Waldner v. Bowden State Bank

Morgan, C. J. Action to recover a judgment for money paid to the defendant by plaintiff on a usurious contract. The complaint alleges that the defendant loaned plaintiff $265, and that he gave it his note for $315, bearing interest at ten per cent, per annum, and that it was agreed between them that plaintiff should pay twelve per cent, per annum as interest on said sum of $315.70 on April 9, 1903, about thirteen months after the note was given. Plaintiff seeks to recover twice the amount of interest paid on the note, together with twice the $50 paid as bonus. Plaintiff asks judgment for $182.40 — twice the amount paid as interest and bonus. The answer is a general denial. The jury found for the plaintiff for the full .amount claimed. Defendant appeals from the judgment, and assigns as errors: (1) The admission of any evidence under the allegations of the complaint, for the reason that it fails to state that the usurious payment was knowingly' made and received; (2) receiving 'evidence of other and independent usurious transactions between the defendant and other persons; (3) failure to charge the jury that the payment of the usury must have been knowingly made and received; (4) failure to charge the jury that plaintiff could recover only the excess of interest paid over and above the rate allowed by law. The complaint does not allege expressly that usury was knowingly paid and accepted. It does state that the plaintiff and defendant entered into a contract under which the plaintiff received $265 as a loan from defendant, and that it was agreed between the parties that plaintiff was to pay $50 as a bonus thereon, in addition to twelve per cent, per annum on $315, the amount contracted- to be paid according to the face of the note set forth in the complaint. The sufficiency of the complaint was not attacked by demurrer, but by an objection to the introduction of any evidence under it, made after the first witness was sworn. As against such objection, we have no doubt that it was properly overruled. As against an objection thus made, the complaint must be liberally construed, and it is only where there is a total want of sufficient alie [608] gations that it should be sustained. If a necessary fact is alleged by fair inference or intendment, the objection will be overruled. The allegation that the usurious payment was made pursuant to a contract that it should be paid is sufficient as against an objection so made. All the authorities favor liberal construction' of a pleading when attacked by such motions. Stutsman Co. v. Mansfield, 5 Dak. 78, 37 N. W. 304; Commonwealth Title Insurance Co. v. Dokko, 71 Minn. 533, 74 N. W. 891; Peterson v. Hopewell, 55 Neb. 670, 76 N. W. 451; Whitbeck v. Sees, 10 S. D. 417, 73 N. W. 915. The complaint, liberally construed, shows that both parties intended to contract for payment of usurious interest, and that it was paid and received knowingly and pursuant to such contract. Evidence was admitted over objection that the defendant was accustomed to take usury, on all loans made by it, and evidence was received to the effect that usury was accepted by defendant on loans other than the one in suit. In case defendant had offered testimony tending to deny the plaintiff’s evidence that the loan in suit was usurious, its admission might have been prejudicial error, but such a case is not before us for consideration. In this case the defendant offered no evidence at all. As we look at the evidence, it would have warranted a direction of a verdict for the plaintiff by the court. Under such circumstances, if error at all, it was error without prejudice to admit this evidence. Donley v. Camp, 58 Am. Dec. 274; Sloan v. Citizens’ National Bank (Neb.) 95 N. W. 480. The court did not in express words instruct the jury that the usurious payments must have been knowingly made and received before the plaintiff could recover. No such instruction was requested, which is a sufficient reason for denying defendant’s assignment on that ground in this court. The charge, however, in effect, informed the jury that the receiving and giving of usury must be knowingly done, before plaintiff could recover. It- stated that the giving and taking of usury must be pursuant to' a contract that usury payments were intended. Section 4066, Rev. Codes 1899, prescribing under what circumstances and conditions payments of usury can be recovered back by action, was read to the jury. This was amply sufficient, in the absence of a request for a more specific instruction. Error is also assigned on the charge of the court in respect to the amount recoverable when usurious payments have been accepted. The rule was given to the jury that twice all sums paid as interest [609] were recoverable, if the transaction was tainted with usury. Defendant claims that twice the interest paid over and above the rate allowed by law can only be recovered back. A determination of this question requires a construction of our Code bearing upon the rate of interest allowed, and the recovery of sums paid as interest, when exceeding the sum allowed by law. Section 4064, Rev. Codes 1899, reads as follows: “No person, firm, company or corporation shall directly or indirectly take, or receive, or agree to take or receive in money, goods or things in action or in any other way any greater sum or any greater value for the loan or forbearance of money, goods or things in action than twelve per cent per annum; and in the computation of interest the same shall not be compounded. Any violation of this section shall be deemed usury; provided, that any contract to pay interest not usurious on interest overdue shall not be deemed usury.” Section 4066, Rev. Codes 1899, reads: “The taking, receiving, reserving or charging a rate of interest greater than is allowed by section 4064, when knowingly done, shall be deemed a forfeiture of the entire interest which the note, bill or other evidence of debt carries with it or which has been agreed to be paid thereon. In case ■the greater rate of interest has been paid, 'the person by whom it has been paid, or his legal representatives, may recover back in an action for that purpose twice the amount of interest thus paid from the person- taking or receiving the same; provided, that such action is commenced within two years from the time the usurious transaction occurred.” The latter section- provides for a penalty for usurious transactions under two independent conditions: (1) When usury rests in contract, and has only been charged; (2) when it has been paid. In cases where usury has been charged and not paid, and the usurer brings an action upon his contract, the illegality of the contract may be alleged as a defense, and if proven, the entire interest due upon the contract becomes forfeited, and no recovery can be had upon the contract, except as to the principal sum loaned. In cases where the usury has been paid, and it is sought to recover back the sum paid as interest, a more difficult question is presented, as the meaning of the statute is not clear. By construing section 4066 in its entirety, we think the legislative intention was that all sums paid as interest, whether 'within or beyond the provisions of the statute, are recoverable in double the sums paid. It does not seem reasonable that the intention of the 'legislature was that all interest was forfeited when it rests [610] in contract, merely, and that the illegal part only is forfeited if the debtor has paid the whole sum contracted to be paid as interest. The words “the amount of interest thus paid” refer to the “greater rate,” which includes a legal and an illegal rate, and they include the same sums as are included in the words “the entire interest,” in the first part of the section. When recovery is allowed for the sum paid as a “greater rate,” it includes a recovery for the whole sum paid, whether legal or illegal, and is the same as the entire in- ■ terest contracted to be paid. Such is the construction generally given to statutory provisions identical or similar to section 4066 in other states, and this seems to us correct, although some cases hold to the contrary. The following cases sustain the construction which We have given to the statute: Lebanon National Bank v. Karmany, 98 Pa. 65; National Bank v. Trimble, 40 Ohio St. 629; Smith v. First National Bank (Neb.) 60 N. W. 866; Bank v. McInturff, 3 Kan. App. 536, 43 Pac. 839; National Bank v. Bollong, 28 Neb. 684, 45 N. W. 164; Colgin v. Bank (Tex. Civ. App.) 40 S. W. 634; Watt v. First National Bank (Minn.) 79 N. W. 509; Henderson National Bank v. Alves, 91 Ky. 143, 15 S. W. 132; Louisville Trust Co. v. Kentucky National Bank ( C. C.) 87 Fed. 143, and (C. C.) 102 Fed. 442; Hill v. National Bank (C. C.) 15 Fed. 432. (102 N. W. 169.) Other assignments made have been duly considered, and found to be without merit. The judgment is affirmed. All concur.