Gist v. Smith

• Decision Date: 06 March 1880
• Citation: 78 Ky. 367
• Parties: Gist, & c., v. Smith.
• Court: Kentucky Court of Appeals

78 Ky. 367

Gist, & c., v. Smith.

Court of Appeals of Kentucky.

March 6, 1880

1. There is a plain distinction between a provision in a statute that a contract for interest above a certain rate shall be void as to the entire interest contracted for, and a provision that the entire interest shall be forfeited.

2. A forfeiture may be waived by a party in whose favor it is declared; and money paid upon a contract which the obligee might have resisted as a forfeiture, is presumed to have been paid, because the person paying elected to waive the forfeiture.

3. Money paid upon a contract declared by statute to be void is not paid under any contract at all. There is no consideration, and it may be recovered back by the payor.

APPEAL FROM HENRY CIRCUIT COURT.

D. W LINDSEY FOR APPELLANT.

1. The statute clearly provides that if more than ten per centum per annum be charged, the entire interest agreed to be paid shall be forfeited.

2. There is no question that Gist agreed to pay, and appellee agreed to receive, a higher rate of interest. (Sess. Acts 1871, vol. 1, 62.)

CARROLL & BARBOUR FOR APPELLEE.

1. To constitute usury there must be a corrupt agreement to pay and receive an illegal rate of interest for the loan or forbearance of money. The proof in this case does not show any such agreement. (Beadle v. Manson, 30 Conn. 175; 3 N.Y. 1; 9 Ib., 52; 23 Howard, N. Y., 476; Rowland v Bull, 5 B. M., 146.)

2. The act of 1871 and the Revised Statutes are the laws of this case.

3. The forfeiture, if any occurred, was waived by Gist's payment of the interest to the appellee.

OPINION

COFER JUDGE:

There is some controversy in this case as to the facts, but for the purposes of this opinion we shall assume the facts to be as claimed by the appellants.

In November, 1872, W. L. Gist borrowed of Jacob S. Smith the sum of $3,748.70, and executed his note for $3,835, bearing ten per cent. interest from date, and payable in one year.

Gist paid on the note, March 1, 1874, $692.50; March 1, 1875 $540, and in January, 1876, $3,755.20.

The note embraced $86.30 in excess of the sum loaned, and interest was paid on the amount of the note at ten per cent per annum from the time the loan was made until the debt was discharged in full by the payment made in January, 1876.

Gist transferred to his wife his supposed right to reclaim the usury paid to Smith, and thereupon Gist and wife brought this suit.

They claim that, as the interest paid and the amount deducted from the note exceeded ten per cent. on the amount loaned for the period during which the loan was continued, the whole interest was forfeited, and that they are entitled to recover back all that was paid in excess of the sum actually loaned.

The court below gave them a judgment for the excess paid over ten per cent., and not content with that, they prosecute this appeal.

The loan was made while the conventional interest law of March 14, 1871, was in force.

That act made it lawful to contract, in writing, for the payment of any rate of interest for the loan or forbearance of money not exceeding ten per cent.

But section 5 provided: " That if any rate of interest exceeding the rate authorized by the first section of this act shall be charged, the whole interest shall be forfeited and if the lender in such usurious contract refuse, before suit brought, a tender of the principal without interest, ...