McCullough v. Mitchell

STONE, J". When this case was in this court at a former term (59 Ala. 179), the recital of the evidence in the bill of exceptions showed “ that neither Miss Killen, nor her husband, the plaintiff, knew any thing of usury, or participated in any manner in the original usurious transaction. The [253] first time the plaintiff heard of the usurious transaction, was after the maturity of the note in suit.” We said: “ By the renewal of the note to the subsequent holder, who did not participate in the usurious transaction, gave full value for the claim, and had no knowledge of the usury, the defendant precluded himself from relying on that defense.” The recital in the present record is, “ There was evidence tending to show that, at the time Miss Killen took defendant’s note, she was informed there was usury in it, and that 12-| per cent, per annum had been included in its face. She took that note, and the other papers, as they stood.” There is, then, this difference in the two presentations of the question: in the former record, it was affirmatively shown that Miss Killen did not know of the usury, when she received the note in payment; in the present record, there is testimony tending to show that she was informed there was usury (12¿ per cent.) in the note when she took it. The policy of laws for the suppression of usury has been frequently assailed, but without lasting success.- The experiment of abolishing all restraints on the rate of interest was once made in this State ; but the result was so disastrous, it was soon abandoned. Most men are hopeful of future success, and, to relieve a pressing want, they will promise more for present use of money, than it is worth, or than they are able to pay. Hence, the policy of usury laws. Legislators refuse to strike them from the statute-books, and courts enforce them in their integrity. They impart a taint to all transactions into w'kicli they enter, which can be purged, or eliminated, only in one of two ways: either by reformation of the contract, rejecting all usurious taint, or by a renewal of the note or contract, after it has passed into the hands of an innocent purchaser, without notice of the usury. Simple renewals of the evidence of a debt, infected with usury, stand for nothing. — Jackson v. Jones, 13 Ala. 121; Pearson v. Bailey, 23 Ala. 537; Payne v. Trezevant, 2 Bay (S. C.), 23; Vickery v. Dickson, 35 Barb. 96; Garth v. Cooper, 12 Iowa, 364; Chadbourne v. Watts, 10 Mass. 121. In Torrey v. Grant, 10 Sm. & Mar. 89, the court (C. J. Sharkey) ruled, that a note, or other security, given in renewal of a usurious note, was usurious; and that an indorser of a note, who takes it with notice that it is tainted with usury, takes it subject to that defect. So, in all the cases, which hold that an indorsee or transferree of usurious paper can recover, it will be found either that the maker, by some act of his, had, estopped himself from setting up the defense of usury, or that the indorsee became the owner of the security without notice of the usury. In this State, which allows all defenses to non [254] commercial paper which would avail between the original parties, to be made against the indorsee, though he purchased before maturity, to cut off the defense of usury against such non-commercial paper, there must be more than a transfer of the paper to one who receives it in good faith, and without notice of the usury. There must, in addition' to this, be a renewal of the debt, by giving a new security, payable to the transferree. This, we have held, amounts to a w'aiver of the defense of usury.—Cameron v. Neal, 3 Ala. 158; Palmer v. Severance, 8 Ala. 53; Gee v. Bacon, 9 Ala. 699; Mitchell v. McCullough, 59 Ala. 179; Chadbourne v. Watts, 10 Mass. 121; Smedburg v. Whittlesey, 3 Sandf. Ch. 320; Powell v. Waters, 8 Cow. 669; Young v. Berkley, 2 N. H. 410; Allison v. Barrett, 16 Iowa, 278; Tyler on Usury, 381 et seq. The City Court erred in the charge given at the request of the plaintiff. Reversed and remanded.