Cheney v. Overmyer
| Decision Date | 14 October 1942 |
| Docket Number | 7020 |
| Citation | 129 P.2d 978,64 Idaho 213 |
| Parties | STOYELL E. CHENEY and Fern CHENEY, husband and wife, Respondents, v. I. F. OVERMYER, Trustee, and BOISE G. RIGGS, Sheriff of Gem County, Idaho, Appellants |
| Court | Idaho Supreme Court |
Rehearing denied November 2, 1942.
USURY-PENALTIES-STATUTORY PROVISIONS, CONSTRUCTION OF.
1. Under statute authorizing recovery of usurious interest and two times the amount of such interest from the lender borrowers were not required to offer to pay the balance of the principal before being entitled to the affirmative relief provided by statute. (I.C.A., sec. 26-1907, Sess. Laws, 1933, chap. 197, sec. 3.)
2. The usury statute manifests an intent in view of its legislative history to make it more drastic against the usurer and in favor of the borrower. (I.C.A., sec. 26-1907, Sess. Laws, 1933, chap. 197, sec. 3.)
3. Under statute authorizing recovery of usurious interests and two times the amount of such interest from the lender, three times the amount of usurious interest is forfeited by the lender to the borrower, and the forfeiture is clearly affirmative, and may be offset against both principal and interest, and if more than the balance due judgment therefor should be entered in favor of the borrower. (I.C.A., sec. 26-1907, Sess. Laws, 1933, chap 197, sec. 3.)
Rehearing denied November 2, 1942.
Appeal from the District Court of the Seventh Judicial District, in and for Gem County. Honorable Thomas E. Buckner, Judge.
Appeal from judgment in favor of plaintiffs. Modified and affirmed.
Judgment affirmed. Costs to respondent.
Charles F. Reddoch for appellants.
The first sentence of I.C.A., sec. 26-1907, as amended by chap. 197, Idaho S.L. 1933, is not independent of the second sentence therein, but the two must be taken and construed together to effectuate the legislative intent. (I.C.A., sec. 26-1907, as amended by chap. 197, Idaho S.L. 1933; O'Malley v. United States Bldg. Etc. Assn., 50 Idaho 583, 298 P. 675.)
An action cannot be maintained against a person exacting usury to recover the penalty specified by statute, unless the usurious interest has in fact been paid. (66 C.J., sec. 390, p. 362; 27 R.C.L., sec. 78, p. 275; Penziner v. West American Finance Co., (Cal. Sup. Ct.) 74 P.2d 252; Temple Trust Co. v. Haney (Tex. Civ. App.), 103 S.W.2d 1035.)
All payments upon usurious contract are to be applied upon the principal sum loaned, and when this is repaid, the lender's rights are terminated. (Cornelison v. United States Building Etc. Assn., 50 Idaho 1, 292 P. 243; Cleveland v. Western Loan and Savings Company, 7 Idaho 477, 63 P. 885; Fidelity Savings Assn. v. Shea, 6 Idaho 405, 55 P. 1022.)
Thomas Y. Gwilliam for respondents.
It is not necessary to pay the interest before an action can be maintained by the borrower since the forfeiture is regulated by statute. (O'Malley v. United States Bldg. and Loan Assoc., 50 Idaho 582, 292 P. 243; Madsen v. Whitman, 8 Idaho 762, 71 P. 152; Cornelison v. United States Bldg. etc., 50 Idaho 1, 292 P. 243.)
All payments made on the sum borrowed shall be deducted from the principal, under the authority of the statute, and when the interest rate is so great as to absorb the principal sum borrowed, the borrower need not pay more to the lender. (Cornelison v. United States Bldg. etc., 50 Idaho 1, 292 P. 243; Miller v. Oklahoma State Bank, (Okla.) 157 P. 767; Stockyards State Bank v. Johnson, (Okla.) 152 P. 769; Richardson v. Barnhart, (Okla.) 16 P.2d 98; Walder v. Bowden, (N.D.) 102 N.W. 169.)
April 27, 1940, respondents borrowed from appellant $ 65, giving, as required by appellant, their installment note, due in five months, for $ 85.50, bearing 8% interest per annum on delinquent deferred payments of $ 17.10 per month, with an acceleration clause, secured by a chattel mortgage on certain cows. By July 28, 1940, $ 23.10 had been paid; no further payments being made, interest on the balance of $ 62.40 face of the note became payable.
December 13, 1940, appellant by notice and sale [1] commenced foreclosure proceedings of the chattel mortgage for $ 62.40 and interest at 8% from June 28, 1940. Respondents sued out in district court a restraining order against said foreclosure, setting up the defense of usury and claiming the protection provided in 26-1907, I.C.A., as amended, 1933 S.L., p. 390, ch. 197, contending the difference between the $ 65 and $ 85.50 was interest, in addition to the 8% on delinquent installments. The trial court made the injunction permanent and awarded $ 35.50 to respondent as the amount of the triple interest sued for, i.e., three times $ 25.80, or $ 77.40, over and above the balance of principal, $ 41.90, otherwise due. The appeal, admitting usury, challenges such affirmative relief and urges that respondent was obligated, before any recovery could be available, to offer to pay the balance of the principal. As to the latter contention, while there are authorities to that effect, they are not under a forfeiture statute such as ours, which obviates such offer. (Cornelison v. United States Building & Loan Association, 50 Idaho 1, 292 P. 243; O'Malley v. United States Building & Loan Association, 50 Idaho 583, 298 P. 675.) Also, such would have been, since the recovery is sustained, a useless and unnecessary proceeding; therefore, not required. (Richards v. Jarvis, 44 Idaho 403, 258 P. 370; In re Astoria Sav. Bank, 139 Ore. 573, 11 P.2d 1062; Title & Trust Co. v. Durkheimer Inv. Co., 155 Ore. 427, 63 P.2d 909; Schwarze v. Logan, 60 Idaho 251, 90 P.2d 692.)
The history of our usury statute [2] clearly indicates a legislative intent and desire to strengthen it, make it more drastic against the usurer and in favor of the borrower.
Where usurious interest has been reserved and charged, as herein admitted, three times the amount of such interest is forfeited by the lender to the borrower. This forfeiture is clearly affirmative, [3] not merely negative, hence may be offset against both principal and interest, and if more than the balance due, to give effect to such affirmative forfeiture, judgment therefor should be entered in favor of the borrower, as was correctly done herein. (Cornelison v. United States Building & Loan Association, supra; Stinson v. Bisbee, 55 Idaho 38, 37 P.2d 236, 102 A.L.R. 570; New Hampshire Banking Co. v. Waller, 5 Kan.App. 881, 47 [64 Idaho 218] P. 543; Vose v. U.S. Cities Corporation, 152 Okla. 295, 7 P.2d 132; Yonack v. Emery, (Tex.) 13 S.W.2d 667, 70 A.L.R. 684; Manning v. Christian, 124 Tex. 517, 81 S.W.2d 54.)
The trial court found:
"That the defendant commenced a proceeding to foreclose said chattel mortgage, by notice and sale on December 10, 1940, and the interest on the total amount of said note from date of delinquency to date of foreclosure was $ 5.30, which amount added to the excess amount contained in said note over the amount borrowed, made a total of $ 25.80 charged as interest."
The note provided:
"With interest on past due installments at the rate of 8% per annum until paid; interest to be paid monthly and should any installment or interest be not so paid as herein provided, the whole sum of both principal and interest to become immediately due and collectible at the option of the holder hereof."
The delinquencies were as follows: June 28, $ 14.10; July 28, $ 14.10; August 28, $ 17.10; September 28, $ 17.10. Interest at 8% on each of such delinquencies to December 10, amounts to $ 1.56; this amount added to the amount of interest called for in the note over the amount borrowed, makes a total of $ 22.06. Three times this amount, $ 66.18, less the balance of principal, $ 41.90, leaves a balance of $ 24.28 due the respondents by appellant, for which respondents are entitled to judgment.
The judgment thus modified is affirmed. Costs to respondent.
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