Goodale v. Wallace

• Decision Date: 31 May 1905
• Parties: GOODALE v. WALLACE et al.
• Court: South Dakota Supreme Court

103 N.W. 651

19 S.D. 405

GOODALE v. WALLACE et al.

Supreme Court of South Dakota

May 31, 1905

Appeal from Circuit Court, Pennington County.

Action by Anna S. Goodale against Minnie E. Wallace, Arthur E Wallace, and others. From a judgment in favor of plaintiff defendants Wallace appeal. Affirmed.

Charles W. Brown, for appellants. Fred H. Whitfield, for respondent.

CORSON P. J.

This is an action to foreclose a real estate mortgage on certain lots in Rapid City. Findings and judgment being in favor of the plaintiff, the defendants have appealed. The mortgage was given to secure the payment of 59 promissory notes for $40 each, and 1 note for $43.20. Thirty-nine of these notes were paid, and the fortieth was partially paid, and foreclosure proceedings were instituted to foreclose the mortgage for the balance due on the last 20 notes. The defendants interposed the defense that the notes were usurious, and that the amount paid by the defendants was more than sufficient to pay the original amount loaned, and hence that the findings and judgment should have been for the defendants. The first note of the series is as follows: "No. 1. $40.00. Rapid City, S Dak., September 28, 1892. October 28, 1892 after date, we or either of us promise to pay to the order of Anna S. Goodale forty 00/100 at First National Bank of Rapid City, So. Dak., with interest at 12 per cent. per annum from maturity until paid, for value received. Minnie E. Wallace. Arthur E. Wallace. Post Office, Rapid City. Received payment, Hulst & Price." The others were all drawn bearing the same date, and similar in form, except as to the date of payment, each of which was made payable on the 28th day of the month for a period of five years. The court finds that the last of said notes was due and payable September 28, 1897; that no part of said notes have been paid, except the first 39 thereof, and $22 paid on account of the fortieth note and indorsed thereon on January 29, 1892; and that there is now due and owing to the plaintiff from said defendants on account of said notes and accrued interest thereon $843.20, with interest at 12 per cent. per annum on each of the notes from its maturity to the time of trial, amounting in all (principal and interest) to $1,378.50; and the court finds generally in favor of the plaintiff and against the defendants upon all the issues. The court concludes that the plaintiff is entitled to a decree that the mortgaged premises be sold for the amount so found due, and for a deficiency judgment against defendants Minnie E. and Arthur E. Wallace. Judgment was entered accordingly, and the property sold in the manner prescribed by law, and a deficiency judgment of $150 entered against the two defendants last named.

The first question presented arises upon a motion to dismiss the appeal on the ground that the property was sold and the deficiency judgment paid under stipulation between the parties, and that therefore an appeal would not lie from the judgment so compromised and settled to this court. This motion was argued at the last term of this court and taken under advisement, but, in view of the fact that the counsel differ as to the stipulation entered into under which the deficiency judgment was compromised and settled, we are inclined to take the view that the appeal should not be dismissed, and hence the motion to dismiss is denied.

This brings us to the merits of the case, and the principal question presented is as to whether or not the notes were usurious. The amount actually loaned by the plaintiff to the defendants was $1,800, but, as will be noticed, 60 notes, aggregating $2,403.20, were executed by the defendants, and it is specified in the notes that they are to draw interest after due at the rate of 12 per cent. per annum. The court, as we have seen, finds against the defendants upon this issue, and denied the motion of the appellants for a new trial based upon the ground that the evidence was insufficient to justify the findings.

It is contended by the appellants that by the terms of the notes there has been reserved about $74.51 in excess of the sum of $1,800 loaned, with 12 per cent. interest thereon from the date until the trial of the action, and that under the provisions of the Code of this state the interest upon the amount was therefore forfeited, and the only sum that could be collected was the original amount of $1,800 loaned, and that, that sum having been paid, the respondent was not entitled to any judgment in her favor in this action. The respondent, on the other hand, insists (1) that, by a correct computation of the amount to be paid on said notes, the amount did not exceed the amount of the original loan, with interest thereon at the rate of 12 per cent.; (2) that, if there was an excess of interest over and above 12 per cent. provided for by the notes, it was caused by a mistake in the computation made by the appellant Arthur E. Wallace, by whom the notes were drawn and delivered to the agent of the plaintiff; and that it was not the intention of either party that the interest reserved should exceed the 12 per cent. per annum allowed by the Code.

As will be noticed, the contract is somewhat peculiar. The original amount loaned was, as before stated, $1,800, but the notes as we have seen, aggregated $2,403.20; no interest being payable on the notes until due. In other words, there was a computation apparently of an amount that would be required to pay the $1,800, with 12 per cent. interest, and the amount so found that would become due was included in these 60 promissory notes. Computing the interest in the manner in which it was apparently computed, there does not appear to have been any excess of interest reserved over and above the 12 per cent. per annum. When the first note was paid, on October 28, 1892, there was $18 for one month's interest on $1,800, and $22 paid upon the principal; thus leaving for the second month, as due upon the principal, $1,778. This process of paying the interest and applying the balance of the amount of the note over and above the interest to the payment of the principal would have paid at the end of five years the sum of $2,403.20, the amount for which the notes were given. The appellants suggest, however, that the computation should have been to ascertain the interest upon the $40 for the one month, and applied the balance upon the principal, and by this method of computation he claims that the amount provided for in excess of 12 per cent. interest was about $74.51. We are inclined to take the view that the computation as made by the respondent and evidently adopted by the court is the correct computation, and does not violate our statute of usury. But if we are not correct in this view, we think the excess of interest, if any, was taken under a mistake. The evidence as to the manner in which the notes were prepared, and by whom drawn, is as follows: "V. T. Price, sworn as a witness on behalf of the plaintiff, testified as follows: My name is V. T. Price. I reside at Rapid City, South Dakota. I acted for the plaintiff, Mrs. Goodale, in the matter of negotiating a loan to Mr. and Mrs. Wallace, the defendants. *** I acted for Mrs. Goodale in this transaction. The papers were drawn up by Mr. Wallace, and the notes are in his handwriting, except the other signature, which is that...