Upton v. O'Donahue

• Decision Date: 02 July 1891
• Citation: 49 N.W. 267,32 Neb. 565
• Parties: UPTON v. O'DONAHUE.
• Court: Nebraska Supreme Court

32 Neb. 565

49 N.W. 267

UPTON

v.O'DONAHUE.

Supreme Court of Nebraska.

July 2, 1891.

Syllabus by the Court.

1. Where a party borrowed $1,100 for five years at the rate of 6 per cent. interest, payable semi-annually, and agreed to pay the agent $200 to secure the loan, which was added into the mortgage, held that, as the bonus and the rate of interest agreed upon were less than 10 per cent. on the loan for five years, the contract was not usurious.

2. Where a party agreed to pay interest at the rate of 6 per cent., but in case payments were not made promptly, then the principal was to draw 10 per cent., held, that the agreement to pay increased interest in case of default was in the nature of a penalty, and did not taint the original transaction with usury.

Appeal from district court, Butler county; POST, Judge.C. E. Holland, G. M. Lambertson, and H. J. Whitmore, for appellant.

E. R. Dean, for appellee.

MAXWELL, J.

This is an action to foreclose a mortgage. It is alleged in the petition, in substance, that on the 1st day of May, 1888, the defendant executed a mortgage upon certain real estate therein described to the plaintiff, to secure the sum of $1,300, with interest at 6 per cent., payable semi-annually, and the note to be due and payable in five years from the date thereof. There is also a provision that, in case of default in the payments, then the plaintiff shall receive 10 per cent., not only on the whole sum, but also on the payments in default, and that he had an option to declare the whole sum due. The defendant filed an amended answer to the petition as follows: “The defendant denies that there is due the plaintiff from him upon the note, coupons, and mortgage set up in plaintiff's petition $1,382, or any other sum in excess of $1,100, without costs. For a further defense defendant alleges that he borrowed from the plaintiff on May 1, 1888, the sum of $1,100, for the term of five years, agreeing to give to plaintiff for said sum of $1,100, and for the use thereof, his note and coupons attached thereto set up in plaintiffs' petition, and to secure the payment thereof by executing and delivering the mortgage set forth in said petition. In pursuance of said agreement, plaintiff did lend and advance to defendant said sum of $1,100 for five years, and defendant made, executed, and delivered to plaintiff the note, coupons, and mortgage set forth in plaintiff's petition; that said sum of $1,100 was all the consideration that defendant ever received for said note, coupons, and mortgage. Therefore defendant prays that plaintiff recovers nothing but the $1,100, so loaned to defendant, and that defendant recover his costs.” The plaintiff, Hiram D. Upton, in reply to the defendant's answer in the above-entitled cause, “denies...