Hendrickson v. Godsey

• Decision Date: 24 January 1891
• Citation: 15 S.W. 193,54 Ark. 155
• Parties: HENDRICKSON v. GODSEY
• Court: Arkansas Supreme Court

15 S.W. 193

54 Ark. 155

HENDRICKSON v. GODSEY

Supreme Court of Arkansas

January 24, 1891

APPEAL from White Chancery Court, DAVID W. CARROLL, Chancellor.

Suit by Mary and Julia Godsey against Hendrickson to foreclose a mortgage on land. The defense of usury was interposed. The court decreed that the lien be foreclosed. Hendrickson has appealed. The facts necessary to its understanding are stated in the opinion.

Judgment reversed.

W. R Coody for appellant.

The transaction was usurious and void. The reservation need not be in the form of interest. It may be included as principal or paid as a bonus. See Tyler, Usury, pp. 102, 368; 2 Barb 56; 29 How. Pr., 280; 32 N.Y. 119; 2 Halst. (N. J.) Chy., 73; 4 Bibb, 327; 51 Ark. 544; ib., 548; Tied. on Com. Paper, sec. 196. A note usurious in its inception cannot be validated by crediting the usury. 35 Ark. 277. No corrupt agreement is necessary if it was the intention to reserve more than 10 per cent. 41 Ark. 339. The whole transaction is void. Mansf. Dig., sec. 4736; 48 Ark. 479.

The appellees pro se.

The present to Julia was a mere gift and not a bonus. No corrupt agreement, device or shift to cover usury is shown. 25 Ark. 191; 41 Ark. 331. Appellant obtained the money by strategy and deception, and is entitled to no protection, and should be held responsible for his own act. He is estopped by his own acts. 30 Barb. 628; 37 N.Y.S. (5 J. & S.), 285; 3 Barb. App. Dec., 285; 35 How. Pr., 478.

OPINION

HEMINGWAY, J.

A loan of money at the highest lawful rate of interest, made under the inducement of a promise by the borrower that he would make a valuable gift of personal property to the lender, is usurious. The gift is such only in name; in law and in fact it is a part of the price paid for the use of money. The loan by Julia Godsey of money, a part of which belonged to her and the remainder to Mary Godsey, was induced by the promise that Hendrickson would pay the highest rate of interest allowed by law, and in addition thereto permit Julia to take from his store merchandise of a value equal to interest on the sum lent at the rate of 5 per cent. per annum. She afterwards got from his store merchandise in excess of that amount; no charge was made against her for such goods up to an amount equal to 5 per cent. on the money loaned, but the excess was charged to her account.

It appears that Mary Godsey had no knowledge of, and received no part of, the excessive charge; and there was nothing in the written contract, or in the character of the transaction, to give her notice there of. She was a very old woman, and her money was lent by her daughter. She had a right to expect that the daughter would make the loan for her without compensation. Therefore the loan of that part of the money that belonged to her was not affected by the usurious taint. Vahlberg v. Keaton, 51 Ark. 534, 11 S.W 878; Thompson v. Ingram, 51 Ark. 546, 11 S.W. 881. But the loan of Julia's money was made in violation of law, and one note and one mortgage taken to secure the entire sum lent. In a suit founded on that note and mortgage can Mary recover the amount lent by her? This question must be answered in the negative, for if any part of a consideration is illegal, the whole consideration is void. 1 Pars. Con., p. 457. "If a statute declares that any security taken for a matter prohibited shall be void, and an action is...