties was to engage in a transaction that is forbidden by those laws. If two reasonable constructions are possible, by one of which the contract will be legal and valid, while by the other it will be usurious and invalid, the court will always adopt the former.
39 Cyc. 917; Riley v. Vanhouten, 4 Howard 428.
The mere fact that a note is given for an amount in excess of that actually due does not alone render the note usurious. There must be affirmative proof that the excess was included with usurious intent.
The mere fact that a lender accepts a gift from the borrower, while a suspicious circumstance, will not render the loan usurious, if such a gift be really voluntary and not required by the lender. Nor will a collateral transaction between the borrower and the lender, whereby the lender may take profit, render the loan usurious, when such transaction was entered into in good faith, and without usurious intent. In fact, the general principle governing all the cases is that when the lender has rendered the borrower any bona fide service, or conferred upon him some real benefit, even though it be in connection with the loan, the borrower has promised to compensate the lender for such service or benefit, will not, in the absence of usurious intent, render the transaction usurious, and the burden rests upon him setting up usury to show that a commission or other things of value alleged to have been promised or received in addition to principal and legal interest rests upon a usurious consideration. The presumption is that such added benefit rests upon an independent and legal consideration.
It is often difficult to discover the reasons and designs of contracting parties but whenever their contracts are susceptible of a legal interpretation by which they can be enforced, such interpretation must prevail.
Riley, Adm. v. Vanhouten, 4 Howard, 428.
In order to constitute the offense of usury, there must be an agreement between the lender and the borrower of money by which the latter knowingly gives or promises, and the former knowingly takes or reserves a higher rate of interest than the statute allows and with an intention to violate the statute. Our statute against usury is penal, since it inflicts a loss of the entire interest, legal as well as usurious, upon the lender. And it is not the less a penal law because it does not provide for the whole debt, or visit the offenders with fine and imprisonment.
Planters Bank v. Snodgrass (Miss.), 4 Howard 573.
The statute against usury is penal in its character and no one should be made to suffer its forfeitures until first clearly shown to have fallen under its condemnation.
Smythe v. Allen, 6 So. 627, 67 Miss. 146.
The statute protects and safeguards the borrower by penalizing sharply the lender in the usurious contract; but it was not meant to give to the borrower any unjust advantage of the lender. Its good purpose should not be perverted into a source of legal fraud by borrowers upon lenders.
Byrd v. Link Newcomb Mill & Lumber Company, 79 So. 100, 118 Miss. 179.
Bouvier's Law Dictionary defines interest as "The compensation which is paid by the borrower of money to the lender for its use."
If the transaction was in fact a joint adventure upon such terms as to entitle the party who advanced the money to a share in such profits as might be made, it is prima facie not usurious although he stipulates for the repayment of the money, in any event, with legal interest for its use, in the business.
Crowson v. Cody, 96 So. 875; Ruck Derschall v. Seibel, 126 Va. 359, 101 S.E. 425; Goodrich v. Rogers, 101 Ill. 523; Orvis v. Curtis, 157 N.Y. 657, 68 Am. St. Rep. 810; 1 Colyer on Partnership 120; Washington Fire Insurance Company v. Maple Valley Lumber Company, 77 Wash. 553, 138 P. 553.
It frequently happens that the lender performs services for the borrower with respect to the loan for which he may claim compensation in addition to interest on the money lent without violating the usury statutes. Thus, it is generally held that where the lender it himself required to borrow or otherwise collect the money to be lent, he receives reasonable compensation for his services in raising the money, in addition to legal interest on the loan without rendering the transaction usurious.
Floyd v. Chandler, 114 So. 344, 148 Miss. 200; 29 Am. & Eng. Ency. of Law, page 446.
Where a party is solicited to make a loan, and to procure the means of so doing must spend time and incur trouble and expense in collecting the money from others and does this at the request of the borrower and upon his agreement to pay for such services and expenses, the transaction is not usurious.
Washington Fire Insurance Company v. Maple Valley Lumber Company, 77 Wash. 553, 138 P. 553; Atlanta Company v. Gwyer Co., 48 Ga. 11.
Courts of equity will not permit borrower fraudulently to escape payment of his debt in whole or in part by purposely making usurious agreement for a loan. In such cases, equity will not enforce the illegal contract but will compel the tricky borrower to pay principal and legal interest.
39 Cyc. 1000; U. T. Hungerford Brass Company v. Bingham, 95 N.Y.S. 867.
Mrs. Cooke cannot recover in this case. If there is any recovery on account of usury, J. W. Cooke is the only person entitled to it. The defense is purely personal to the borrower.
29 Am. & Eng. Ency. of Law 548; 39 Cyc. 999.
Where sum of money is paid as compensation for procuring loan and not as interest, then the loan is not usurious.
Floyd v. Candler, 148 Miss. 200, 114 So. 344.
Shands, Elmore & Causey, of Cleveland, for appellee.
If a greater rate of interest than eight per centum shall be stipulated for or received in any case on a note or account or contract, the note or account or contract is usurious.
It is not necessary that there be an intent to violate the usury statute as such. The law presumes the necessary unlawful intent from the mere fact of intentionally doing what is forbidden by the statute.
39 Cyc. 919; Hebron Bank v. Gambill, 116 Miss. 343. 348; Washington Fire Ins. Co. v. Maple Valley Lumber Co., 138 P. 553, 556.
The character of a contract as usurious or not, is to be resolved by what the lender would have the right under the terms of the contract in any situation during the life of the contract to do.
Crofton v. Building & Loan Association, 77 Miss. 166, 179.
The principal difference between a joint adventure and co-partnership is that while a co-partnership is ordinarily formed for the transaction of a general business of a particular kind, a...
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Dickey v. Bank of Clarksdale
...the plaintiff intentionally did the thing which the statute prohibits. When this was done, the law presumes the intent. Chandler v. Cooke, 163 Miss. 147, 137 So. 496; Hebron Bank v. Gambrel, 116 Miss. Ignorance of law excuses no one, not even an honest money lender. 66 C. J. 179. It was nev......
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Hardin v. Grenada Bank, 32612
...There was no contention between them as to usury; they both knew that it was usury and are held to have so known by the law. See Chandler v. Cooke, supra. other words, the bank reduced its usury without any contention that either the 10 per cent interest on the note or the $ 900 bonus was l......
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Hardin v. Grenada Bank
...There was no contention between them as to usury; they both knew that it was usury and are held to have so known by the law. See Chandler v. Cooke, supra. other words, the bank reduced its usury without any contention that either the 10 per cent interest on the note or the $ 900 bonus was l......
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