Hanson v. Cummings State Bank
| Decision Date | 19 November 1896 |
| Citation | 69 N.W. 202,6 N.D. 212 |
| Court | North Dakota Supreme Court |
Appeal from District Court, Traill County; Templeton, J.
Action by Christian Hanson against the Cummings State Bank. From an order sustaining a demurrer, plaintiff appeals.
Affirmed.
B. E Ingwaldson, for appellant.
Cochrane & Feetham, for respondent.
On June 5, 1893, the plaintiff and appellant executed and delivered to the defendant and respondent a certain promissory note due on the 1st of November, 1893. The note was paid. Subsequently this action was brought to recover the original sum for which the note was given, with interest from the date of the note. A demurrer to the complaint on the ground that it did not state facts sufficient to constitute a cause of action was sustained, and this appeal is from such order.
At the time of the execution of the note, Ch. 184 Session Laws, 1890, was in force. The allegations of the complaint show that the note was usurious, under § 3 of that act, the interest reserved being more than 12 per cent per annum. Sections 5 and 6 of that act provide that in all cases where the original owner of any usurious promissory note shall sell or part with the same before the maturity thereof, the maker may at once bring an action against such original owner, and recover the full amount of such note, and the usurious interest thereon up to the date of the maturity of such note; and in such action it is not necessary to allege or prove payment of such note. The statute proceeds upon the theory that by the transfer of the note before maturity the maker becomes liable to the purchaser for the full amount of the note, and will be obliged to pay it at maturity; whereas, had it remained in the hands of the original owner, he had an absolute defense under the statute against the note, and the whole thereof. Therefore the maker is given this right of action against the original owner so that he may not, by the transfer, be deprived of his rights under the statute. But he is given such right of action only in case of a transfer as aforesaid. Section 7 of the act--and this is a section upon which plaintiff bases his right of recovery--creates another class of usurious notes, not in any manner covered by the preceding section. It provides that when any broker, loan agent, or other person charges a fee or compensation for procuring a loan of money, or an extension of time upon an existing loan, and such fee or compensation, added to the interest reserved in the note, exceeds 12 per cent. per annum, then the note is declared usurious, within the meaning of the act, and void from the beginning in the hands of the original owner, and the maker is given the same remedy in law against the original owner that is provided for in the preceding sections of the act. In our judgment, there is an unassailable ground upon which the demurrer must be sustained. The note did not come within the provisions of § 7, but of § 3. There was no broker or loan agent known in the transaction. The contract was made between plaintiff and defendant direct. The money reserved was for interest, and did not represent any fee or compensation for obtaining the loan. But, were it otherwise, the result would not be different. Sections 5 and 6 give a right of action against the original owner only in case of a transfer. Section 7 gives a right of action under the same circumstances, and no other. There was no transfer in this case. ...
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