Compton v. Collins

• Decision Date: 07 November 1914
• Docket Number: 558
• Parties: COMPTON et al. v. COLLINS et al.
• Court: Alabama Supreme Court

67 So. 395

190 Ala. 499

COMPTON et al. v. COLLINS et al.

No. 558

Supreme Court of Alabama

November 7, 1914

On Application for Rehearing, December 17, 1914

Appeal from Chancery Court, Marengo County; Thomas H. Smith Chancellor.

Bill by C.W. Collins and another against J.F. Compton and the firm of Mayer Bros., to restrain the sale of certain lands, and for a discovery and an accounting, to relieve the indebtedness of any usury, and to redeem from a mortgage. Decree for complainants, and respondents appeal Reversed and remanded.

Pettus Fuller & Lapsley, of Selma, and Ben F. Elmore and Henry McDaniel, both of Demopolis, for appellants.

George Pegram, of Faunsdale, and Allen & Bell, of Birmingham, for appellees.

DE GRAFFENRIED, J.

Mr Charles W. Collins, who is now over 80 years of age, was at one time owner of a plantation consisting of several thousand acres of land and which was situated in the lime lands of Hale county. These lands were fertile and productive of those crops which are accustomed to be grown in what is known as the "Canebrake Section" of Alabama. A good many years ago Mr. Collins found that his extensive farming operations, through the changes which new conditions had created, had heavily involved him in debt, and since that time his history, and the history of his lands, as shown by this record, have been the history of a section which is turning from large ownerships to small ownerships in land the history, in short, of a section in which the large landowner is being eliminated and the small landowner is taking his place. In his efforts to extricate himself from his financial embarrassments, Mr. Collins began to make sales of parts of his lands, and this policy was pursued until there remains to him something over 1,000 acres. This is, of course, a large tract of land; but its size is modest when compared with his former holdings.

We gather from this record that during the period of his long embarrassment Mr. Collins was forced to become indebted to many people. Some of these creditors were mortgage companies to which he made mortgages on some of his lands; one, at least, of them was a lady who resided in New York, while some of them were his immediate neighbors and relatives. During this period, Mr. Collins began to do business with Mayer Bros., a large mercantile partnership which did business at Demopolis, Ala., and which, for the purposes of this opinion, was composed of two brothers, Morris Mayer and Ludwig Mayer, and one H.B. Pake. Morris Mayer and Ludwig Mayer are dead. H.B. Pake still lives, but he was not, when this bill was filed, a member of the firm, or in any way interested in it. We take it from this record that Morris Mayer and Ludwig Mayer were, when Mr. Collins opened up the account with the firm, men who, like Mr. Collins, were of advanced age, and we also take it that Mr. Collins and the members of the firm of Mayer Bros. had known each other for many years. While Mayer Bros. seem to have been possessed of large means, we gather from the record that their business was, essentially, that of merchants, and not that of money lenders. The business of Mr. Collins was such that he required not only supplies from the store of Mayer Bros., but he also required some of their cash, and an arrangement was entered into, when Mr. Collins began to do business with them, whereby the account of Mr. Collins--and, when we say "account," we mean "store account"--became tainted with usury. The chancellor so found upon the evidence, and in that finding we sustain him. We do this with full recognition that "usury" is the result of a covinous contract entered into by two or more parties, whereby one party is to receive and the other party is to pay, for the use of money loaned, more than the legal rate of interest. While we doubt whether Mayer Bros. were desirous of advancing cash to Mr. Collins at even the usurious rate which they charged him--and which he agreed to pay--nevertheless the contract was made, and we are of the opinion that the chancellor properly held that the account which Mr. Collins had with Mayer Bros. from year to year should be restated, that no interest should be allowed on this account, and that the principal of the account should be credited with the payments which were made by Mr. Collins as they were made.

In this state the usurer is forbidden interest, and the payments made by the debtor are credited upon the principal, both in actions at law and in suits in equity, and without regard to who is the actor in the proceedings. This penalty was imposed by the Legislature upon contracts tainted with usury, and it is, of course, the plain duty of the courts to inflict the penalty.

We are not disposed to think, however, at any of the items on the account of Mayer Bros. against Mr. Collins were falsely charged upon the account. On account of the financial embarrassment of Mr. Collins, his account was probably not so attractive to Mayer Bros. as was the account of an unembarrassed customer with unimpaired credit, and, as the opportunity thus presented by Mr. Collins' situation appealed to the cupidity of the members of the firm, an usurious arrangement was the result; but we are not of the opinion that the evidence sustains the argument that Mayer Bros., at any time, charged Mr. Collins on their store account with articles which he did not purchase from or through them. Through their usurious contract, Mayer Bros. attempted to make an unlawful--and, under the law, an unconscionable--profit out of Mr. Collins, on the cash advanced to him from their store; but, in our opinion, the articles charged upon the account were in fact obtained by Mr. Collins. This statement applies to the item of seven mules which appears upon the account. We are satisfied that Mr. Collins obtained from Mayer Bros. the seven mules--not five--and that those seven mules should be charged upon the restated account at what Mayer Bros. paid for them. There are items upon the account, to which we make specific reference below, which should not be upon the account; but these items are in the nature of charges for interest or attorneys' fees, and are not charges for merchandise or property which Mr. Collins did not obtain from Mayer Bros. In so far as the store account is concerned, the items charged thereon as having been sold to Mr. Collins were, in all human probability, obtained by him. While there may never have been a technical statement of the account between Mayer Bros. and Mr. Collins, statements were from time to time rendered to him, and we are not inclined to think that items appeared upon those statements as representing things sold to Mr. Collins unless they were in fact sold to him. An error may have inadvertently crept into the statement, but we hardly think that an error so great as the value of two mules could have crept into the account.

1. After Mr. Collins had thus been dealing with Mayer Bros. for several years, his financial situation and pressure from creditors indicated to him the necessity of, so far as possible, consolidating his indebtedness and of arranging a long loan. To this end he employed an attorney to negotiate for him a loan for a large amount for a period of five years, the loan to be secured by a mortgage on his Alabama lands. Efforts were made to secure this money from some corporation engaged in the business of lending money, but these efforts were unsuccessful. Finally, Mayer Bros. agreed to lend Mr. Collins $24,956.43 on five years' time, with interest at the rate of 8 per cent. per annum. To this end a mortgage was executed and delivered by Mr. Collins and his wife to Mayer Bros. This mortgage covered all, or substantially all, of the real estate of Mr. Collins in Alabama, and secured the following notes, viz.: An interest note of $1,868.96, due December 1, 1904. Three interest notes of $1,966.51, due, respectively, on December 1, 1905, 1906, and 1907. And one note for $26,852.94, being for the principal, $24,956.43, and $1,966.51 interest, due December 1, 1908. The papers all bear date December 28, 1903, and the interest represented by the above notes on $24,956.43 is 8 per cent. per annum.

The principal of $24,956.43, of the above indebtedness, represented the following items: $2,200 claimed to have been paid to Davies & Bro. $2,600 claimed to have been paid to one Gage, $902.47 claimed to have been paid to one Metzger. $2,332 claimed to have been paid to one Marx. $1,102.21 claimed to have been paid to Davies & Bro. $660 claimed to have been paid to one Gilder. $500 claimed to have been paid to one Gilder. $751.81 claimed to have been paid to one Nelson. $878 claimed to have been paid to one Ernst. $1,465.75 claimed to have been paid to R.H. & W.C. Agee. $344.31 claimed to have been paid on a judgment. The balance of the $24,956.43, viz., about $11,219.88, was represented by the balance claimed by Mayer Bros. to be due them by Mr. Collins on his account with them, including usurious interest which had been charged to him by them and possibly one or two items which are not above enumerated as having been paid out by Mayer Bros. when this mortgage was made.

2. The item of $2,200, to which we have above referred, claimed to have been paid Davies & Bro., was not paid to them on the day the mortgage was made. It was Mr. Collins' understanding either that it had been paid or that it would be paid in full. Some time later, however, Mayer Bros. paid to Davies & Bro. the sum of $2,250 in full of said debt. In our opinion Mr. Collins is chargeable with that $2,250 from the date of its payment and interest thereon at the rate of 8 per cent. per annum.

The members of the firm of Davies & Bro. were related to Mr Collins, and if Mayer Bros. misled him as to the amount which th...