Citizens Bank v. Hoyt & Co.

Bloodworth, J. (After stating the foregoing facts.) Under the rulings in Croom v. Jordan, 20 Ga. App. 802 (93 S. E. 538), and West v. Atlanta Loan & Savings Co., 22 Ga. App. 184 (95 S. E. 721), the court erred in directing a verdict for the defendants. In the opinion in the Croom case Judge George said: “ It is insisted by the plaintiff in error that the mortgage executed .by him is absolutely void. The uncontroverted evidence is to the effect that the mortgage contained an amount as interest in excess of five per cent, per month. Under the law of this State such a contract is unlawful, and the act of reserving, taking, or charging a rate of interest greater than five per cent, per month for the loan or advance of money or forbearance to enforce the collection of money, is made penal. Section 3444 of the Civil Code and section 700 of the Penal Code would have the effect (nothing further appearing) to sustain the contention made by the plaintiff in error, and defeat the mortgage in this case, manifestly made in the face of the plain provisions of the law of this State, referred to above. However, the statutes and the decided cases of the [225] courts of last resort in this State on the subject of usury provide for the civil status of usurious contracts. As to contracts made prior to the acts of 1916, the excess interest, that is the amount charged over and above the legal rate of interest, shall be forfeited. The status of a mortgage infected with usury, when the subject of an action in a civil court, as in this case, is thoroughly established by the decisions of this court and the Supreme Court. Such a mortgage is not void, except as to the usury included therein, and may be enforced for the collection of the actual principal and the legal interest thereon.” In the West case, supra, Judge Harwell said: “ That the note charged or reserved a rate of interest in excess of the legal rate would not make it void. If usurious, the effect is simply to forfeit the excess of interest above the legal rate; the note and contract having been made on May 25, 1916, prior to the act of the legislature, approved August 18,1916, which forfeits all interest in a usurious contract. Code section 3444, which makes it a misdemeanor to charge more than a certain rate, does not attempt to annul the contract. The section following (3445) says: ‘The preceding section shall not be construed as repealing or imparing the usury laws now existing, but as being cumulative thereto/ A contract is not rendered void under the laws of this State by the fact that it is tainted with usury.” The Civil Code (1910), § 4215, provides that “A contract to do an immoral or illegal thing is void. If the contract be severable, that which is legal will not be annulled by that which is illegal.” Hsury can be severed from legal interest. Applying to the facts of this case the principle announced in the foregoing decisions, the plaintiff would be entitled to recover the amount of the principal sued for and legal interest, after deducting the amount of usury incorporated therein; and the question as to the amount of the usury should have been submitted to the jury. Judgment reversed. Broyles, C. J., and Luke, J., concur.