Jones Et Ux. v. Brewer

* Corpus Juris-Cyc. References: Usury, 39Cyc, p. 990, n. 22; p. 993, n. 39 New; p. 1027, n. 77; p. 1030, n. 90 New. Ike Jones and his wife instituted this suit in the chancery court aganist W.H. Brewer, seeking to enjoin a foreclosure of a deed of trust, and asking for an accounting in the different transactions between the parties running back for a number of years. Brewer filed an answer and cross-bill, asking for the foreclosure of his mortgage against Jones and his wife and for the attorney's fees provided in the note. On the hearing of the cause upon the merits, the Chancellor found in favor of Brewer, the cross-complainant, except as to the allowance of usury in favor of Jones as an offset against the amount claimed by Brewer under the mortgage. *Page 149 Jones directly appeals, and Brewer cross-appeals, from the decree of the lower court. The case is substantially as follows: Jones borrowed four thousand five hundred dollars from Brewer in 1914 and executed ten promissory notes therefor, each being in the sum of four hundred fifty dollars, plus eight per cent. interest, due annually. Most of these notes were paid at maturity. Some of them remained unpaid, for which Jones executed subsequent notes and included therein the amount of the unpaid notes of the first transaction. The last-named notes also included additional money advanced to Jones by Brewer. The Chancellor held, as a fact, that the two last notes provided for usurious interest, and that the interest on these notes, which amounted to several hundred dollars, was forfeited; but held that there was no usury charged in the interest on the ten notes executed to cover the four thousand five hundred dollar transaction first mentioned. The court also held that Jones and his wife were indebted to Brewer on the final accounting in the sum of about two thousand three hundred fifty-two dollars and fifty cents, which amount included attorney's fees for the collection of the notes against Jones. The court further held that the usurious interest forfeited by Brewer on the notes mentioned should be credited as an offset against the amount due by Jones to Brewer under the deed of trust, but that no interest upon the usurious interest should be allowed to Jones nor should Jones be allowed to credit the usurious interest to the payment of the principal due at the time when the usurious interest was charged and collected and thus reduce the principal of the amount due by Jones, and in that way reduce the amount allowed to Brewer on the final accounting. The main appellant, Jones, contends that the decree of the lower court is wrong in three particulars, namely: *Page 150 First, that the court should have allowed him a forfeiture of the interest in the first transaction involving the ten notes of four hundred fifty dollars each, although the interest charged on that transaction was not usurious, because some of the notes in that transaction had been included in the subsequent notes of one thousand eight hundred dollars and one thousand four hundred seventy-six dollars given by Jones to Brewer, in which the interest was usurious, and that therefore the usurious charge in the subsequent notes tainted all of the notes with usury in the first transaction, and that the court should have held that the interest in the first transaction was forfeited as usurious. On this proposition, we hold that the Chancellor was correct in his view that the interest charged in the first transaction was not usurious; and the fact that the subsequent notes, in a different transaction, bore usurious interest, and because such notes were partially made up of a balance due from the first transaction, did not taint the first transaction with the infirmity of usury. The taking of the first ten notes and the taking of the subsequent notes were different transactions, were founded on different considerations, and the fact that some of the old indebtedness was included in the subsequent notes did not taint with usury the indebtedness of the first transaction. There was no such connection between the two transactions as to warrant the view that the interest in the first transaction was usurious, because usurious interest was charged in the two subsequent notes. Second, Jones contends that no attorney's fees should have been allowed for the collection of the indebtedness against him, because he (Jones) was compelled to enter suit to cancel the indebtedness against him because of the usurious charges, and he, having established usury as charged in the bill, should not be compelled to pay the attorney's fees for Brewer in the collection of the balance of the amount due by him on the notes, but that, since he was forced to go into court to secure his just *Page 151 rights as against the usurious charges, he should not be made to pay for the legal services provided for in the notes in favor of Brewer. It may be stated, at this juncture, that Jones did not tender any amount in his bill but contended that he owed Brewer nothing, and that, if he was owing him anything, he was willing to pay it upon such ascertainment by the accounting. On this point, we think the Chancellor was correct in allowing the attorney's fees provided in the notes. Brewer was cross-complainant, and sought affirmative relief in the collection of the notes and the foreclosure of the mortgage, which relief was granted by the lower court. The mere fact that Brewer was brought into court at the instance of Jones (who was partially successful in his complaint) did not relieve Jones of the obligation to pay attorney's fees for the collection of the balance by Brewer, the cross-complainant below. We apprehend, though it is unnecessary to decide, that if Jones had tendered the amount of the principal debt recovered by Brewer in this case, no attorney's fees could have been charged against Jones for the collection of the balance of the notes by Brewer. The case of Burt v. Brashears, 118 Miss. 339, 79 So. 182, settles the question in favor of the correctness of the holding of the Chancellor. On the third contention of Jones, that the Chancellor erred in not allowing the usury charged by Brewer in the last transaction to be applied to the payment of the principal of the notes at the time it was charged and collected, we think the point is well taken, and that the decree must be reversed in that regard so that the amount of the usury may be properly credited and a deduction allowed, as against the amount of the balance recovered against Jones by Brewer, as a proper calculation may show. On the point presented by Brewer on cross-appeal, that is, that the court should not have allowed the amount of the usury as an offset against the amount due by Jones because it was barred by the statute of limitation *Page 152 at the time it was offered, we are of opinion the Chancellor was correct in allowing the usury as an offset against the claim of Brewer, because while it would ordinarily have been barred by the lapse of time, yet it could be pleaded as an offset, because it was a debt due to Jones by Brewer at a time when the claim of Brewer against Jones was in existence. In view of the above conclusions, the decree of the lower court on both direct and cross-appeals is affirmed, except as to that part of the decree which denied Jones the right to an application of the amount of the usury to the payment of the principal owed by him at the time of the charge and collection of the usury, and to this extent the decree is reversed and the case remanded for another hearing, in accordance with this opinion. Affirmed in part and reversed in part.