Edwards v. Rumph

• Decision Date: 12 March 1887
• Citation: 3 S.W. 635,48 Ark. 479
• Parties: EDWARDS v. RUMPH
• Court: Arkansas Supreme Court

3 S.W. 635

48 Ark. 479

EDWARDS v. RUMPH

Supreme Court of Arkansas

March 12, 1887

APPEAL from Nevada Circuit Court, in Chancery, Hon. L. A. BYRNE Judge.

Decree reversed and cause remanded.

Smoote McRae & Hinton, for appellants.

1. The cross-appeal should be dismissed because Rumph failed to except to the decree. Mansf. Dig., secs. 4915, 4916, 4917 4910, 5317, 6363, 5157, 5160, 4927.

2. The defense of usury is made out and Edwards could plead it as a full defense in this action having been brought in as a defendant in equity by Rumph. 18 Ark. 369; ib., 456; 34 ib 28; 9 Johnst., 122; 9 Am. Dec., 283; 9 Gill, 299; 62 Am. Dec., 694.

A note or mortgage, usurious in part, is void in toto, and cannot be validated by crediting the usury thereon. 35 Ark. 217.

If commissions and interest amount to more than can be lawfully taken they are usurious. 18 Ark. 294; 1 McCord, 350.

Payments will not be applied to the discharge of usurious interest. 32 Ark. 346.

3. The value of the eight bales of cotton accounted for, together with the usury, extinguished the debt sued on.

The court having found that Edwards owed Rumph nothing, erred in rendering a judgment against Bolden on the notes held by Rumph as collateral security. The debt being extinguished, Rumph was not entitled to judgment.

B. W. Johnson, for appellee.

As to what is necessary to constitute usury, see 9 Peters, 400; 12 Pick. 586; Chitty on Cont., 9th Ed., pp. 708-9.

If there was no mutual agreement and understanding between the parties at the time of making the notes and trust deeds, that Rumph was to charge, and Edwards to pay more for the loan of the money than allowed by law, then there was no usury. 4 Fla. 404; 1 Bard. Ch., 43; 2 Iowa 604; ib., 607; 9 Wheat, 581; 4 Const., 364; 1 Kern (N. Y.), 368; 41 Ark. 331.

The charge of 5 per cent commissions on advances, as was the custom of merchants at Camden, was not usurious, and was stricken out. This was not usury, and the parties had the right so to do, and neither the notes nor trust deeds, disclosed any such facts, and hence were not usurious. 25 Ark. 191; 25 ib., 258; 9 ib., 22; Tyler on Usury, 103; 2 Black, 865; 21 N.Y. 219.

The court having rendered a decree against Bolden, should have condemned the lands to be sold. 29 Ark. 218; 16 ib., 145; 14 ib., 626.

Insists: First--That there was no usury in the original transactions.

Second--That Edwards is justly indebted to Rumph, in the amount claimed, less the amount that the Bolden land may bring at public sale, and

Third--That said land should have been condemned and sold, and the proceeds, after paying costs, credited on the balance due from Edwards to Rumph.

OPINION

BATTLE, J.

G. B. Rumph was a merchant doing business in the city of Camden, in this state, during the years 1879, 1880, 1881, 1882 and 1883. Joe Edwards was a farmer and during these years bought goods, wares and merchandise, and borrowed money of Rumph, on a credit. On the moneys loaned Rumph charged, and Edwards agreed to pay, 15 per cent. interest. They settled annually, Edwards giving new notes to cover balances due and future advances, and deeds of trust to secure the same. On the 2d of March, 1882, on a settlement, Edwards was found to owe Rumph $ 822.25. Fifteen percent. interest was charged and added to this balance, pursuant to an agreement between Rumph and Edwards, for indulgence and extension of time for payment. On the 4th of April, 1882, Edwards executed his note to Rumph for the sum of $ 1100 to cover this balance and interest, and in settlement and payment thereof and of future advances, payable on the first day of November following, and bearing 10 per cent. per annum interest from the maturity thereof until paid, and executed a deed of trust to secure the same and other indebtedness of Edwards to Rumph which should be existing at the time of the maturity of the deed of trust. In this deed certain lands were conveyed in trust as security. Edwards sold a part of this land to William Bolden for the sum of $ 400, and Bolden gave two notes for the purchase money. Edwards deposited these notes with Rumph as collateral security for the payment of his indebtedness to Rumph. In the meantime Edwards continued to trade with and borrow money of Rumph. On the 1st of March, 1883, Edwards' debits to Rumph, including the balance of $ 822.25 and the 15 per cent. added thereto, were $ 1681.80, and his credits amounted to $ 1271.32, leaving a balance of $ 410.48 due Rumph. Bolden failing to pay the first of his notes falling due, Rumph brought this action against Edwards and Bolden, in the Nevada circuit court, on the equity side thereof, to recover of Edwards the $ 410.48, and asked in his complaint to be subrogated to all the rights and privileges of Edwards as vendor of the land sold to Bolden; that the land be sold under a decree of the court; that the proceeds of the sale be applied to the payment of the amount due on the note of Bolden then due; that the amount so applied to the payment of Bolden's note be paid to Rumph in part payment of the balance due him by Edwards; and that the residue of the proceeds, if there should be any, be held subject to the order of the court for the payment of the other note of Bolden when it should fall due, and for general relief. And Edwards pleaded usury by way of defense.

In the hearing, evidence was introduced which established the foregoing facts.

The court found that the debt secured by the deed of trust executed on the 4th of April, 1882, was usurious and void; that the open account of Rumph against Edwards for the year 1882 was not usurious, but had been paid in full; that plaintiff was not entitled to foreclose the deed of trust; that plaintiff was an innocent purchaser of the notes of Bolden before maturity; that these notes were due and unpaid; and that there was due upon them the sum of $ 430.21; and decreed that plaintiff take nothing by this action; that Edwards have and recover of Rumph all his costs; and that Edwards further have and recover of Bolden the $ 430.21 for the use and benefit of Rumph.

Both parties have appealed to this court.

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