Vahlberg v. Keaton

• Decision Date: 15 June 1889
• Citation: 11 S.W. 878
• Parties: VAHLBERG <I>v.</I> KEATON.
• Court: Arkansas Supreme Court

11 S.W. 878

VAHLBERG

v. KEATON.

Supreme Court of Arkansas.

June 15, 1889.

Appeal from circuit court, Garland county; J. B. WOOD, Judge.

R. G. Davis, for appellant. John M. Harrell, for appellee.

HEMINGWAY, J.

The appellant, claiming title under the appellee, brought ejectment in the Garland circuit court to recover of her two parcels of land. The lands had been sold under the power contained in two deeds of trust executed by her, and the appellant had purchased them. She seeks to defeat the title thus acquired, upon a plea that the deeds of trust were each given to secure usurious loans from the appellant to her. The case was tried by a jury. There was verdict and judgment for the appellee, defendant in the court below. The appellant assigns as grounds to reverse the judgment that the court erred in instructing the jury. It is contended, on the other hand, that such error, if committed, was without prejudice to the appellant, for the reason that upon the evidence no other verdict could have been reached than the one found by the jury.

The evidence conclusively establishes the following facts: The appellee applied to one O. F. Smith, a broker in Hot Springs, for a loan of $300. Smith procured that amount from the appellant, and delivered to him one of the notes and deeds of trust to which the taint of usury is now imputed. The note was for $300, due in three months, without interest until due. Smith paid to the appellee $261 of the amount procured from appellant, and returned to the appellant the amount of the interest and the note for three months at 10 per cent. per annum. Smith retained the amount of his own commissions, and the cost of acknowledging and recording the deed of trust. Whether this exhausted the balance or not is left in doubt. Afterwards the appellee applied to Smith for a loan of $100. Smith afterwards procured from appellant $120, and delivered to him the appellee's note for that amount, due in three months, without interest until due, with a deed of trust on part of the land in controversy, to which note and deed of trust the defendant imputes the taint of usury. Smith gave to appellee $100 of the amount thus procured, returned to the appellant the amount of the interest on the note for three months at 10 per cent. per annum, and retained out of the balance the amount of his own commissions, with fees for acknowledging and recording the deed of trust. Whether this exhausted the balance or not is left in doubt. The appellant contends that upon each loan he only received interest in advance at the rate of 10 per cent. per annum, while the appellee contends that he received more. The notes were not satisfied. The lands were sold under the power in the two deeds of trust, and the appellant purchased them. Usury is charged — First, because the lender reserved interest in advance upon the face of the note at the highest lawful rate of interest; and, second, because, in addition to the highest lawful interest paid directly to the lender, interest in excess thereof was paid by way of bonus to Smith.

As the notes were given for the entire amount applied for, and as the amount actually received by the borrower was less than such amount by the amount deducted for interest, it is contended that this constitutes usury to a mathematical certainty. The constitution denounces the taking of usury in no uncertain terms, and upon all contracts for its payment it impresses the stamp of absolute nullity. This blight covers the entire transaction. It extends to the principal as well as to the unlawful interest contracted for. Besides this, the constitution requires the general assembly to prohibit usury by law. Const. 1874, art. 19, § 13. The general assembly, which convened within a few weeks after the constitution was adopted, in the attempt to execute the mandate above, enacted a statute against usury. In it it is provided, among other things, that all persons loaning money in the state shall be authorized to reserve or discount interest, upon any note, bond, bill, draft, acceptance, or other commercial paper, mortgages, or other securities, at any rate stipulated or agreed upon by the parties, not to exceed 10 per cent. Acts 1874-75, p. 145; Mansf. Dig. § 4736. Unless the legislative interpretation of the terms of its mandate was in violation thereof, it is clear that usury cannot be imputed to the reserving in advance of the highest lawful rate of interest. Although the statute was intended to promote, if it in fact violates, the provisions of the constitution, it is void. The language of the constitution, as of other similar instruments, is general and comprehensive. It deals with large topics, couched in broad phrase. It attempts neither minute definition nor enumeration. It should be so construed as to subserve its broad purposes, and in the accomplishment of this end it should not be subjected to the application of arbitrary rules of construction, which, it is said, are more often resorted to as aids in ingenious attempts to make the constitution say what it does not mean than with a view to make it express its real intent. End. Interp. St. § 506; Cooley, Const. Lim. 101. As a constitution does not deal in detail or enumeration, we should not give it so broad a meaning as will carry it beyond its true sense and spirit, nor should we apply to it such narrow or constrained views as to defeat the object of those who framed it. Cooley, Const. Lim.; People v. Fancher, 50 N. Y. 291; People v. Cowles, 13 N. Y. 350; Temple v. Mead, 4 Vt. 535. It has been said by a court distinguished for its learning and ability that conventions do not always use language with mathematical accuracy, and that in them exceptions and qualifications are sometimes implied when not expressed. Kennedy v. Gies, 25 Mich. 83. It is also said to be a correct rule in constitutional interpretation to construe it, not according to its technical meaning, but according to the acceptation of those who adopted it. State v. Mace, 5 Md. 337-351. Mathematical scope and technical significance should each yield to the purposes of the instrument, to be ascertained upon an examination of its provisions, and a consideration of the evils it was intended to remedy, and the benefits it was intended to secure. The meaning may be drawn from all these sources, and should be in consonance with each of them. It must be presumed that it was framed and adopted in the light and understanding of prior and existing laws, and with reference to them. When the framers of a constitution employ terms which, in legislative and judicial interpretation, have received a definite meaning and application, which may be either more restricted or more general than when employed in other relations, it is a safe rule to give to them that signification sanctioned by the legislative and judicial use. Daily v. Swope, 47 Miss. 367-383. Nor will it be presumed that the constitution intended to destroy or change the existing laws, except as such intent is manifested by its spirit and letter. End. Interp. St. § 520.

Applying these rules to the construction of the clauses under consideration, it becomes material to ascertain whether its terms had received judicial interpretation before it was incorporated into the constitution. The statute of 12 Anne provided, in substance, that no person should take, directly or indirectly, for loan of money, etc., interest at a higher rate than 5 per cent. per annum, and that all contracts whereby there was reserved or agreed to be paid interest at a higher rate should be utterly void. The question came before the court of common pleas under this statute, and Sir WILLIAM BLACKSTONE "conceived that interest may as lawfully be received beforehand for forbearing, as after the term is expired, for having forborne." Lloyd v. Williams, 2 W. Bl. 792. The same principle was approved under the same statute, in so far as it applied to commercial transactions in bills and notes. Auriol v. Thomas, 2 Term R. 52; Marsh v. Martindale, 3 Bos. & P. 154; Floyer v. Edwards, Cowp. 112. In the case last above the court say: "Upon a nice calculation it will be found that the practice of the banks in discounting bills exceeds the rate of 5 per cent., for they take interest upon the whole sum, but pay only part of the money." Although this practice was held lawful under the usury laws, it was not permitted to become a cover for usury. In the case of Marsh v. Martindale, supra, the court, after approving this construction of the law to the extent indicated, says: "No shift will enable a man to take more than legal interest upon a loan." If any English court ever gave to the statute of 12 Anne any other construction, it has not come within our knowledge. Its construction is of the highest importance in construing all subsequent legislation upon the subject, because it has been taken as the model for such subsequent legislation. Usury laws differ widely as to the effects of usury, but there are slight differences in defining its elements. As the American states have adopted the English statutes as a model, so the American courts have adopted the construction given it by English courts. So we find the statement that "the courts uniformly hold, at the...