McEwin v. Humphrey

Townsend, J. (after stating the facts); The de|ise in this action is that the note which is secured by the attel mortgage is void for usury. The burden of proof is, jnce, upon the defendant to establish this fact by a pre-iderance of the evidence. The note was payable to the iler of F. G-. Smith, who was the wife of F. M. Smith, lo claims to be a loan broker and attorney, and the only pess introduced on the trial was F. M. Smith, except one [ness, who simply testified to the value of the property |luded in the chattel mortgage. The defendant introduced fjesfcimony, and relies upon the cross-examination of said I. Smith to make out his case, Smithtestifi.es that his i has no interest in the note; that it was made payable to as a matter of convenience, and that he acted as agent of the defendant in the making and sale of note and mortgage to raise the money for the de [554] fendant to purchase a span of mules; that the defendant re ceived $81.05 out of the sale of said note, and that he (Smith got $1.75 for making the mortgage in duplicate and for filing the same, and that constituted the $82.80, the amount of thi note, which was payable 90 days after date, with interest a the rate of 10 per cent per annum. The following questio: by plaintiff’s attorney, and answer by Smith, were giver viz: “Q. Was there any understanding between you and th: defendant, at the time this note was executed, or at anl time prior thereto, that he was to pay any sum as interel on said note in excess of ten per cent. ? A. No, sir. Frol a careful reading of Smith’s, testimony, while defendant! counsel seems to think there are some admissions by hi| that go to show that Smith was agent for plaintiff, and thi Smith either owned the note or had some understanding wif the defendant that a higher rate of interest was 'agreed upJ between him and the defendant, when the contract wl made, yet we think the court stated the effect of the ei| dence fairly in sustaining the motion of defendant to 9 struct the jury to find for defendant. It was certainly will in the knowledge of the defendant to establish cleam whether any agreement had been made between himself afl Smith for a higher rate of interest than 10 per cent, befdj or at the time of the execution of the note and mortgage, n sustaining the motion of the defendant, the court used fl following language in regard to the evidence: “The nil in evidence embraces a valid, contract on its face, as by 9 terms it draws a rate of interest of ten per cent, per 9 num. ” “The defense is based, not upon the face of the cjjl tract, but by the facts established by the evidence, and 9 disputed, which occurred subsequent to the signing of 9 note, and before its final payment. ” The plaintiff, in 9 reply to defendant’s answer alleging usury, denies that tifl was any usury in the note, but that at its maturity heH fused to extend the note at a less rate of interest than 1|H [555] nt. per month.. The plaintiff alleges he bought the note :om Smith, who was a loan broker at Yinita, Ind. Ter., ad agent of the defendant, about a week or ten days after íe execution of the same, and the plaintiff states he is a jsident of the state of Kansas. The defendant paid the rate interest demanded by the plaintiff, through Smith, for ime months, and Smith each time charged the defendant or §1.50 for attending to the matter for him, though it es not appear that there was any agreement between ith and defendant authorizing him to do so; hence the ¡fendant for some months was paying to plaintiff usurious |terest, and each time the note was extended a fee to Smith, .ich, without agreement, would also be properly charged usury. Now, the question presented is: It being con-sive that the original note and mortgage are not shown the proof to be tainted with usury, did the act of the intiff in demanding and receiving a usurious interest after iurity of the paper, for extending the same, make the Ite and mortgage void? “Where the original transaction |>s valid, but subsequently by a usurious agreement the íe of payment was extended, the taint of the subsequent tal contract does not effect the original contract. Where lyments on such usurious agreement were made to plain-rs husband as her agent, and plaintiff knew and permitted pm, she is chargeable with the sums so paid. Where Iney is due on a lawful debt, in connection with which a pious contract has arisen, all payments made on either |e must be credited on the valid claim. ” Humphrey vs Cauley, 17 S. W. 713, 55 Ark. 143. “The loan and the se-rity being complete and valid, neither of them was affect-jby the usurious rate of interest inserted in the note and rtgage subsequently executed for the same debt, unless | unlawful interest was contemplated by the original agree-it; and there is nothing to show that it was.” Johnson Hull, 57 Ark. 553, 22 S. W. 176, and cases cited. These [556] are Arkansas cases, and are conclusive. The defendai seems to rely upon Garvin vs Linton, 35 S. W. 430, but a examination of this case shows it to be in harmony with tl cases cited above. The parties in Garvin vs Linton unde took to rescind a usurious contract, and eliminate the usur; Held, they could do so, and, upon rehearing in this case, r ported in 37 S. W. 569, it was held that where, by mistak part of the usury included in the first contract was carric into the second contract, the second contract was valid, e: cept as to the usury thus by mistake carried into the secoi contract. We think the usurious interest paid by the d fendant should be credited on defendant’s note, and the fe charged by Smith, if he was acting for the plaintiff in e tending the paper, or the charge was known to the plainti should also be credited on defendant’s note, and the ca should be reversed and remanded. | Clayton and Thomas, JJ., concur. I