Rosenbluth v. Dunn

Park, C. J. These two cases, being governed by the same principles of law, were argued together, and will be considered together. It appears that the notes in suit were given in renewal of other notes which had been given by the defendant to the plaintiff, for various sums of money advanced previous to the first day of February, 1872, in one case, and previous to the fourth day of March, 1873, in the other; and for sundry amounts as interest on the sums loaned, which far exceeded the rate allowed by law, except in cases where the agreement to pay such greater rate of interest is in writing. It seems to be conceded that the questions made in these cases depend upon the construction which shall be given to two statutes which were passed by the legislature in 1872, and which were in force when these notes w'ere given in renewal. One of these statutes was as follows:—“It shall be lawful to contract to pay or reserve any discount at any rate, and to contract for payment and receipt of any rate of interest; provided however, that no greater rate of interest than six per cent, per annum shall be recovered in any action, except when the agreement to pay such greater rate of interest is in writing.” The other statute was as follows:—“ That all contracts on which any person has taken, accepted or received, or on which any person has agreed to take, accept or receive, by means of any bargain, loan, exchange, conveyance or otherwise, more than the sum of six dollars for the forbearance of one hundred dollars in money, or other property of that value, for a year, and after that rate for a greater or less sum, or for a longer or shorter time, are hereby validated and confirmed and may be enforced, any law to the contrary notwithstanding.” It seems to be conceded, and unquestionably the fact was so, that these notes were usurious in their inception, unless one or the other, or both of these statutes, made them otherwise. We will consider these statutes in their order. The first declares that the agreement to pay a greater rate of interest than six per cent, per annum must be “ in writing” in order to be lawful. The object of this requirement is [624] obvious. It was to put the agreement beyond all controversy, and thereby prevent the injustice that might in many cases be done to the borrower, if the agreement was left to be proved by the oral testimony of the parties. The question then is, was there any agreement in writing in each of these cases, or in either of them, to pay a greater rate of interest than six per cent, per annum for the sums loaned ? The plaintiff claims that, inasmuch as the principal sums stated in these notes embrace not only the sums loaned, but the interest added thereto for the length of time the notes were to run, and inasmuch as the notes contain a promise to pay the entire amount, therefore the rate of interest can be ascertained, and that rate was agreed to in writing by the promise to pay the amounts of the notes. But this claim involves all the mischief that the statute was intended to remedy. It does not appear by these notes how much was principal and how much was interest. These facts would have to be shown by parol testimony; and hence the rate of interest would in effect be proved by parol. We entertain no doubt that the statute was intended to mean just what it says, that the agreement to pay a rate of interest more than six per cent, per annum must be in writing, and must appear upon the note, or in a separate instrument referring to the note, or the note must show in definite terms how much was principal, and how much was interest for the length of time the note has to run. We think therefore that these notes do not contain agreements in writing to pay a greater rate of interest than six per cent., and that therefore this statute does not aid the plaintiff. Does the second statute referred to make the interest reserved in these cases lawful? This statute was unconditionally repealed by the legislature in 1873 before anything whatever had been done for the collection of these notes. The statute is entirely retrospective in its terms and has no reference to transactions which should thereafter occur. It therefore does not apply to the renewal note of March 4th, 1873, for whatever agreement may have been made in regard [625] to the interest which entered into that note, was made after the passage of this act. And for the same reason the statute does not apply to any agreement that may have been made in regard to a large part of the excessive interest that entered into the renewal note of January 3d, 1873. This being the case it is manifest that there is error in the judgments complained of. This disposes of the cases and renders it unnecessary to consider what effect, if any, the repealing act of 1873 had upon the small amount of excessive interest embraced in the note of January 3, 1873, to which the act of 1872 could apply, and we therefore leave that question undetermined. There is manifest error, and the judgments below are reversed. In this opinion the other judges concurred; except Pabdee, J., who was of opinion that, as the notes embraced in their amount all the interest that was to be paid, leaving nothing to be proved by parol evidence, the agreement to pay the higher rate of interest was in writing within the meaning of the statute.