Folsom v. Kilbourne
| Decision Date | 21 April 1896 |
| Court | North Dakota Supreme Court |
Appeal from District Court, Ransom County; Lauder, J.
Action by Harriet E. Folsom against Josephine S. Kilbourne and Edward S. Kilbourne. From an order sustaining a demurrer to the answer, defendants appeal.
Affirmed.
Edward Engerud and T. A. Curtis, for appellants.
John D Farrand and Newman, Spalding & Phelps, for respondent.
This is an appeal from an order sustaining a demurrer to an answer, and we are all agreed that the order should be affirmed. Plaintiff brings an action of foreclosure, and declares as an indorsee of a promissory note executed by defendants in favor of the Fargo Loan Agency on November 1 1892, and due in five years from date, for the sum of $ 600, with interest at 7 per cent. per annum, and exchange on New York; interest payable annually. This note was secured by a mortgage on real estate which provided that in case of default in the payment of interest the holder might declare the whole amount due and payable. The provision in the note for exchange on New York renders the note non-negotiable, under the decision of a majority of this court in Flagg v. School Dist., 4 N.D. 30 58 N.W 499. The answer admits the execution of the note and mortgage, but seeks to set up a defense under chapter 184, Laws 1890, in force when the loan was made. The substance of the defense is contained in the allegations that on the date of the note defendants applied to the Fargo Loan Agency for a loan of $ 600 for a term of five years, with interest at the rate of 10 per cent. per annum, the loan to be secured by a mortgage on the real estate described in the complaint; that the Fargo Loan Agency accepted the application, and agreed to make the loan, but instead of making the loan in accordance with the agreement, said agency made the loan of $ 600 for five years, with interest at the rate of 7 per cent. per annum, as evidenced by certain coupon notes attached to the principal note, and required the same to be secured by mortgage, and at the same time required defendant to execute to it five separate notes for the sum of $ 18 each, due in one, two, three, four, and five years from date, with interest at the rate of 12 per cent. per annum after maturity, and required said last notes to be secured by a separate and second mortgage upon the same premises, which said mortgage recited that the consideration for said notes consisted of services performed by said Fargo Loan Agency for defendants, which said recital was false, and said notes in fact represented 3 per cent. per annum interest upon the amount of said loan. Defendants asked that plaintiff take nothing by the action, and that the note and mortgage declared upon be canceled and discharged. The demurrer was upon the ground that the answer did not state a defense or counterclaim to the cause of action stated in the complaint. Section 4, Ch. 184, Laws N.D. 1890, reads: "In all written contracts for the loan of money the exact amount agreed upon to be received for the use, by the borrower, shall be stated in the contract, and separately therefrom, the rate per cent. thereon of interest contracted to be charged, and if in any contract, either verbal or written, for the loan of money, the borrower receives a less sum than the principal sum so agreed upon and contracted to be loaned to and received by the borrower, the said contract shall be deemed to be usurious except as otherwise herein provided." Section 10 of the same act reads: "Whenever it shall satisfactorily appear to a court that any bond, bill, note, assurance, pledge, mortgage, contract, security, or other evidence of debt has been received in violation of the provisions of this act, the court shall declare the same to be void, and enjoin any proceedings thereon, and shall order the same to be canceled and delivered up." The answer was based upon these statutory provisions, and it is urged in its support that all of the documents as set forth in the answer were executed at one and the same time, and must be construed together as constituting the transaction between the parties; and when so construed they do not state the amount to be...
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