First National Bank v. Rambo

Lumpkin, J. (After stating the foregoing facts.) 1. Was the transaction controlled by the Georgia law, or did the law of Florida (which the testimony showed permitted the [669] charging of ten per cent, interest) apply? It appeared that Mrs. Bambo and Powers & Company lived in Brooks county, in this State, while Wimberly lived in Florida; that the land lay in Brooks county; and that the notes and other papers were there executed. It did not appear that the notes given to Wimberly were made payable at any other place, or that the contract was to be performed elsewhere than in Georgia. This was a Georgia contract, and governed by Georgia law; and the mere fact that the negotiations preliminary to the execution of the papers took place in Florida did not alter the case. Civil Code (1910), § 3430; 1 Dan. Neg. Inst. (6th ed.) § 90; Taylor v. American Freehold etc. Co., 106 Ga. 238 (32 S. E. 153); Martin v. Johnson, 84 Ga. 481, 486 (10 S. E. 1092, 8 L. R. A. 170). 2. Section 3436 of the Civil Code (1910) declares: "It shall not be lawful for any person, company, or corporation to reserve, charge, or take for any loan or advance of money, or forbearance to enforce the collection of any sum of money, any rate of interest greater than eight per centum per annum, either directly or indirectly by way of commission for advances, discount, exchange, or by any contract or contrivance or device whatever.” And section 3442 declares: "All titles to property made as a part of an usurious contract, or to evade the laws against usury, are void.” According to the undisputed evidence, Owens made to Mrs. Bambo a bond for title, and she gave notes for the balance of the purchase-money. The bond was transferred to the bank as security. Wimberly agreed to take up the indebtedness and give time. It was not a purchase by him and a resale to her, but he took the title as security. The deed was made by Owens to him; but, as between the parties, it was in substance a security given by Mrs. Bambo to him. She remained in possession. The original purchase-money notes made to Owens were not transferred to Wimberly; but they were treated as paid, and a new debt was created for an advance made by Wimberly. The indebtedness due to Owens then amounted to about $2,100 or $2,200. He was willing to take $1,900 in settlement. Wimberly actually paid $1,600, and Mrs. Bambo $300. Wimberly took from her notes which included principal and interest, and which accountants testified included something more than ten per cent, interest on $1,600, the amount actually advanced by him. According to his own evidence, this was [670] done because he ivas unwilling to take eight per cent, for the use of his money, and required ten per cent. He also testified that he had a certain person figure the amount, and told such person that he was “interested in $1,725,” thus giving, as a basis for calculating the amount of the indebtedness for which Mrs. Eambo was to . give notes, a sum in excess of the real amount advanced for her, by him. Calling this a discount, and claiming that Wimberly was to get ten per cent, for his money, but Mrs. Eambo was to pay eight per cent., while Owens, through the medium of a so-called discount, contributed the other two per cent., was one of those diaphanous devices which the statute intended to prevent. Taking the evidence most favorably to the defendants, there was none which authorized a verdict finding such an arrangement not to be usurious. The verdict was contrary to law. 3. Under the rulings made in the preceding divisions of this opinion, the deed from Owens to Wimberly was to secure a usurious debt, and was consequently void. Instead of the land being conveyed by Owens to Mrs. Eambo and by her to Wimberly, Owens made the conveyance directly to Wimberly, the debt of Mrs. Eambo to Owens was discharged, and she gave notes to Wimberly for the amount advanced by him, with usurious interest, and took a bond for title from him. The transaction was expressly for the purpose of securing to Wimberly more than the rate of interest which could be lawfully charged under the Georgia law, and its substance was not changed by making one conveyance instead of two to accomplish that result. National Bank of Tifton v. Smith, 142 Ga. 663 (83 S. E. 526); Sharpe v. Denmark, 143 Ga. 156 (84 S. E. 554). Mrs. Eambo remained in possession, with the purchase-money paid to Owens. Wimberly was a creditor for the amount actually due him, but his security was lost by being infected with usury. The bank holds the bond for title executed by Owens to Mrs. Eambo and transferred to it as security. By the transfer it was subrogated to her rights thereunder, at least to the extent of the' secured debt, although the bond was not a negotiable instrument in the legal sense of that expression. Walker v. Maddox, 105 Ga. 253 (2), 254 (31 S. E. 165). Clearly the bank has a standing in equity against her and a right to attack as void for usury a deed which it was claimed superseded and outranked the bond for title held by it. [671] If the deed from Owens to "Wimberly was void, a decree requiring Wimberly to make a conveyance to the bank would be a non sequiter. We need not now declare in advance what would be a proper decree under the other prayers. Powers & Company were not parties, but no point was raised as to that fact by proper pleading. The verdict being contrary to law, a reversal results. Judgment reversed. All the Justices concur.