Huntington v. Westerfield

• Decision Date: 27 May 1907
• Docket Number: 16,560
• Citation: 119 La. 615,44 So. 317
• Court: Louisiana Supreme Court
• Parties: HUNTINGTON v. WESTERFIELD. In re HUNTINGTON

44 So. 317

119 La. 615

HUNTINGTON v. WESTERFIELD.

In re HUNTINGTON

No. 16,560

Supreme Court of Louisiana

May 27, 1907

Rehearings Denied June 28, 1907.

Certiorari to Court of Appeal, Parish of Orleans.

Action by Henry L. Huntington against J. W. Westerfield. Judgment for plaintiff was reversed by the Court of Appeal, and plaintiff applies for certiorari or writ of review. Judgment of Court of Appeal reversed, and judgment of district court affirmed.

Francis Rivers Richardson, for applicant.

William Weeks Westerfield, for respondent.

MONROE J. BREAUX, C.J. adheres to the views originally expressed (not on rehearing) in the case of Chadwick v. Menard Bros. 104 La. 38, 28 So. 933. Entertaining the views expressed by Chief Justice BREAUX in the case of Chadwick v. Menard Bros. 104 La. 38, 28 So. 933, Mr. Justice PROVOSTY also dissents.

OPINION

MONROE, J.

Plaintiff brings this suit on four notes for the aggregate amount of $ 285, dated February 20, 1904, and made payable 60 days after date, with interest at the rate of 8 per cent. per annum, from maturity until paid, upon which he alleges that defendant is surety; the history of the notes being as follows: On February 9, 1899, Thorp Westerfield borrowed from plaintiff $ 110, for which he gave his two notes, of $ 55 each, bearing defendant's name, as surety, and maturing in 60 days, and on May 15 and May 18, 1899, $ 75 and $ 100, respectively, were borrowed, by the same party, for which, similarly indorsed, 60-day notes were given; the total amount borrowed being that now sued for. When the notes thus given matured, the maker issued new notes, for like amounts, upon which he paid interest, in advance, and in cash, and the new notes were substituted for the old, with the same surety, and so the business continued, the maturities of the notes given varying, now and then, until finally, the notes sued on, all dated February 20, 1904, maturing in 60 days, and representing the aggregate amount originally borrowed, were executed and delivered. The interest paid, as above stated, on the different notes of the series, in cash, was calculated at the rates of from 5 per cent. to 3 per cent. per month, and the total amount which has been paid in that way is found by the Court of Appeal to have been $ 650. The defense, in substance, is that the payments of usurious interest must be attributed to the principal of the debt, and, that being done, that the debt has been extinguished. On the original trial, in the district court, plaintiff objected to the evidence offered on behalf of defendant, on the grounds: (1) That the holder of a note is entitled to recover the whole amount expressed upon its face, without regard to anterior transactions, and whether usurious interest be included or not; (2) that the plea of usury can be set up only in a suit by the payer of the usury against him to whom the payment has been made; (3) that evidence is inadmissible to show payment of usurious interest, after the lapse of 12 months. And the objections having been sustained, there was judgment for plaintiff, as claimed. The rulings and judgment so made and rendered were, however, reversed by the Court of Appeal, and the case was remanded, to be tried, de novo, with the instruction that the rejected evidence be admitted, "without prejudice to its being limited, or restricted, according as a proper ruling on the plea of prescription may [might] warrant, about which" the court reserved its opinion. Plaintiff applied to this court to review the judgment thus rendered by the Court of Appeal, and, the application having been denied, the case was again tried in the district court agreeably to the views expressed in said judgment, with the result that defendant was allowed credit for the usurious interest which had been paid on the notes within the year; his claim on that account being otherwise held to be prescribed. And the case was again taken to the Court of Appeal, where it was held that, whilst the plea of prescription might avail the plaintiff if he were sued for a repetition of the usurious interest paid, it could not be so applied as to prevent the plea of usury from being used as a defense. In other words, the court applied the maxim, "Quae temporalia sunt ad agendum, perpetua sunt ad excepiendum," and rejected plaintiff's entire demand; and it is of this judgment that plaintiff now complains.

We are of opinion that the judgment of the Court of Appeal, upon the first hearing, considered in connection with the refusal of this court to review that judgment, must be regarded, quoad this case, as conclusive of the right of the defendant, sued as surety, to set up the plea of usury, and so to connect the evidences of debt sued on with the original obligation as to make the plea applicable to the whole, and we regard the case brought up for review in the light in which it was considered by the Court of Appeal, viz., as presenting the questions: "Has the usurious character of the transaction been established, and, if so, to what extent, and, as a matter of law, can the plea of prescription operate to defeat the defense? We agree with our learned Brethren of the Court of Appeal in the following finding of facts, to wit:

"The taint of usury runs throughout the entire transaction, and * * * the holder of the notes, the plaintiff, has received on them, or rather, on the original loan which these notes evidence, more than double the amount called for on the face of the notes. The original loans, in the amounts and about the several dates stated in the answer, * * * and aggregating $ 285, were evidenced by four notes, of identical amounts and maturities, as are the notes sued on. They were discounted by plaintiff at the rate of 5 per cent. per month. Every 60 days, when the notes would mature, they would be exchanged for new notes, for like amounts, and at the same maturities, and, again, the maker was charged, and would pay a discount of 5 per cent. per month on each note. These notes were charged and paid for several years, when, finally, the rate on one of the loans was reduced to 4 per cent. per month, and on another to 3 per cent. per month. The interest, or discount, thus charged, was never capitalized, or included in the note, but was paid in cash, so that the notes sued on, as well as the hundred of intervening notes, are of the same denominations as the original notes given to evidence the original loans."

The basis of plaintiff's plea of prescription, as the Court of Appeal says, is the following provision of Civ. Code, art. 2924:

"Except in the cases herein provided, if any person shall pay on any contract a higher rate of interest than the above [8 per cent. per annum], as discount, or otherwise, the same may be sued for and recovered within twelve months from the time of such payment."

Then follow the exceptions to the rule thus announced, to wit:

"The owner or discounter of any note, or bond, or other written evidence of debt for the payment of money, payable to order, or bearer, or by assignment, shall have the right to claim and recover the full amount of such note, bond, or other written evidence of debt, and all interest, not beyond eight per cent. per annum, that may accrue thereon, notwithstanding that the rate of interest, or discount, at which the same may be, or may have been, discounted, has been beyond the rate of eight per cent. per annum, interest, or discount; but this provision shall not apply to the banking institutions of this state, in operation under existing laws.

"The owner of any promissory note, bond, or other written evidence of debt for the payment of money, to order, or bearer, or transferable by assignment, shall have the right to collect the whole amount of such promissory note, bond, or other written evidence of debt for the payment of money notwithstanding such promissory note, bond, or other evidence of debt for the...