Taylor v. Buzard

• Decision Date: 06 November 1905
• Citation: 114 Mo. App. 622,90 S.W. 126
• Parties: TAYLOR v. BUZARD.
• Court: Missouri Court of Appeals

90 S.W. 126

114 Mo. App. 622

TAYLOR v. BUZARD.

Kansas City Court of Appeals. Missouri.

November 6, 1905.

USURY—CONTRACT FOR PENALTY.

W. bought of T. a piano for $300, giving a note promising to pay that amount with 8 per cent. interest (the highest legal interest), payment to be made by a piano at $75, and balance by monthly installments of $10 and securing this by mortgage on the piano sold; providing that, if the payments did not amount to more than $3 per month, they should be applied as rent for use of the piano, and all rights of the purchaser to it should be forfeited. Held, that such provision did not make the contract usurious, and so render the mortgage void; it merely providing a penalty, attaching only in case the contract was not performed according to its terms.

Appeal from Circuit Court, Adair County; Nat M. Shelton, Judge.

Action by John N. Taylor against T. J. Buzard. Judgment for defendant. Plaintiff appeals. Reversed.

A. Doneghy, for appellant. J. P. O. Givens and Campbell & Ellison, for respondent.

ELLISON, J.

This is an action in replevin for a piano. The trial was before the court without the aid of a jury, and resulted in a judgment for the defendant. Plaintiff, a piano dealer, sold the piano in question to Mrs. White for $300, and took from her the following note for the purchase price: "For value received, I promise to pay to the order of John H. Taylor three hundred dollars, with eight per cent. interest per annum from date; said principal and interest payable, one square piano at $75, and balance in installments of ten dollars each and every month, beginning February 7, 1900. Reasonable attorney's fees allowed if collected by suit." This note was secured by a mortgage on the piano, which mortgage contained the following provision: "I agree that, if my payments do not amount to more than $3 per month, to apply that amount as rent for the use of said property, and forfeit all my right to said property." The trial court found for defendant, on the ground that such provision made the contract usurious and rendered the mortgage void. Afterwards, a creditor of Mrs. White obtained a judgment against her, and the piano was seized and sold under an execution to the defendant. This plaintiff, as mortgagee, then instituted this action.

It is stated in a standard work that "an agreement to pay more than interest by way of a penalty for not paying the debt is not usurious, because the debtor may relieve himself by paying the debt with lawful interest." And the author adds that, "even if he incurs the penalty, this may be reduced to the actual debt." 3 Parsons on Contracts, side page 116, bottom page 129. The same is stated in Clark on Contracts, 401. Usury in this state is exacting or receiving more than 8 per cent. interest per annum. But if the debt on which it is complained usury is exacted may be wholly discharged according to its terms without reaching the usury, there is no usury, since the debtor has the privilege of paying the lawful sum only. Ramsey v. Morrison, 39 N. J. Law, 591; State v. Elliott, 61 Kan. 518, 59 Pac. 1047; Gambril v. Doe, 8 Blackf. (Ind.) 140, 44 Am. Dec. 760; Fisher v. Anderson, 25 Iowa, 28, 95 Am. Dec. 761; Weatherby v. Smith, 30 Iowa, 131, 6 Am. Rep. 663; Righter v. Warehouse Co., 99 Pa. 289; Downey v. Beach, 78 Ill. 53; McNairy v. Bell, 1 Yerg. (Tenn.) 502, 24 Am. Dec. 454; Walker v. Abt, 83 Ill. 226; Upton v. O'Donahue, 32 Neb. 565, 49 N. W. 267; Rogers v. Sample, 33 Miss. 310, 69 Am. Dec. 349; Spain v. Hamilton's Adm'r, 1 Wall. 605, 17 L. Ed. 619, 626; Long v. Storie, 41 Eng. Ch. (9 Hare) 542. In the first of those cases the contract, as in this case, provided...