Morton v. Rutherford

By the Court, Cole, J. However unconscionable tbe defense of usury may be in the light of morals and good conscience, yet it is very clear that courts have no duty but to enforce it when clearly established, so long as prohibitory laws upon tbe subject are enacted by tbe legislature. In this case, if the contract set forth in the answer was really made as therein stated, there cannot be a particle of doubt but it was usurious. The counsel for the respondent argues that because the contract to receive a greater rate of interest than 12 per cent, was not embodied in tbe note and mortgage, therefore it does not fall within tbe prohibition of the usury law of 1851. But this is a mistake, and contrary to the construction which we have uniformly placed upon that statute. That law unquestionably prohibits a loan of money for a greater rate of interest than 12 per cent., and avoids tbe entire contract where more than that rate is reserved and agreed to be paid. Courts have uniformly held that it was entirely immaterial in what manner or under what pretense the usury is taken. From the necessity of the case they disregard tbe form and examine into tbe real nature and substance of tbe transaction. We have no idea that tbe statute renders only those usurious contracts void where, [310] the usury appears upon the face of the instrument. It is leveled at all usurious contracts, and renders them void. And it is quite immaterial that a portion of the contract is evidenced by a note and mortgage bearing a rate of interest the parties were permitted to contract for, if there is in addition a separate oral promise to pay usurious interest. The law condemns the whole transaction, and visits it with the penalties of usury. So that if we are satisfied from the testimony that the real contract was, that the borrower should pay the principal sum mentioned in the note with 12 per cent, interest from date until paid, and in addition thereto was to deliver the lender twelve cords of fire-wood each year until the maturity of the note, and that these were the conditions of the loan, there can be no doubt but the contract was usurious and rendered void by the law just cited. Does then the evidence show that such was the real agreeement and contract of the parties in respect to the loan ? This question we think must be answered in the affirmative. It is true that there is something of a conflict upon the point, but to our minds the decided weight of testimony is in support of the answer. The respondent swears that he was to receive only 12 per cent, interest for the use of his money, and that there was no understanding or agreement that he was to receive in addition wood or anything else as a consideration for making the loan. There are some improbabilities about his statements, especially those relating to what occurred on the 10th and 11th of August, when the transaction was finally consummated, which tend to shake the credibility of his testimony. And it is but fair to add that his testimony derives some support from that of several other witnesses, who swear to declarations or admissions of the appellant that he was to pay only 12 per cent, interest for the use of the money. But this species of evidence is always very unreliable, for the most obvious reasons. On the other hand, the appellant swears positively that the agreement was, that in addition to the 12 per cent, interest stipulated in the note, he was also to pay twelve cords of [311] fire-wood per annum till tbe maturity of the note. His testimony as detailed in the bill of exceptions will bear scrutiny quite as well as that of the respondent. But moreover he is sustained by the direct and positive evidence of Martin and Brown, who swear as to what the contract was. They are disinterested and impartial parties, so far as we can discover, and speak in regard .to facts of which they profess to have been personally cognizant. It is not possible for them to have been mistaken as to the terms of the agreement, and what rate of interest the respondent exacted for the use of his money. The nature of their testimony is such that it must either be accepted as the most direct and satisfactory of human testimony, or must be utterly rejected as totally false. We see nothing in the case which authorizes the inference that these witnesses were guilty of peijury. We are disposed to accept their statements as being substantially correct, particularly as there are no opposing circumstances which overcome or counterbalance them. Subsequent legislation is relied on to show that the defense of usury is not available. By the law in force at the time the contract was made, it was usurious and void. To the same effect was the law when this suit was commenced. And by the law of 1856, a usurious contract was declared valid and effectual only to secure the repayment of the principal sum loaned. But how this latter enactment, even if it attempted it, could render valid an antecedent contract which was void, we do not comprehend. But the law of 1856, which has been abrogated, can have no bearing upon the question. The defense of usury is doubtless available, and we are constrained to say that it is fully established by the evidence in the cause. The judgment of the circuit court must be reversed, and the cause remanded with directions to enter judgment for the appellant, declaring the note and mortgage set forth -in the complaint void on the ground of usury.