Green v. Equitable Mortg. Co.

• Decision Date: 21 July 1899
• Citation: 33 S.E. 869,107 Ga. 536
• Parties: GREEN et al. v. EQUITABLE MORTG. CO.
• Court: Georgia Supreme Court

33 S.E. 869

107 Ga. 536

GREEN et al. v. EQUITABLE MORTG. CO.

Supreme Court of Georgia

July 21, 1899

Syllabus by the Court.

A written contract for the payment by the borrower to the lender of a gross sum of money, including principal interest, and commissions, is not, in law, usurious, if the total amount to be paid does not exceed a sum greater than that which would result from adding to the principal actually received by the borrower interest at 8 per cent. per annum for the period of the loan. The statutory provision that "any higher rate [than 7 per cent.] must be specified in writing, but in no event to exceed eight per cent. per annum" (Civ. Code, § 2876), is, in a given instance substantially complied with, if in fact the lender does not contract to receive more than 8 per cent. per annum for the use of the principal advanced. (a) The contract in this case was not usurious.

Error from superior court, Richmond county; John C. Hart, Judge.

Action by the Equitable Mortgage Company against H. T. Green and others. From a judgment for plaintiff, defendants bring error. Affirmed.

W. K Miller and H. Phinizy, for plaintiffs in error.

Payne & Tye, Lawson & Scales, and J. R. Lamar, for defendant in error.

LITTLE J.

The facts in this case are practically agreed on, and are as follows: The plaintiffs in error made application to the Georgia Security Investment Company to negotiate a loan for them, to be secured by a mortgage on or deed to certain farm lands, fully set out in the application, and agreed to pay the company a commission of $900, to be paid in whole or in part, as may be agreed at the time of closing the loan. Through the medium of the investment company, the defendant in error agreed to loan to the applicants the sum of $2,800, and was to receive from the agent of the borrower a part of the commissions agreed to be paid it for negotiating the loan, to wit, $210, being 7 1/2 per cent. on the amount of the loan. When the contract between the borrower and lender was executed, the amount of the commission so to be received, $210, was added to the sum loaned, and the borrowers gave to the lender their joint bond, by which they undertook to pay the lender, five years after date, the sum of $3,010 as principal, together with interest on said principal at the rate of 6 per cent. per annum; and it was stipulated that, if any part of the principal or interest was not paid at maturity, the sum so due and unpaid should bear interest at the rate of 8 per cent. per annum thereafter. To secure this note, a deed conveying title to certain land was given. Suit was instituted to recover the principal expressed in the bond, together with one of the interest notes; the makers being in default in the payment of the sums expressed thereby. The defendants pleaded that the contract was usurious. They prayed it might be so decreed, that the deed to secure it be canceled as void, and that the recovery be limited to the amount actually received by defendants. The jury rendered a verdict in favor of the plaintiff for $2,800, with interest at the rate of 7 per cent. Motion was made for a new trial. On the hearing it was agreed that the sole question to be decided was whether the debt was tainted with usury, and that, if the presiding judge should conclude that the contract was usurious, he should mold a decree accordingly, and, if it was not a usurious contract, then he should correct the verdict, and render a proper decree under the law and the pleadings. It is insisted by the plaintiffs in error that in this state it is usurious to charge over 7 per cent. for a loan of money, in the absence of a written agreement which specifies a higher rate, not over 8 per cent.; and it is argued that, as in this case the contract binds the maker to pay 6 per cent. on an assumed principal which in fact amounts to more than 7 per cent. on the real principal, and that, in the absence of a written agreement specifying a higher rate, the lender could only have 7 per cent., the contract is usurious. The wording of our statute is: "The legal rate of interest shall remain seven per centum per annum, where the rate per cent. is not named in the contract, and any higher rate must be specified in writing, but in no event to exceed eight per cent. per annum." Civ. Code, § 2876. There is nothing on the face of the contract which renders it obnoxious as containing usury, and, in order to determine whether in fact the contract made is usurious, it becomes necessary to ascertain the meaning of the statute, as well as to determine what was the rate per cent. taken either as interest, or commissions, or both, on the amount actually loaned. The statute provides that, if the rate per cent.

is not named, the contract...