Culver v. Bigelow

The opinion of the court was delivered by Peck, J. The charge of the court that if Safford, in paying the money and taking the assignment of the notes and mortgages, acted in his own interest and behalf and not as the agent or in behalf of the plaintiff, the payment of the notes and interest computed at compound interest would not be the payment of usurious interest, was correct. A fund safely invested, even at interest not exceeding the legal rate,'is often regarded by the creditor of greater value than* the nominal amount of principal and accrued interest. This is more especially true of mortgage securities. The sale of such securities at a premium cannot subject the party to an action to recover back the premium on the ground of usury-. It makes no difference in such case whether the premium is computed in the contract of sale at a certain per centum in excess of the legal rate for the time past, or whether it is stated at a gross sum, or the result arrived at by computing compound interest. But in that part of the charge in which the court told the jury* that the only question was whether Safford [254] acted as the agent of Culver and in Culver’s behalf, or in his own interest and behalf; and that if Safford, in the transaction at Burlington, acted as Culver’s agent and in Culver’s behalf, then it was precisely the same as if Culver had paid the money and taken a dischai’ge instead of an assignment of the notes and mortgages ; and that all excess over annual interest on the notes would under the circumstances be usury, &c.,—we think there was error. Assuming that the excess over annual interest would be usury, .and could be recovered back by the plaintiff if he had paid it in discharge of the notes and mortgages, it is not necessarily so when paid by Safford and an assignment taken to him, even if Safford, in the transaction, as between him and Quiver, acted as the agent of Culver. It would be so upon the assumption that compound interest paid by the debtor is usury, if the defendant knew that Safford was acting in behalf of Culver, notwithstanding the transaction was in form a sale and assignment to Safford. But as the defendant had a right to make a sale and assignment of the notes and mortgages at a price exceeding the amount of principal and legal interest due, without subjecting himself to liability to refund the excess, if, when he made the transfer, he for good reason supposed it was a sale to Safford, and that Safford was making the purchase in his own behalf and not for the benefit or in behalf of. Culver, and neither the defendant nor Henry had any notice to the contrary, the liability of the defendant would be no different than if the transaction were in fact what it thus apparently was, a purchase by Safford in his own behalf. It is stated in the case, that “ there was no evidence that the relations of Safford and Culver to each other, orXlulver’s purpose in having the assignment made to Safford, was communicated to Henry or to the defendant.” But we think the evidence detailed did at least tend to show that the defendant was affected with notice that Safford was acting in the interest and behalf of Culver, in view of what transpired at Chester between Henry and Culver and Safford, and the purpose of going to Burlington and what there transpired ; and tended to show that Henry so far participated in the transaction as to make notice to him notice to the defendant. This question of notice of the character in which Safforjl acted is, however, [255] unimportant in one event, that is, in the event of the jury finding the fact as the plaintiff’s evidence tended to show, that no more was claimed by the defendant or Henry than was actually due, and that the money was paid upon the faith of an assurance that if there was anything wrong in the cast it should be made right. Where a party by simple contract deals with an agent who does not disclose the fact of his agency, he may be made liable in a suit in the name of the principal, to the same extent as if the agent had been principal and the suit had been brought in his name. But even if compound interest, when understandingly and voluntarily paid by a debtor, is usury, and subjects the creditor to an action to recover it back, yet upon the theory of the evidence on the part of the defense, it follows from what is already said, that the question of notice that Safford was acting in behalf of Culver, the real debtor, ought to have been submitted to the jury. This portion of the charge is also erroneous in this, that it assumes as matter of law that the payment of compound interest is the payment of usury to the extent of the excess over annual interest, and that it can be recovered back. Although courts will rarely, if ever, as between debtor and creditor, enforce an executory contract for the .payment of compound interest, yet the payment of it is not necessarily in a legal sense the payment of usury; and if a debtor knowingly, understandingly and unconditionally pays it under no peculiar circumstances of oppression, it cannot be recovered back. Judgment reversed, and new trial granted.