Yonack v. Emery

• Decision Date: 13 February 1929
• Docket Number: (No. 1183-5178.)
• Parties: YONACK et al. v. EMERY.
• Court: Texas Supreme Court

13 S.W.2d 667

YONACK et al. v. EMERY.

(No. 1183-5178.)

Commission of Appeals of Texas, Section A.

February 13, 1929.

Error to Court of Civil Appeals of Fifth Supreme Judicial District.

Action by C. A. Emery against Julius Yonack and another. A judgment continuing an injunction in force was affirmed by the Court of Civil Appeals , and defendants bring error. Affirmed.

Emil Corenbleth and Geo. T. Burgess, both of Dallas, for plaintiffs in error.

Geo. Clifton Edwards, of Dallas, for defendant in error.

CRITZ, J.

We copy the following preliminary statement as set out in the application for the writ:

"The appellee, C. A. Emery, filed his suit alleging that he was the owner of the property in controversy, and that Julius Yonack and Jacob Yonack are the owners of a certain note, dated November 3, 1925, for $2,000.00 payable $50.00 per month and interest, secured by a deed of trust upon said property; that Wm. T. Sargeant is Trustee in said Deed of Trust and at the request of Yonack Brothers posted notices for the sale of the property under said Deed of Trust, default having been made in the payment of said note; that the $2,000.00 note was a usurious contract and was void to the extent of $540.00 in that plaintiff only received $1,460.00 on the note. That Yonack Brothers had knowledge of the facts which constituted usury. That upon the whole principal of $1,460.00, plaintiff has paid to Yonack Brothers the aggregate sum of $1,149.78, of which sum Yonack Brothers have applied $410.00 to the payment of principal and are now seeking to compel plaintiff to pay $1,050.00 in addition. That the difference in the $1,149.78 paid by plaintiff and the $410.00 applied by defendants to the principal is the sum of $739.78, which amount was applied by defendants to interest, whereby the defendants have become liable to plaintiff in twice said amount, or $1,479.56, as penalty under the statute. That the application by defendants of $410.00 to the payment of principal left the plaintiff with an offset against defendants and said penalty of $1,479.56, less $1,050.00, and the defendants are indebted to plaintiff in the sum of $1,479.56, less said sum of $1,050.00, or a net sum of $429.56, for which plaintiff prayed judgment; and that by reason thereof that plaintiff is entitled to the cancellation of said note and deed of trust. Upon the presentation of the petition the Court below granted a temporary injunction enjoining the appellants herein from selling said property under the terms of said deed of trust. Defendants answered and also filed a motion to dissolve the temporary injunction, in both the motion and answer excepting to the petition and to the granting of the injunction because plaintiff having appealed to a Court of Equity to be relieved against the alleged usury and admitting an indebtedness would be compelled to tender the amount admitted into the registry of the court, and would not be permitted to cancel the debt by offsetting against the same the alleged penalty sought to be recoverd. Plaintiff filed exceptions and an answer to the motion of defendants. The Court refused to consider the motion of the defendants and sustained the demurrer and exceptions of the plaintiff thereto, to which action of the Court the defendants excepted and gave notice of appeal and perfected their appeal to the Court of Civil Appeals."

The honorable Court of Civil Appeals for the Fifth district at Dallas affirmed the judgment of the trial court, and the cause is now before this court on writ of error granted on application of Yonack et al.

To restate this case in as simple language as possible: Emery brings the suit, and alleges that there is due Yonack et al. on the principal of the note in question $1,050; that he has paid usurious interest on said note to the amount of $739.78; and that therefore Yonack et al. have become liable to plaintiff under the statute, in "an action of debt," for twice the amount of the usurious interest collected, $1,479.56. Emery asks for judgment for the said sum of $1,479.56, and offers to credit on said judgment the $1,050 due on the principal of said note, thus leaving a net judgment prayed for by Emery of $429.56. Emery alleges that the note in question is secured by deed of trust on property belonging to him in Dallas, Tex., and that Yonack et al. have advertised, and are about to sell, said property under said deed of trust, and asked, and obtained, in the trial court, temporary injunction restraining the sale of the property under the deed of trust pending the outcome of the litigation. The record as it stands before us shows that Yonack et al, are still demannding that the original usurious contract be carried out in all of its terms. Under the further allegations of the petition, Yonack et al. will sell the property in the deed of trust before the rights of the parties can be adjudicated, if the temporary injunction is dissolved.

Yonack et al. presented motion to the trial court to dissolve the injunction on the ground that Emery, having appealed to a court of equity to be relieved against the alleged usurious contract, and admitted his indebtedness, should be compelled to tender the amount admitted unpaid to the registry of the court, and should not be permitted to cancel the debt by offsetting against the same the alleged penalty sought to be recovered. By proper assignment this is the question presented to the Supreme Court for decision.

We are unable to accede to the contention of Yonack et al. and we are of the opinion that, even if the rule in chancery is as contended for by them, such rule has no application to our remedial system. In fact, the contrary has been held by our Supreme Court. Spann v. Sterns, 18 Tex. 569; Rosetti v. Lozano, 96 Tex. 57, 70 S. W. 204.

We are further of the opinion that the rule in force in this state as applied to the facts of this case is as follows:

In a case where the borrower has paid usurious interest on a debt secured by a deed of trust, and sues the usurers in action for debt under the statute, for twice the usurious interest they have collected, which amounts to more than the amount due and owing on the principal debt, and the debtor tenders to the usurers as an offset the amount unpaid on the principal, and prays judgment for the excess only, and cancellation of the deed of trust, and where the usurers are still demanding full compliance with the original usurious contract, and are about to cause the sale of the borrower's property under said deed of trust, and at no time before the filing of the suit, nor in their pleadings in the suit, have waived their usurious claims, it is right, under the statutes and decisions of this state, for the trial court to grant and maintain a temporary injunction to prevent said sale and to keep matters in statu quo until the trial can be had on the merits. Article 16, § 11, Texas Constitution; R. C. S. of Texas, arts. 5071, 5073, and 4642, §§ 1, 2, and 3; Spann v. Sterns, 18 Tex. 556.

Section 11 of article 16 of our state Constitution, with regard to usury, recites:

"All contracts for a greater rate of interest than ten per centum per annum shall be deemed usurious, and the first legislature after this amendment is adopted shall provide appropriate pains and penalties to prevent the same; but when no rate of interest is agreed upon, the rate shall not exceed six per centum per annum."

Articles 5071 and 5073, R. C. S. 1925, which have to do with putting into effect and enforcing our constitutional provisions in regard to usury, read as follows:

"Art. 5071. The parties to any written contract may agree to and stipulate for any rate of interest not exceeding ten per cent. per annum on the amount of the contract; and all written contracts whatsoever, which may in any way, directly or indirectly, provide for a greater rate of interest shall be void and of no effect for the amount or value of the interest only; but the principal sum of money or value of the contract may be received and recovered."

"Art. 5073. Within two years after the time that a greater rate of interest than ten per cent. shall have been received or collected upon any contract, the person paying the same or his legal representative may by an action of debt recover double the amount of such interest from the person, firm or corporation receiving the same. Such action shall be instituted in any court of this State having jurisdiction thereof, in the county of the defendant's residence, or in the county where such usurious interest shall have been received or collected, or where said contract has been entered into, or where the parties who paid the usurious interest resided when such contract was made."

Article 4642, pars. 1, 2, and 3, which have reference to injunction, reads as follows:

"Art. 4642. Judges of the district and county courts shall, in term time or vacation, hear and determine applications for and may grant writs of injunction returnable to said courts in the following cases:

"1. Where the applicant is entitled to the relief demanded and such relief or any part thereof requires the restraint of some act prejudicial to him.

"2. Where a party does some act respecting the subject of pending litigation or threatens or is about to do some act or is procuring or suffering the same to be done in violation of the rights of the applicant when said act would tend to render judgment ineffectual.

"3. Where the applicant shows himself entitled thereto under the principles of equity, and the provisions of the statutes of this State relating to the granting of injunctions."

Under section 11 of article 16 of our Constitution, above quoted, all contracts for a greater rate of interest than 10 per cent. per annum are deemed usurious, and it is made the duty of the Legislature to provide appropriate pains and penalties to prevent usury. Under article 5071 it is provided that the parties may agree to and stipulate for any rate of interest...