Smith v. Neeley

Townsend, J. The appellant has filed eight specifications of error, as follows; ‘‘The court below erred: (1) In its answer to the following request for a special finding: ‘What was the defendant’s relation to said note and mortgage, and for whom and in what capacity did he act?’ — said special finding being as follows: ‘When the note was made the defendant acted for himself and his wife, or in the name of his wife. Afterwards, prior to maturity of the note, defendant and his wife endorsed it in blank, and defendant testified that he sold it to Mrs. M. E Dupree. He acted for himself, to protect himself as surety on the note, and as agent of Mrs. Dupree in the collection of the note and in the foreclosing of the mortgage.’ (2) In its answer to the following request for a special finding: ‘What amount of money was realized by the plaintiff on said note and mortgage, and to whom was it paid?’ — the answer to the same being as follows: ‘No money was realized, but the plaintiff, by giv-ng the note, obtained the extinguishing of debt, evidenced D,y two otherpromissory notes, one note for $46.75,and one for 1)91.75, and accrued interest, and $1.75 charges of defendant [654] for services and filing mortgage.’ (3) In its answer to the following question: ‘Pid usurious interest form any part of consideration of the note in question? — said answer being as follows: ‘My recollection of the testimony is that about $3 of the principal of the note in question was for usurious interest on one of the two notes which plaintiff had previously given, and which were to be paid off or extinguished by the new note.’ (4) In its answer to the following question : ‘Did the defendant in this case ever take any usurious interest on either of the notes that form a part of the consideration of the note in question?’^the answer being: ‘It is my recollection of the evidence that he did.’ (5) In the following declaration of law: ‘The court is of the opinion that the mortgage which is pleaded in this case as the authority for the seizure of. the property in question and the holding of the same was void, for the reason that it was H used by the defendant for the purpose of protecting him as H surety upon a note, upon which, as agent for the payee, he El was collecting, after maturity, two per cent, a month.’ (6) jj In the following declaration of law: ‘And that the require- || ment of the payment of usurious interest upon á contract of any kind renders that contract, under the laws in force in I this jurisdiction, void.’ (7) In the following declaration of | law: ‘The mortgage is only sued upon in this case, and is j pleaded here as authority for the hold ng of the property, j and it seems that this property was either taken by the I defendant for the purpose of securing himself as surety or I as agent of the paj^ee of the note. If he was the agent of | the payee of the note, she was bound by his acts, and there-1 fore was guilty of usurious consideration for further exten-11 sion of time on the note. If he was acting for himself for H the purpose of protecting himself as sui'ety and taking || usurious interest, his own act vitiated the instrument, and|| makes it a usurious contract.’ (8) In overruling the defend-11 ant’s motion for a new trial.” H [655] It appears that this action of replevin was brought by the plaintiff below, appellee here, to recover possession of certain property included in a chattel mortgage which was executed by appellee to secure the payment of a certain note, and which property had been turned over by the appellee to the defendant below, appellant here, to be sold, in accordance with the terms of said mortgage, to pay and discharge said note. It appears that the .note was given by appellee in discharge and payment of two other notes that had been previously executed by him and had matured. Did one or both of these two notes embrace any usury? If they both did, then the note given in payment of them would be affected or tainted with usury; if one of them did, it would be affected to that extent. The case having been tried by the court without a jury, the findings of fact by the court on that point are contained in the third and fourth specifications of error, supra. It appears that, according to the recollection of the court, one'of the notes had three dollars of usury in it. The appellant insists in argument that, as the court made his findings some weeks subsequent to the hearing, his recollection of the evidence was dim, and that, as a fact, the evidence did not disclose any usury in either of the two original notes. It, however, appears from the findings of the court, as set out in the fifth, sixth, and seventh specifications of error, supra, that the court was of the opinion that charging usury for the extension of a note vitiated the same; but it does not appear from the evidence that the. holder of the note was a party to, or knew of any usury, or that she ever authorized appellant, who according to the findings of the court, was agent for the holder, to charge usury. Call vs Palmer, 116 U. S. 98, 6 Sup. Ct. 301. In fact, the note was sold to the holder by Smith and wife, after its execution, before maturity, and for value. Taking the recollection of the court as correct, only one of the orig [656] inal notes was tainted with usury, and we think the law is well settled that no contract which in its inception is unaffected by usury can ever be invalidated by any subsequent usurious transaction. McEwin vs Humphrey (1 Ind. T. 550); Nichols vs Fearson, 7 Pet. 104; Johnson vs Hull, 57 Ark. 550, 22 S. W. 176; Humphrey vs McCauley, 55 Ark. 143, 17 S. W. 713; Tyler, Usury, pp. 111, 126, 402. The contract on its face did not import usury. Therefore it was necessary to prove some corrupt agreement, device, or shift to cover usury. The fees charged for drawing, acknowledging, and recording the chattel mortgage were legitimate, and usury must be intentionally received, and the burden is on the party alleging it. See Taylor vs Association, 56 Ark. 340, 19 S. W. 918; McAleese vs Goodwin, 16 C. C. A. 387, 69 Fed. 759; Baird vs Millwood, 51 Ark. 548, 11 S. W. 881; Richardson vs Shattuck, 57 Ark. 347, 21 S. W. 478; Thurston vs Cornell, 38 N. Y. 281; Garvin vs Linton (Ark.) 37 S. W. 569; Stillman vs Northrup, 109 N. Y. 477, 17 N. E. 379; Jarvis vs Grocery Co. (Ark.) 38 S. W. 148; Holt vs Kirby, 57 Ark. 256, 21 S. W. 432. Only one of the original notes contained usury, according to the recollection of the court. Hence the note secured, by the moi’tgage could only be void pro tanto, and the mortgage securing the part of the note that is not invalidated by usury was valid and binding, and the appellant, being in possession, is rightfully in possession to secure all of the debt not invalidated by usury, and the appellee cannot maintain this action. Reversed and remanded. Gdayton and Thomas, JJ., concur.