Hemphill v. Watson

• Decision Date: 14 March 1884
• Docket Number: Case No. 4302.
• Citation: 60 Tex. 679
• Parties: A. M. HEMPHILL v. NATHAN WATSON.
• Court: Texas Supreme Court

60 Tex. 679

A. M. HEMPHILL

v.NATHAN WATSON.

Case No. 4302.

Supreme Court of Texas.

Mar. 14, 1884.

APPEAL from Parker. Tried below before the Hon. A. J. Hood.

On April 1, 1880, Hemphill brought this suit against Watson to vacate and set aside a sale of land, and to set aside and vacate the trust deed under which the sale was made. The case made by the petition was in effect that on the 22d day of July, 1876, appellant secured a loan from appellee of $300, and agreed to pay interest thereon at the rate of two and one-half per cent. per month; that the interest was calculated at that rate and added to the $300, making $420; that appellant gave his note for that amount, and also executed a deed of trust to B. R. Milam as trustee, on the land therein described, to secure the amount; that power was given in the deed to Milam to make the sale in default of payment; also conferring power upon the sheriff of the county to make the sale in the event Milam did not. Appellant claimed that the contract was in contravention of the constitution regulating interest, and void, and, if not void as to the principal, that the same was void as to the interest; that after the note fell due, the sheriff advertised the land for sale in accordance with the terms of the trust deed. At the sale he appeared and objected to the sale. That Watson bought in the property for $600; that its value was then $1,500; claimed the note, deed of trust and sale were all void on account of the usury; prayed that the same be vacated and held for naught. Watson answered by general demurrer and general denial. Upon hearing the court below sustained the demurrer and rendered judgment dismissing the case.

J. R. Curl and Eblen & Robertson, for appellant, cited: Johnson on Mortgages, sec. 646, vol. 1; Jackson v. Dominick, 14 Johns., 435;McLaughlin v. Congreve, 9 Mass., 4; Bissell v. Kellogg, 60 Barb. (N. Y.), 647; Stringham v. Brown, 7 Iowa, 33;Sloan v. Coolbaugh, 10 Iowa, 33; Korngay v. Spicer, 70 N. C., 95; Johnson on Mortgages, vol. 2, sec. 1906; Story's Eq. Jur., vol. 1. sec. 301.

E. P. Nicholson, for appellee.

WILLIE, CHIEF JUSTICE.

The first question in this case is: Was the note which Hemphill made to Watson and secured by mortgage upon the land in controversy tainted with usury? It was executed July 22, 1876, subsequent to the adoption of our present constitution, but previous to the passage of the act of August 21, 1876, which regulated interest and prescribed a penalty for the prevention and punishment of usury.

Art. XVI, sec. 11, of the constitution, denounced all interest above twelve per cent. as usurious, and charged the legislature with the duty, at its first session, of providing appropriate pains and penalties to prevent and punish usury, and it was in obedience to this mandate of the constitution that the above act of August 21, 1876, was passed.

It is clear that if the note and mortgage had been made subsequently to the date of the act, the contract would have been usurious and nothing but the principal could have been recovered.

But it is contended that previous to the passage of that act there was no law against usury of force in our state, the constitution of 1870, and all laws passed whilst it was in force, permitting interest at any rate to be agreed upon between the parties to a contract. In this view we cannot concur. The section of the constitution above alluded to made usury a quasi offense, which the legislature was charged with suppressing and punishing. It even defined what should amount to the offense of usury, declaring such offense to consist in charging interest at a greater rate than twelve per cent. per annum. This provision is prohibitory in its nature and self-executing so far as to render all contracts of the kind denounced immediately illegal; and it left to the legislature the only remaining duty of saying what penalties should be imposed upon offenders against this clause of the constitution. Cooley on Const. Lim., 100, note; Law v. People, 87 Ill., 385.

A constitutional provision denying the legislature power to pass laws of a certain character is prohibitory of such acts as those laws would authorize. For instance, a provision that the legislature should not authorize lotteries is held to be in itself a prohibition of lotteries. Bass v. Nashville, Meigs, 421; Yerger v. Rains, 4 Humph., 259. And it is said that “any constitutional provision is self-executing to this extent, that everything done in violation of it is void.” Buen v. Williamson, 4 Humph., 259. These principles are too well settled to require further argument to support them. Accordingly, usurious contracts of the kind mentioned in our constitution were as absolutely prohibited and illegal by force of the eleventh section above mentioned as they could have been when afterwards denounced and punished by the statute of 1876. Parties entering into such...