Dole v. Northrop

By the Gourt, DowNER, J. This is an appeal from an order allowing the defendants below to amend their answer so as to set up the defense of usury. By the first answer the defendants set up a payment of $180 on the note on which the suit was brought, and “ demanded that that sum be allowed as set-off and payment against and upon sai<J note.” By the amended answer the defendants allege, in substance, that the plaintiff loaned to the defendants $1000, for which they gave their note with twelve per cent, interest, and at the same time the parties agreed, the defendants to pay and ■ the plaintiff to receive two per cent, per month in addition to the twelve per cent, interest expressed in the note; that on or about the 18th day of April, 1859, the defendants paid to the plaintiff $90, and two days thereafter $90 more — in all $180, which was paid and received as corrupt and usurious interest. It is evident, or at least we may reasonably infer from the pleadings, that this $180 is the [252] same money or claim set up in the original answer as a payment or set-off, and if paid, whether paid as usury or not, might have been proved under the first answer, and the defendants received credit for the amount of money the plaintiff had actually received; and the plaintiff, under those pleadings, would have had a right to recover the amount of money actually loaned, and interest as agreed in the note, less the payment or set-off, if proved. This would have been doing equity between the parties, according to the principles formerly adopted by the court of chancery, and still acted on, except where altered by statutory provisions, on granting relief against usurious contracts. Dunham v. Dey, 15 Johns., 556; Jordan v. Trumbo, 6 Gill & J., 103. By the provisions of the statute of 1859, all usurious contracts are void. According to the previous statute, they were good for the sum actually loaned, but no interest could be recovered. Such statutes have always been regarded as highly penal; and although the borrower, or party to the corrupt agreement, was allowed to avail himself of these provisions, yet he could waive the defense of usury, and courts have generally refused him leave' to amend his plea or answer for the purpose of setting it up. The equity rule, requiring the borrower to pay, or offer to pay, the amount actually loaned and legal interest before the aid of the court would be given, has generally been regarded as gound in morals. As between the borrower and the lender (both being guilty of violating the law), the former ought, in equity and good conscience, to pay the amount actually loaned; and, if he does not, must be regarded as withholding that which morally, though not legally, rightfully belongs to the lender. If this be so, then the borrower should at least use ordinary diligence in setting up his defense. In this action the first answer was served April 22, 1862; the order granting leave to file the amended answer was made September 18,1868. Between these dates there had been four [253] or five terms of the circuit court, general and special; judgment had been entered in the action, and a new trial granted. It appears to us, under the circumstances, it was an abuse of discretion to allow the amendment; and we think the order is appealable. In the case of Newman v. Kershaw, 10 Wis., 333, the court held that an answer setting up the defense of usury defectively might be amended. The only question before the court in that case was, whether the order sustaining the demurrer to the answer should be reversed or affirmed. It was affirmed because the answer was defective in substance. We are inclined to think the remark that the answer might be amended should be regarded as an obiter dictum; but the court in that case did not decide as to the terms of amendment, and there is nothing in the opinion inconsistent with the idea that it would have required the defendant to .pay or offer to pay, and give judgment for the amount actually loaned and legal interest, as a condition of the amendment. The order of the circuit court is reversed, with costs.