Jones v. Brewer

• Citation: 110 So. 115,146 Miss. 142
• Decision Date: 18 October 1926
• Docket Number: 25377
• Court: Mississippi Supreme Court
• Parties: JONES et ux. v. BREWER et al. [*]

110 So. 115

146 Miss. 142

JONES et ux. v. BREWER et al. ^[*]

No. 25377

Supreme Court of Mississippi

October 18, 1926

Suggestion of Error Overruled Nov. 15, 1926.

(In Banc.)

1 USURY.

Usurious interest charged on notes partially made up of balance on former notes did not taint the first transaction with usury.

2 USURY.

Attorney's fees provided in notes held properly allowed on holder's cross-bill in action by maker to cancel indebtedness because of usurious charges.

3 USURY.

Usurious charge must be allowed and applied to payment of principal at time it was charged and collected.

4. LIMITATION OF ACTIONS.

Usury charged on notes, although ordinarily barred by lapse of time, could properly be pleaded as offset, as being debt due to maker by holder at time notes were still in existence.

SMITH C. J., and ETHRIDGE and ANDERSON, JJ., dissenting in part.

HON. T. P. GUYTON, Chancellor.

APPEAL from chancery court of Carroll county, HON. T. P. GUYTON, Chancellor.

Suit by Ike Jones and wife against W. H. Brewer and J. G. Petty, substitute trustee, wherein defendant Brewer filed a cross-complaint. From the decree plaintiffs appeal, and defendant Brewer cross-appeals. Affirmed in part, and in part reversed and remanded.

Affirmed in part and reversed in part. Case overruled.

S. E. Turner and J. E. Conger, for appellants.

This is not a suit to recover a penalty, eo nomine. Commercial Bank v. Auze, 74 Miss. 609, 11 So. 754. "When the illegality of consideration extends only to a part of plaintiff's demand, as in the present case; where the contract of transfer is illegal, and void, only as to interest, the same rule must apply and the defense must prevail so far as to prevent the recovery of all interest, because where the consideration is illegal as to a part of the demand, the defense must prevail to that extent upon the same principle by which the whole action is defeated, where the entire claim is rendered void by illegality of consideration. Coulter et al. v. Robinson, 14 S. & M. 18; Newman v. Williams, 29 Miss. 212; Lewis v. Hickman, 77 So. 46; Blue v. Bank, 75 So. 377; Brashear case, 118 Miss. 339, 69 So. 182.

Usurious payments are never barred and the law applies them for the parties as of the date they are paid. Brewer v. Jones, 131 Miss. 545, 95 So. 519; Polkinghorn v. Hendricks, 61 Miss. 366; Chaffee v. Wilson, 59 Miss. 15; Bend v. Jones, 58 Miss. 368; Mattock v. Cobb, 62 Miss. 43; Bank v. Fraser, 63 Miss. 231.

These cases not only say that the statute of limitations does not apply as against a payment, but hold that the payment of usurious interest is a payment, credited by the law when paid. Was it usury on the forty-five hundred dollar loan for the first note to be placed in a renewal note and the interest on it made to run at six per cent on its face from January first prior thereto, and maturing before the end of the year? This was done twice in this case.

We have an "Evasion of six per cent Statute," section 2076, Hemingway's Code. See also section 2075, Hemingway's Code (section 2678, Code of 1906); section 2079 (2681) Hemingway's Code.

Set-off and counterclaim. Barred claims can be set-off against those not barred. The only difference is no judgment ever can be obtained on a barred claim. Set-off and counterclaim defenses are available always even if barred themselves. Bank v. Gambrill, 116 Miss. 343, 77 So. 148.

Attorney's fees. The question of attorney's fees is controlled by the Zachary case, 101 So. 588.

R. C. McBee, for appellee.

I. It is claimed that the interest was not earned for the time that Jones kept the papers in his possession, after the same were figured, drawn up and delivered to him for signature; that this interest amounts to five dollars and has tainted the entire transaction with usury.

"If the agreement for a loan contemplates that the entire amount shall be available to the borrower at once, the mere fact that he leaves a part thereof with the lender for a time, or that a brief delay in paying it over to him occurs, does not make the transaction usurious in the absence of a corrupt intent to evade the law against usury. Bishop v. Blair (1900), 90 Ill.App. 64; Appleton Bank v. Fiske (1864), 8 Allen (Mass.) 201; Leonard v. Cox (1880), 10 Neb. 341, 7 N.W. 289; Muir v. Newark Sav. Inst. (1863), 16 N.J.Eq. 537; Bevier v. Covell (1881), 87 N.Y. 50; Keyes v. Moultrie (1858), Bosw. (N. Y.) 1; Geisberg v. Mut. Bldg. & Ass'n (1901, Tex.), 60 S.W. 478; 12 A. L. R. 1423 and note; Planters' Bank v. Snodgrass, 4 How. 73; Smythe v. Allen, 67 Miss. 146.

II. This loan was not usurious because of section 2076, Hemingway's Code, chapter 137, Laws of 1914, which provides that a loan is usurious if a sum in excess of six per cent is charged where the note shows six per cent on its face. This statute became effective March 27, 1914. The present loan was made February 20, 1914. The contract already made could not be affected by any change in the law. Murrell v. Jones, 40 Miss. 565 at 584; Richard v. City Lumber Co., 101 Miss. 678-692.

III. Counsel seem to argue in their brief that because the separate, subsequent, independent eighteen hundred dollar note contained usury and because it was made up in part of a six hundred twenty-eight dollar balance from the original loan, that therefore the original loan was usurious. 39 Cyc. 992.

IV. Set-off with us is purely statutory. Henry v. Hoover, 6 S. & M. 418; Hoover Commercial Co. v. Humphrey, 107 Miss. 810; Fire Ass'n of Philadelphia v. Schellenger, 84 N. Y. Eq. 464, 94 A. 615; Home Ins. Co. v. Hartshorn, 128 Miss. 282, 91 So. 1. Under section 2479, Hemingway's Code, both his right and his remedy had expired. The court deciding an issue of fact held that these were separate and distinct transactions. 39 Cyc. 1029; Riddle v. Rosenfeld, 103 Ill. 600; Dickey v. Permanent Land Co. of Baltimore, 63 Md. 170; Sturgis v. Nat'l Bank, 9 Tex. Civ. App. 540, 30 S.W. 678.

The question of application of payments by operation of the law is not a part of the law of set-off and has no place in this record since the transactions were separate and distinct. Knights of Pythias v. Quinn, 78 Miss. 525.

V. Attorney's fees. Appellant complains because the decree embraced the attorney's fees provided for in the note, and cites as his authority the Zachary case, 101 So. 558. That case is not in point. 8 C. J. 1098; Hoover Com. Co. v. Humphrey, 107 Miss. 810-819.

Brief of J. W. Conger, for appellant, in response to question by the court.

"Is the maker of a note of the character of the ones here involved liable to the holder for the attorney's fees therein provided for or any part thereof, where the holder has demanded of the maker a sum larger than the true amount due, and the maker in order to defend against the claim of the holder is forced to employ attorneys and litigate the question as to the amount due resulting in a judgment for the holder for an amount less than that claimed by the latter?" As to the nature of a stipulation for attorney's fees, see Parks v. Granger, 96 Miss. 503, 51 So. 716, 27 L. R. A. (N. S.) 157; Almand v. Almand, 95 Ga. 204, 22 S.E. 213; Pomeroy's Eq., sec. 436, "Concerning Penalties."

It was never intended that the ten per cent stipulated in any case should be allowed, except in the event the note should be placed in the hands of an attorney for collection after maturity, upon and after default in payment.

In order for the holder of these notes to collect an attorney's fee at all on any account, it must be held that the stipulation therein meant that the attorney's fees became a part of the principal when the contingency arose; that is, the debt itself; but it is settled in our state that the liability for attorney's fees does not attach until the exact contingency provided for has arisen. This contingency cannot be held to have arisen under the facts of this case. Middleton v. Zachary, 101 So. 558.

In Brahan v. Bank, 16 So. 203, it was decided that the ten per cent stipulated was valid and the fact that the debtor was garnished and the note fell due while the garnishment was pending, and the note was collected by an attorney, did not relieve the debtor of the payment of the ten per cent commissions. See, also, Eyrich v. Bank, 67 Miss. 60, 6 So. 615; Burlington, etc., R. R. Co. v. Dey, 12 L. R. A. 436 (Iowa).

Attorney's fees, although stipulated, are in the equitable control of the court. Graves v. Burch, 5 A. L. R. 1216 and cases there cited. See, also, Am. Freehold Land, etc. v. Jefferson, 69 Miss. 770, 12 So. 464; 27 R. C. L. 242-43; Lindsey v. Hill, 66 Me. 212, 22 Am. Rep. 564.

Tender was made in good faith in the bill and offer made to pay whatever amount that might be found to be due--all before the notes were delivered to counsel for the defense. Am. Freehold Land Co. v. Jefferson, 69 Miss. 770, 12 So. 464; Purvis v. Woodward, 78 Miss. 922, 29 So. 917; Crittenden v. Ragan, 89 Miss. 185, 42 So. 281; Union Nat'l Bank v. Fraser, 63 Miss. 231; Dickerson v. Thomas, 67 Miss. 788, 7 So. 503.

The mortgage and the notes were void for the amount not due. Moncrief v. Palmer, 17 A. L. R. at 119 (R. I.) 114 A. 181; Lewis v. Germania Savings Bank, 96 P. 86; Daily v. Maitland, 88 Pa. 384, 32 Am. Rep. 457.

R. C. McBee, for appellee, in response to the request of the court.

"Is the maker of a note of the character of the ones here involved liable to the holder for the attorney's fee therein provided for or any part thereof, where the holder has demanded of the maker a sum larger than the true amount due, and the maker in order to defend against the claim of the holder is forced to employ attorneys and litigate the question as to the amount due resulting in a judgment for the holder for an amount less than that claimed...