Lindsay v. Hill

• Decision Date: 07 November 1876
• Citation: 66 Me. 212
• Parties: ANN LINDSAY v. ELIZABETH HILL. 1876.
• Court: Maine Supreme Court

66 Me. 212

ANN LINDSAY v. ELIZABETH HILL.

1876.

Supreme Judicial Court of Maine.

November 7, 1876

ON REPORT.

WRIT OF ENTRY on mortgages of land lying in Calais, Maine. Writ dated December 4, 1874.

Plea, general issue with brief statement that the amount secured by the mortgages has been paid, and nothing is due on the same.

And further, " that the contract, to secure which the mortgage of the land described in the plaintiff's writ was given, was made at St. Stephen, New Brunswick, and by its terms there to be performed; that upon said contracts more than six per cent interest has been received by the plaintiff from the parties thereto, and their assignees, and that by the law of said province, at the time of said payments, the receiving of more than six per cent interest made said contracts utterly void."

The plaintiff put into the case the mortgages given to her, one by one Bixby, dated May 12, 1846, to secure payment of $2000 in five years with interest, and one by Daniel Hill and Horatio N. Hill, co-partners, dated June 1, 1848, to secure payment of a note of $1000 in one year with interest. Indorsements of payments of interest, not specifying any sum, were made upon each mortgage annually, or nearly so, to June 1, 1872, in the handwriting of Daniel Hill.

It was admitted that the land described in the writ is the land described in the first mortgage and includes the land described in the second mortgage; and that the title of Bixby went to the Hills, co-partners, with the agreement that they should pay off the Bixby mortgage; and that their title afterwards passed to the defendant.

Daniel Hill testified, and there was no evidence to the contrary, that from and after the times the sums secured by the mortgages became due, there was annually, substantially, paid to the plaintiff, ten per cent interest thereon, on a gold basis, to the time of the last payment June 1, 1872; the extra interest, even without the gold premium, being more than sufficient, if deducted from the principal when paid, to pay off the entire sums secured by the mortgages.

The defendant put in, chapter 102 of the Revised Statutes of New Brunswick, revision of 1854, which is admitted to have been the existing statute at the time the contract was made.

" I. No person shall, directly or indirectly, receive on any contract to be made for the loan of any money, or goods, more than six pounds for the forbearance of one hundred pounds for one year, and after that rate for a greater or less sum, and longer or shorter time; and all deeds or contracts for the payment of any money to be lent, or for the performance of anything undertaken, upon or by which more than such rate of interest shall be reserved or received, shall be utterly void.

II. Whoever shall upon any such deed or contract receive, by means of any fraudulent loan, bargain, exchange or transfer of any money or goods, or by any deceitful means for the forbearing or giving day of payment beyond a year, of his money or goods, more than six pounds for one hundred pounds for one year, and after that rate for a greater or less sum, and longer or shorter time, shall forfeit for every offense the value of the principal sum or goods, so loaned, bargained, exchanged or transferred, together with all interest and other profits accruing therefrom, one moiety to be paid to the Queen for the use of the province, and the other moiety to the person suing for the same, to be recovered by action in any court of record in the county where the offense may be committed, which action shall be brought within twelve months from the time of such offense."

It was " agreed that either party may cite from the New Brunswick reports, any decisions of the courts of that province applicable to the case, relating to the construction of the foregoing statute."

The full court are to render judgment according to the rights of the parties; and, if for the demandant, she is to have the conditional judgment provided by statute.

E. B. Harvey, for the plaintiff.

The payments made and indorsed as interest cannot be treated as payment of principal. No decided case justifies it. Higly v. First National Bank of Beverly, 24 Ohio 76. 3 Parsons on Contracts, 115. Houghton v. Page, 2 N.H. 42.

The contracts, secured by the mortgages, were valid in their inception. To avoid a security as usurious you must show that the agreement was illegal from its origin. 3d Parsons, 115 and cases cited in note q, also at page 122. Tate v. Wellings, 3 Term R. 531, cited in Bank of British N. A. v. Fisher, 2 Allen, N. B. Rep. 1.

The contracts were between residents of New Brunswick, and made there. Their construction and validity depend on the foreign law. 3d Parsons on Con. 114. Houghton v. Page, 2 N.H. 42. Dunscomb v. Bunker, 2 Met. 8.

The statute in evidence is strictly a penal statute; and the courts of this state will not enforce or notice the penal provisions of the laws of a foreign country. Ogden v. Folliot, 3 Term R. 726, 733. Wolf v. Oxholm, 6 M. & S. 99, and other cases cited in notes to Story on Conflict of Laws, 803. Gale v. Eastman, 7 Met. 14. 1 Hill. Mort. 373.

The taking the mortgages on property in Maine does not change the place of the contracts, as they are only accessorial to the originals which are none the less foreign. Story on Conflict of Laws, §§ 287 a, 293.

The alleged usurious payments were made after the debts were overdue and the contracts broken. There entered into them the considerations of the varying value of the currency, and the prices of goods received in part payment from a third party. Such payments are not usurious. Bank of Orleans v. Curtis, 11 Met. 359. Fox v. Lipe, 24 Wend. 164, cited in Hill. Mort. 18, § 17. 3 Parsons 116, notes. Cutler v. How, 8 Mass. 257.

Defendant was not a party to the contracts secured by the mortgages. She did not make the payments charged to be usurious. Upon the Bixby mortgage the payments were not made by the original party contracting, nor by the defendant. She cannot recover here, to her own use, the penalty provided by the foreign statute, to be recovered by a local action, in the foreign jurisdiction, within a time limited and long since elapsed, half to the Queen.

It is not usury if a third person voluntarily pays a sum in excess of the legal interest. McArthur v. Schenck, 31 Wis. 673.

F. A. Pike and A. McNichol, for the defendant.

I. The excess of payment over six per cent should be deducted from the principal. Such was the statute law of our state not repealed till 1870, after nearly all the payments were made by Hill. The repealing act of 1870 provides " that in the absence of any agreement in writing, the legal rate of interest shall be six per cent." In the case at bar, there being no agreement in writing, the parties are thrown upon their rights at common law.

In Peters v. Horton, 2 Pugsley 176, Ritchie, C. J., says " whatever doubts may once have been entertained as to the right of the party paying usurious interest to recover back any portion of the money so paid, they have long since been dissipated; and text books and cases now all agree that when a party has paid usurious interest he may recover back the excess beyond the legal rate in an action for money had and received. This is one of the exceptions to the general rule that when money has been paid in pursuance of an illegal contract, it is generally irrecoverable; and the reason why it is so is because the law looks on both parties as being in pari delicto. But in the case of payment of usurious interest it is considered that the law prohibiting the taking of more than a certain rate of interest is for the protection of men in needy and necessitous circumstances and who from their situation and condition are liable to be oppressed and imposed upon; and so they and the parties taking advantage of their distress are not in pari delicto. The lender on usury being regarded by the law as the oppressor and the borrower as the oppressed and injured."

This case was in 1874. The statute did not provide for the recovery back of money in the manner allowed in the case, and the C. J. put it on the common law doctrine. The case was similar to the one at bar. The debt had been paid by the payment of extra interest and $165 in excess; and the court gave judgment for the $165.

After enumerating the English authorities the chief justice says: " With these authorities, all the text books English and American agree."

The specific ground on which we place this portion of the defense is, that whenever Mr. Hill paid $300, as he says he did, for the use of $3000 for one year, he paid $180 for interest and $120 on the principal; and the contract, not made in writing, by which the plaintiff claimed to put, and did put the whole $300 to the account of interest, was illegal by the statute then existing and by the present statute.

We need make no account of the fact that the 10 per cent was paid with a gold premium; because the over-payments in any event are sufficient to extinguish the principal.

II. The law of the place of contract and performance made the payment of more than six per cent vitiate the contract.

The contracts secured by the mortgages declared on were made in New Brunswick and to be executed there. Mr. Hill and...