Durkee v. City Bank of Kenosha

By the Court, Dixon, C.J. TUs a°tiorL is brought under the provisions of tbe act of March 10th, 1851, prescribing anq limiting the rate of interest, to recover treble the amount of various sums of money, alleged to have been paid , z. ° _. by the appellants to the respondent as usury upon divers loans made by the latter to the former, the particulars of which are stated in the complaint. The complaint, which is somewhat voluminous for an action of this kind, contains fourteen counts, each of which embraces the details of several different transactions. It alleges that on the seventh day of July, 1855, and thence hitherto, the appellants have been associated and doing- business as dealers in lumber at Kenosha, under the copartnership name and style of Durkee, Truesdell & Co.; that upon that day it was corruptly and against the the form of the statute, agreed between them and the respondent, that the latter should lend and advance to them, as such copartners, such sums of money as they should require to carry on their said lumber business, in such amounts from time to time as the respondent could well loan, and the parties might deem proper and expedient ; that such loans were to be made upon the promissory notes of the appellants, with á' single nominal indorser, and made payable at some time within sixty-five days from their respective dates, which time was to be expressed therein ; that the respondent was to receive interest in advance at the rate of ten per cent, per annum on each note given for an original loan, and like interest on each renewal and extension thereof until finally paid; that no note was to be renewed or extended for a period exceeding sixty-five days at any one time; and that upon each renewal or extension, and as a condition thereof, there should be paid by the appellants to the respondent, in addition to the legal interest already paid thereon, the current rate of exchange between Kenosha and the city of New York upon the amount of such note, which rate of exchange is averred to have ranged from one to five per cent. This agreement for exchange is alleged to have been made for the purpose of hiding the corrupt and ■usurious nature of the transaction, and with intent to evade the spirit and object of the statute, by enabling the respon [219] dent, under that pretext, to ask and receive a greater rate of interest tban is allowed by it. It is furthermore alleged none of tbe notes were to be, or were in fact, transmitted to or used in New York, but that all were discounted and paid at tbe office of tbe respondent in Kenosba. Then follows in tbe first thirteen counts, a minute history of tbe pecuniary dealings of tbe parties in pursuance of tbe agreement, from its date down to tbe first day of December, 1857. To these counts the respondent demurred for want of a sufficient statement of facts to constitute a cause of action. Tbe fourteenth count is not demurred to, but, so far as tbe present issue is concerned, is conceded to be good, and therefore its contents need not be noticed. Tbe first count recites the particulars of a loan of $2,000, made on tbe day of the date of the agreement, to which farther sums were subsequently added, and traces it down through the several renewals of the note which was given for it, to the first day of December, 1857, when it is alleged that the last 'note thus given was paid. Tbe first note was payable to tbe order of William White, the nominal indorser, sixty days after its date, at tbe office of tbe respondent. It was renewed some ‘ thirteen or fourteen times before it is alleged to have been finally paid, and upon each renewal, exchange at the rate of one per cent, was, in tbe language of tbe complaint, “ required of and from the plaintiffs,” in addition to the interest at the rate of ten per cent, per annum, which was invariably paid in advance. Tbe amounts thus required as exchange on each renewal, are specifically stated. Tbe count closes with an averment that tbe several sums of usurious .interest thus required by tbe respondent under pretense of exchange on New York, and which amounted in tbe aggregate to $427 50, were paid by tbe appellants to tbe respondent on the first day of December, 1857, and within one year next before tbe commencement of tbe action, and claims a recovery of treble tbe amount thereof. The next eleven counts are similar in form and substance to that already alluded to, and contain narrations of as many different loans, alleged to have been made in pursuance of the same agreement, at various intervals between tbe 24th [220] -^ovem^er> 1855, and tbe 20th day of April, 1857. The notes given to secure these loans were in like manner renewed, until the first of December, 1857, at which time the principal sums loaned are averred to have been paid, and at A , , . t which time also the several sums required as exchange upon the various renewals, are said to have been paid. The only point in which the notes thus given and renewed differ from those mentioned in the first count, is, that most of them were drawn payable in New York. The thirteenth count avers that on the first day of December, 1857, the respondent held twelve notes against the appellants, which were payable in New York, and amounted in the aggregate to $3,300, and which had theretofore been discounted for the appellants by the respondent; that the interest thereon, at the rate of ten per cent, per annum, was deducted at the time the same were discounted; that between the first and tenth days of that month, the appellants paid all of said notes to the respondent at its banking house in the city of Kenosha; and that in addition to the principal sums due, the interest having been paid as above stated, the respondent exacted and the appellants paid, under pretense of exchange, but, in truth and in fact, as usurious interest, the further sum of $841 71. The payment of this sum is alleged to have been made in pursuance of the same agreement, and judgment for treble the amount is demanded. The first objection taken by the respondent is, that it does not appear from the complaint that the alleged usury was paid within one year next before the commencement of the action, which was on the 29th day of November, 1858. In support of this objection, it is urged that the facts stated in the complaint show that the supposed exchange was paid at the time of each renewal, and not on the first day of December, 1857; that as each new note was given for the exact amount of the old one, and as the note must be deemed to represent the principal sum loaned, it necessarily follows that the usury, if paid at all, was paid at the time each note was given. It may be confessed that the entire history of the transaction as detailed in the complaint, leaves some room for suspecting that such might have been the case; nevertheless, we [221] cannot, in tbe face of tbe averments that it was paid on tbe first day of December, 1857, say that it was not. Tbe guage of those parts of tbe complaint in wbicb tbe several renewals are described, is that, on eacb renewal, such and . ' _ such sums were “ required under pretense of exchange, it is not alleged that they were then paid, but at tbe close of eacb count it is averred generally that all tbe sums thus required were paid on tbe first day of December, 1857. We are not informed why their payment was deferred; whether they stood as a matter of account; whether tbe appellants gave their notes for them, or what tbe particular arrangement was ; but are simply told that they were required, and when they were paid. Neither are we informed what amount of money was paid on tbe first day of December. If we were, and it appeared that only so much was paid as was sufficient to pay tbe sums originally borrowed, it might afford still stronger ground for inferring that tbe alleged exchange was paid upon eacb renewal. But even then it might be doubtful whether tbe plain and positive averments as to tbe time of payment, wbicb are admitted by tbe demurrer, could be thus rebutted. As it is, we cannot entertain a doubt that tbe respondent must abide by tbe facts wbicb it has admitted to be true, and cannot be allowed to say that tbe exchange was paid at any other time. Tbe second point of objection has been already decided adversely to tbe respondent by this court. It is that money claimed and paid as exchange between different places, cannot constitute usury under tbe statute. In tbe case of Towslee vs. Durkee, decided at tbe present term, [12 Wis., 480], it was held that where such exchange was claimed and taken, not in good faith, but with intent to evade tbe statute, it was usury. Tbe complaint is not defective in this particular. It is averred that tbe claim of exchange was merely colora-ble, and was made for tbe express purpose of escaping tbe penalties of tbe statute. Tbe third objection is, that it affirmatively appears from tbe complaint that tbe principal sums have not been paid or tendered, and that no action can be maintained until that has been done. Tbe information as to tbe non-payment of tbe [222] principal is gathered or inferred from the facts stated in the fourteenth count. This count is not demurred to, and we cannot look into it for the purpose of either aiding or defeating those which are. Upon separate demurrers, each count must stand or fall upon its own merits. But even if it be conceded that the principal is not paid, it would seem that that circumstance would not preclude the borrower from bringing his suit. It is the payment of the usury as such which gives the right of action. See Wood vs. Lake, decided at the present term, [ante, p. 84], and authorities there cited. If it were otherwise, the statute would be wholly inoperative in all cases where the time fixed for the payment of the principal exceeded one year from the time when the usurious interest was taken. The fourth and fifth points have been already determined in the case of Rock River Bank vs. Sherwood, 10 Wis., 230. It was there decided that the provisions of the statute against usury applied as well to banks as to natural persons, the only difference being that the former are restricted to interest at the rate of ten per cent, per annum, whilst the latter may receive twelve. It therefore follows that a bank may be prosecuted for three times the excess of its legal limit, in the same manner as a natural person who has exceeded his. The order of the circuit court sustaining the demurrer, is reversed, and the cause remanded for further proceedings in accordance with this opinion.