H. Wetter Manufacturing Co. v. Dinkins

• Decision Date: 20 March 1893
• Citation: 70 Miss. 835,12 So. 584
• Court: Mississippi Supreme Court
• Parties: H. WETTER MANUFACTURING CO. v. W. L. DINKINS ET AL

12 So. 584

70 Miss. 835

H. WETTER MANUFACTURING CO. v. W. L. DINKINS ET AL

Supreme Court of Mississippi

March 20, 1893

March 1893

FROM the chancery court of Madison county, HON. H. C. CONN Chancellor.

W. L Dinkins, a merchant, failed in business and made a general assignment of his effects, preferring certain creditors. Appellant, an unpreferred creditor, filed the bill in this case to set aside the assignment and subject the property claiming that the assignment was fraudulent and void because of the preference of a certain usurious debt. From a decree sustaining a demurrer and dismissing the bill, this appeal is prosecuted. The opinion contains a further statement of the case.

Affirmed. Suggestion of error denied.

Calhoon & Green, for appellant.

In Torrey v. Grant, 10 Smed. & M., 89, it is declared that a usurious contract is void, being based on an illegal consideration, and that no waiver of it as a defense can be binding. This is approved in Kountz v. Price, 40 Miss. 341. In Marks v. Bradley, 69 Miss. 1, it is declared that assignments with preferences do not commend themselves to the courts; that the power to make preferences must be confined within legal limits, and that no infringement upon the rights of creditors can be permitted.

The debtor does not owe usury. It is a creation by agreement, not within legal limits, of a false claim which creditors must remove before they can enforce their rights.

In Burrill on Assignments, § 118, there is only a meager compilation of cases. The author inclines to the New York doctrine, which is, that if a debt including usury is preferred, it will not render the assignment void, but the assignee will be required to scale the usury. See § 428. Such is not the ruling in this state. Selleck v. Pollock, 69 Miss. 870. In the North Carolina case cited by Burrill, there was a trust-deed to secure a single usurious debt, and it was held void. The case of Pennington v. Woodall, 17 Ala. 685, cited by this author, holds, contrary to the text, that if the instrument is made intentionally to secure to the creditor a larger amount than is due, it renders it void. The case of Early v. Owens, 68 Ala. 171, overrules the case cited from 50 Ala.

In Bigelow on Frauds, pages 50, 133, 135, 157, 325, it is laid down that the debtor may prefer persons whose claims, by reason of some technical rule or policy of law, are not enforceable. By way of illustration, cases are cited on the statute of frauds where the statute was waived; and so of the statute of limitations, and of usury. As to the last, Pennington v. Woodall, 17 Ala. is cited; but, as shown, it does not sustain the text. Chapin v. Thompson, 89 N.Y. 271, is also cited, but that case holds that usury cannot be preferred.

The rule of administration of assignments has been condemned in this state. Montgomery v. Goodbar, 69 Miss. 333. Cases upon the waiver of the statute of frauds have no application, for, if the debt is preferred in the writing, the terms of the statute are complied with. See Bigelow on Frauds, 135; Metcalf v. Brandon, 58 Miss. 841. Nor do cases upon the statute of limitations affect the question. It has always been a sufficient consideration for a new promise that there had been a debt. But it was held in Edwards v. McGee, 31 Miss. 143, that a creditor whose debt was barred could not maintain a bill to set aside a fraudulent conveyance. See, also, Partee v. Matthews, 53 Miss. 140.

There is no principle of public policy to aid the collection of usury in the face of statutory prohibition. Section 755, code 1892, makes a confession of judgment tainted with usury void. Usury may be recovered by the debtor if paid. If a debtor may create for preference any conventional sum as interest, there is no limit to the power. As said in the case of Arthur v. Bank, 9 Smed. & M., 394, "all over and above what is necessary for the division of the property for the payment of debts cometh of evil."

While it is competent to include past-due interest, upon the renewal of a note, it is not competent to stipulate for interest in advance when the contract is made. Perkins v. Coleman, 51 Miss. 298.

W. H. Powell, for appellees.

1. There is nothing in the case of Marks v. Bradley, 69 Miss. 1, to sustain the contention of opposite counsel that, because of usury in one of the preferred debts, it is to be treated as simulated and fraudulent.

2. But, should this court agree with counsel on the general question of usury, it will avail appellant nothing, because the defense of usury is a personal privilege, and the debtor has waived his right to plead it. A lien creditor might perhaps occupy a position different from that of the appellant, because, in that case, there would be privity of contract between him and the debtor. A junior mortgagee might raise the question of usury in a prior mortgage. But it would be a novel doctrine to hold that a creditor recovering judgment, and thereby obtaining a second lien on property, could plead usury as against a prior lien.

3. I submit that appellant has not acquired such a lien upon the property here as to enable it to interpose the defense of...