Walter v. Adams

• Decision Date: 21 April 1919
• Docket Number: 190
• Citation: 211 S.W. 365,138 Ark. 411
• Parties: WALTER v. ADAMS
• Court: Arkansas Supreme Court

211 S.W. 365

138 Ark. 411

WALTER v. ADAMS

No. 190

Supreme Court of Arkansas

April 21, 1919

Appeal from Jefferson Chancery Court; John M. Elliott, Chancellor affirmed.

Decree affirmed.

Asa C Gracie, for appellant.

The deed though absolute was intended only as a mortgage and the debt secured was usurious and void and appellant is entitled to recover back all he had paid under the void contract. 117 Ark. 304; 106 Id. 166; 1 Jones on Mort., § 257; 128 Ark. 67. The intention of the lender of money is determined from his acts. The facts show usury clearly. 62 Ark. 370; 41 Id. 341; 132 Id. 377. The form of the contract is not material if all the facts and circumstances show usury. 132 Id. 377. Appellee was only entitled to interest on $ 135, the amount loaned or upon not to exceed $ 150 at most. The law will not permit usury to hide behind a sale. 46 Ark. 50; 66 Id. 460. See also 36 Cyc. 941; 83 Ark. 31; 54 Id. 566; 91 Id 458; 51 Id. 534; 194 S.W. 29. The decree shows usury on its face. The agreement for a loan was an oral one and it was error to allow 10 per cent. interest in the decree. 57 Ark. 550. The deed should be canceled as a cloud upon appellant's title and appellant should recover all he has paid under the void contract with interest and costs. Cases supra. 39 Cyc. 941 and cases cited, note 54.

H. K Toney, for appellee.

The evidence sustains the finding of the chancellor and the decree should be affirmed, but the great preponderance of the evidence would have justified a decree that appellee paid $ 190 as a full consideration for sale and purchase of the property and that the deed had become absolute and appellant's right to repurchase or redeem were lost after the expiration of one year.

OPINION

SMITH, J.

The appellant instituted this action in the Jefferson Chancery Court for the purpose of having a deed executed by him to the appellee on the 5th day of June, 1915, declared a mortgage and canceled as being a conveyance securing a usurious debt. It was alleged that on June 5, 1915, appellee loaned appellant $ 135 for a period of one year and as security therefor took a deed, which was represented to be a trust deed, conveying two lots owned by appellant. The consideration was recited in the deed to be $ 190. Appellee answered that the deed evidenced the contract made between the parties but admitted that a contemporaneous agreement had been made by which he was to reconvey the lots, provided the money was repaid within one year.

Upon conflicting testimony the court below found that the deed was intended as a mortgage, and fixed a period within which the lots might be redeemed after allowing appellant credit for the payments made to appellee. No cross-appeal was taken by appellee; but appellant insists on his appeal that the contract was usurious and that the mortgage should therefore be canceled.

Appellant introduced in evidence two receipts written by him and signed by appellee, which read as follows:

"This is to certify that Allen Walter paid the interest on money loaned on property until May 30, 1917, amount $ 20."

"Received of Allen Walter $ 25 on interest for staying the account, May 30th until 1918."

Appellant also insists that in addition to the payments evidenced by these receipts he paid $ 55 interest in advance. The testimony is not clear that the sum loaned was $ 190, but the scrivener testified that the parties stated at the time the deed was executed that the sum advanced appellant was $ 190, and appellee so testified, and while there is some uncertainty as to how and when the excess over the $ 135, which appellant admits receiving, was paid, we cannot say that the chancellor's finding, that the sum loaned was $ 190, is clearly against the preponderance of the evidence.

Appellant remained in possession of the lots and paid the taxes and collected the rents, but was unable to pay the sum borrowed at the end of either the first or the second year, and he says that by way of forbearance and to secure a further extension of time he made the payments evidenced by the receipts set out above; and he now contends that as these payments each exceed ten per cent. of the sum loaned and were made to cover the interest for the year in which the payments were made this exaction of usurious interest invalidated the original loan. We have held to the contrary, however, in the following cases: Johnson v. Hull, 57 Ark. 550, 22 S.W. 176; Tillman v. Thatcher, 56 Ark. 334; Humphrey v. McCauley, 55 Ark. 143, 17 S.W. 713; Marks v. McGehee, 35 Ark. 217. The doctrine of these cases is that the taint of a subsequent usurious contract does not invalidate a prior lawful contract, so that if a subsequent contract, executed in total or partial satisfaction of a prior valid contract, be void because usurious the...