Johnson v. Hull

• Decision Date: 22 April 1893
• Citation: 22 S.W. 176,57 Ark. 550
• Parties: JOHNSON v. HULL
• Court: Arkansas Supreme Court

22 S.W. 176

57 Ark. 550

JOHNSON v. HULL

Supreme Court of Arkansas

April 22, 1893

Appeal from Carroll Circuit Court in Chancery, Western District JAMES M. PITTMAN, Judge.

W. C Hull sued James Johnson in ejectment to recover possession of certain town lots, claiming title by deed from W. H. Longan dated October 15, 1885.

Defendant filed an answer and cross-complaint in which he stated that at the time of the execution of the deed from Longan to plaintiff, defendant owed Longan seventy-three dollars for the purchase of the lots in controversy; that he borrowed the money of plaintiff to pay for the lots, and that by agreement the title to the lots was conveyed by Longan to plaintiff for the purpose of securing the loan; that, on October 21, 1885, in pursuance of this agreement, defendant executed his note to plaintiff for the amount, bearing 12 per cent. interest from date, and at the same time executed to plaintiff a mortgage upon the same lots to secure the payment of the note; that on the 25th day of October, 1885, Johnson and Hull made a written contract in which it is stated that "said Wm. C. Hull aforesaid will lend and now does lend to the said Jas. Johnson aforesaid the sum of seventy-three dollars, good and lawful money of the United States, the receipt of which the said Jas. Johnson hereby acknowledged--said money to be applied in the purchase of a storehouse and lots situated on Main street in the city of Eureka Springs aforesaid, etc.; said loan to continue from date hereof until the 21st day of April, 1886, according to a promissory note dated this day and granted by the said Jas. Johnson to the said Wm. Hull, the note bearing interest at the rate of 12 per cent. per annum from date of execution." Defendant asked that the deed be declared void as a security for a usurious note, and that the title be vested in him.

Upon motion the cause was transferred to chancery. Plaintiff's answer to the cross-complaint admitted that he loaned defendant seventy-three dollars, and took the deed to the lots in controversy as security for the loan. It further alleged that, at the time the deed was executed, nothing was agreed upon concerning interest, except that defendant agreed to pay the highest legal rate of interest; that, six days after the deed was executed and delivered, defendant proposed to give a note and mortgage; that plaintiff did not know the legal rate of interest, and only demanded the highest legal rate; that defendant had the note and mortgage prepared and the rate of 12 per cent. interest inserted, claiming the same as the highest rate allowed by the laws of Arkansas. Plaintiff conceded that the note and mortgage were usurious and consented that the same be cancelled, but asked for possession of the lots.

Upon evidence that supported plaintiff's contention, the court found the issues of fact in his favor, and gave judgment in his favor for seventy-three dollars with 10 per cent. interest from the 15th day of October, 1885, and also for the recovery of the land. Defendant excepted and appealed.

Reversed and remanded.

Atkinson & England for appellant.

1. There was but one contract. The payment of the money, getting the deed and making the note and mortgage were all parts of one transaction--a usurious loan. 53 Ark. 345; 53 id. 455; Ib. 271.

2. Parol evidence was inadmissible to explain away or vary the written contract. 45 Ark. 199.

3. The innocent intentions of Mr. Hull do not protect him. It is not the intention to violate the law which makes usury, but the agreement to pay and receive more than 10 per cent. Ignorance or mistake as to the law is no defense. 41 Ark. 339.

A. Davis for appellee.

The original contract was not usurious, and no subsequent contract, though usurious, will affect it. 55 Ark. 143; 19 S.W. 968; 14 S.E. 863.

OPINION

MANSFIELD, J.

The original agreement of the parties fixed no rate of interest except by stipulating that the highest legal rate should be paid for the use of the money. Under that agreement the money was advanced for the defendant, and the lots were conveyed to the plaintiff as a security for its re-payment. Thus far, the transaction was without any suspicion of usury, and is unquestionable in its legal consequences. It imposed upon the defendant an obligation to restore the money borrowed, with legal interest, and invested the plaintiff with the title to...