Ricker v. Clark

The opinion of the court was delivered by Royce, Ch. J. The question presented by the report is, what amount should be decreed as the sum due to the defendants upon the two notes executed by the orator on the 5th day of June, 1871. The orator claims that upon the facts found by the master there should be deducted from the amounts apparently due certain sums paid by him as usury. No claim is made that any usury is contained in the note for $3,710. It- is found that the sum of $121.76 as extra interest, was included in the note for $1,451.92. Interest was paid by the orator on both of said notes at the rate of ten per cent, annually, to June 5, 1876 ; and the question is, what if any of the interest so paid shall be applied as payments on said notes ? The rule as to what constitutes usury within the prohibition of the law is comprehensively stated by Judge Barrett [298] in Farmer's Bank v. Burchard, 33 Vt. p. 370, to be that: “ There must be an intention, knowingly to contract for, or to take usurious interest; for if neither party intend it, but act Iona fide and innocently, the law will not infer a corrupt agreement. When, indeed, the contract upon its face imports usury, as by an express reservation of more than legal interest, there is no room for presumption, for the intent is apparent. But when the contract on its face is for legal interest only, then it must be proved that there was some corrupt agreement, or device, or shift to cover usury.” The notes upon their face do not require the payment of any thing beyond legal interest. Is it found as to the note for $3,710, that there was any intention to contract for the payment of usurious interest, or that there was any corrupt agreement, device or shift to cover usury ? In our judgment the facts found by the master refute any such intention or agreement. When the defendants agreed to raise the money for the orator, for which the note for $3,710 was given, it was understood that the defendants had no money to loan — and that they would be obliged to borrow it upon such security as they might be able to give; and the orator agreed that he would pay such interest, not exceeding ten per cent, as the defendants might have to pay for the money. The defendants acted for the orator, and at his request in obtaining the money for him, and upon his assurance that he would pay them, just what they had to pay as interest, and no more, both parties then understanding that more than the legal rate would have to be paid. Upon those facts it cannot be found that there was an intention to contract for usurious interest. The claim for usury paid is based upon the hypothesis, that the party against whom the claim is made, has received to his own use more than the legal rate of interest which he holds against equity and good conscience. Here the money which is shown to have been paid by the orator to the defendant, was not paid for their benefit. It was paid and applied for the. benefit and protection of the orator, in fulfillment and discharge of his contract. It was not held by the defendants against equity and good conscience ; for they were obliged to pay the same money or the same amounts as interest to the parties of whom they made the loan. It is found that the [299] defendants since the 5th of June, 1878, could have hired the money at six per cent.; and the agreement of the orator to pay such interest as the defendants might have to pay, must be construed as requiring them to obtain the money at as low a rate of interest as they could by the use of reasonable diligence. Hence, it was their duty to have carried the loan at six per cent, after the 5th of June, 1878. And whatever was paid by the orator above that rate after that time should be applied as payment. It was evidently the expectation of the parties that the orator was to secure the defendants for the money they might procure for him. And the giving of the note and mortgage does not affect the question made as to the payment of usury. If the agreement of the parties had not any portion of it been reduced to writing, it would have stood for the same legal consideration and adjudication that it does now. It was the right of the orator to have paid the note, and thus have determined his obligation to pay interest. It was his duty to have done so, or to have notified the defendants that he should not pay the interest that he agreed to pay when the loan was made. The loan was carried by the defendants after the time at first intended, apparently for the accommodation of the orator without pecuniary benefit to them- — and upon the understanding by them as evidenced by the orator’s payment of interest that he intended to abide by his agreement. It would be gross injustice to allow the orator to repudiate that agreement and permit him to recover the money so paid. The wise and beneficent laws that have been enacted to protect the borrower against the oppression and extortion of the usurer, were not designed to work out any such result. And we are not acquainted with any judicial construction that has been given to those laws that compels us to aid in any such purpose. The case of Jackson v. Jackson, 51 Vt. 253, is in principle like this; and what is said by the judge who drew up the opinion, is as well applicable to this case as to that. The master has found that the orator agreed to pay the defendants two per cent, per annum, upon the whole sum borrowed by them, for and during all the time they should keep said loans running, and until the orator should repay them, in addition to [300] the interest they should have to pay. This was to be for their time, trouble and expense, and their credit and names, and that the two per cent, so agreed to be paid, was a reasonable compensation for carrying said loans. In Auriol et al. v. Thomas, 2 Term, 52, it was held that extra charges made by the indorsers of a bill of exchange, in excess of the legal interest where there had been an agreement for their payment were not usurious, and might be allowed if they were fair and reasonable, and not a color for usury. See also Lloyd v. Williams, 3 Wilson, 261; Hammett v. Zea, 1 B. & P., 153, and Corstairs v. Stein, 4 M. & S. 192. It will be seen by reference to the authorities cited on defendants’ brief, and especially the 2, 14, and 30 Conn., that that is the rule adopted by the courts in this country. So that there should have been found due to the defendants on said note on the 5th day of June, 1881, the sum of §5,652.68. The note for §1,451.92 was given for a past indebtedness of the orator to the defendants ; and the sum of §121.76 which was included therein as extra interest should be deducted ; ' and the balance of §1330.16, is subject to the payment of six per cent, interest annually. Any agreement for delay of payment of that note which required the payment of anything beyond legal interest would be usurious. There should have been found due to the defendants on that note on the 5th day of June, 1881, §1,286.45, making the sum of §6,939.13, which was due to the defendants on said notes on the 5th day of June, 1881. It is claimed by the defendants that the chancellor’s order in relation to costs was erroneous. It appears from the report that other matters besides the ascertainment of the sum due on the above notes was referred. And we have no data from which we can judge what proportion of the costs before the master or in the Court of Chancery was incurred in the investigation of matters connected with said notes. The general rule is, that the Supreme Court will not reverse the order of a chancellor upon the question of costs. And there is nothing here disclosed that warrants a departure from that rule. The decree of the Court of Chancery is reversed with costs to the defendants in this court, and cause remanded, with directions [301] to enter a decree for defendants in accordance with mandate sent to that court. The decree of the Court of Chancery is reversed, and cause remanded with mandate, that the sum due to the defendants from the orator on the first mortgage named in the decree, on the 5th day of June, 1881, was $6,939.18, (instead of $4,972.33,x) and that the orator be permitted to redeem upon the payment of that sum, together with the other sums found due by the chancellor, with interest, and $2.25 of the master’s fees, at such time as may be ordered by the Court of Chancery, and on failure to redeem the bill to be dismissed with costs, and the defendants to have judgment in the suits enjoined with costs. And if the orator shall redeem as ordered, the injunction granted against the prosecution of said suits is to be made perpetual, without costs to either party.