Allen v. Dunn

Kirkpatrick, 0. On the 4th day of September, 1886, Priscilla. Dunn procured a loan of $600 from the American Investment [832] Company. A note and mortgage were executed to P. 0. Refsil, wbo seems to have been acting as a trustee for the investment company. A mortgage was given on certain lands in Garfield county to secure the loan. Soon after the note and mortgage Avere made, they Avere sold to the trustees of the estate of William S. Pierson. Subse,-quently, and after the commencement of this foreclosure proceeding, the trustees died, this cause having been re-Adved in the name of the present appellants. The defense interposed by the appellees is that the contract for the loan was usurious. The trial court so found, and the cause is brought to this court on appeal. The correctness of the judgment of the trial court is challenged upon three grounds: First, that the trial court erred in adjudging the contract usurious; second, that, even if it is usurious, appellees failed to establish this defense by competent evidence; third, that, in any event, the note and mortgage were sold long before maturity, for value, in the usual course of business, and, for that reason, the defense of usury can not be successfully interposed. Regarding the contention last mentioned, it is disclosed that the mortgage contains a provision in the language following: “It is further agreed that, in case any taxes or assessments shall be levied against the legal holder of this indebteness on. account of this loan, Avithin the state or territory in Avliich the property mortgaged shall be situate, the said party of the first part agrees to pay the same.” The note and mortgage were executed on the same day, and are parts of the same transaction, and must be construed together. In the case of Consterdine v. Moore, 65 Neb. 296, this court had under consideration a mortgage containing a condition identical in language Avith that quoted above; and in that case it Avas expressly held, that such a provision in a mortgage rendered the note AAdiich it secured, the note and mortgage being parts of the same contract, non negotiable. To the same effect is Garnett v. Meyers, 65 Neb. 287. We are content with the doctrine announced in these cases, and upon their [833] authority the note in controversy is nonnegotiable, and it follows that appellants are in no better position than the payee named in the note. The first question argued by appellants, and mentioned as first in this opinion, is, whether the transaction as detailed by appellees is, in fact, usurious. The testimony discloses that appellees desired a loan of $600. There is some uncertainty under the evidence, whether the written application for the loan signed by appellees was for $600 or for $690. But, in any event, appellees only desired a loan of $600, and this is the amount of money received. The note and mortgage which appellees executed were for $690, and drew interest at the rate of 7 per cent, per annum. The interest paid by appellees was $48.30 a year, or a total for 5 years of $241.50. Add to this the $90 which was added to the face of the note as principal, and which appellees never received, and it will make the interest on the $600 for 5 years $331.50; or $31.50 more than 10 per cent, interest on $600 for 5 years. It is contended on behalf of appellants that adding the $90 to the principal was simply taking 3 per cent, in advance for the 5 years, and that under the statnte this is permissible. We do not think that the contention made can be sustained under the statute fixing the rate of interest that may be charged. Section 1, chapter 44, Compiled Statutes (Annotated Statutes, 6725), concerning interest, is in the following language: “Any rate of interest which may be agreed upon, not exceeding ten dollars per year upon one hundred dollars, shall be valid upon any loan or forbearance of money, goods or things in action; which rate of interest so agreed upon may be taken yearly, or for any shorter period, or in advance, if so expressly agreed.” This section authorizes the taking of interest annually, or for a shorter period, or in advance, if expressly so agreed; but we fail to find therein any authority for laking interest for 5 years in advance. The $90 added to the note as principal, together with 7 per cent, on the $600, which appellees actually received, [834] would jusl c(]iial !0 jut coni, on (Ik* ^(>00 loan foe t!i.period of o years. Hr (ho ((Mans of (he coniracl entered info between the partus, (he inoi-1 <>■;>,u;eo <*a<-h year received «()..■>(• upon (he ttiM) added (o (ho face of (lie nolo, and which appellees had inner received - more Ilian 10 percent. This was a mere device (o enable (ho payee (o rolled moiv (lian 10 pei* emit, inlerest on the money loaned, ami (aims (he i.ransaclion with usury. We have made a careful examination of (he aulhorilies ciled by appellanls and find none which susfain (In* doc-Irine contended for, so (hat we do not deem an extended discussion of (he cases necessary. Il is quilo (dear (hal under our slatule (lie taking of interest for more (ban oik* year in advance* is unauthorized, if by such action more (lian 10 per cení. Ínteres! is received. Il is finally conlended ihai, even thouidi usury did in fad exist in (.lie transad ion, yd, tin* burden of establish ins’1 that fad is upon Hu* appellees, and that they have failed in tin* proof. From a careful examination of Hu* entire record, we are of opinion (hat tin* iindiiyti; of (In* dial court upon (hat question is dearly riiiii(. On the oral argument of (In* cause, it was contended by appellants that tin* answer filed in the case is insufficient as a p.lea of usury. This question is not presented in the briefs, and seems not to have been brought to tin* attention of tin* trial court, tinder this slate of tin* fads, Hu* answer w ill be liberally construed, wdlh a view to upholding il in stal inj*1 a «¿nod defense, and, so construed, it is sufficient as a plea of usury. From an examination of (he entire record, we are convinced that tin* judgment of tin* trial court, is rii>’hf. It is therefore recommended that the judgment be affirmed. Dufkik and Hutton, concur. Hy the Court: For Hu* reasons slated in (In* fnrejoin.", opinion, the judgment of the district court is AiT-ii;\tn>