Anderson v. Griffith

Me. Justice Mooee delivered the opinion of the court. 1. The testimony given at the trial shows that on March 19, 1897, the plaintiff was the owner of the specified interest in the several mining claims, which property he at that time sold and conveyed to Griffith and Reed for $2,025, taking as security therefor a mortgage on the premises; that about March 19, 1902, when the note evidencing the debt matured, it was orally agreed that in consideration of $500 extra compensation, the payment, of the mortgage debt might be deferred until the mining claims could be sold; that a sale thereof was effected August 25, 1903, and there was paid on account of the purchase price, $3,000, of which sum the.plaintiff received and credited on the note, $1,000, and thereafter obtained the money evidenced by the other indorsements appearing on the negotiable instrument; that on November 13, 1905, the' defendants sent a check for $500 to the plaintiff, without indicating how the money represented thereby should be credited, whereupon he applied it in discharging their promise to pay for the indulgence. Griffith and Reed severally testified, and the court found, though denied'by the plaintiff, that the stipulation to pay the extra remuneration was in lieu of interest; that the plaintiff agreed to wait for his money until it was received from the sale of the premises, and that at the time this suit was instituted the entire purchase price had not been paid. [119] It is contended by plaintiff’s counsel that, as Griffith and Reed were indebted on the promissory note and on the oral agreement to pay for the delay, when they sent the $500, without directions as to what account should be credited therewith, the plaintiff was entitled to apply the money in discharging their obligation for the postponement, and that the question of usury is not involved herein, because it is not made an issue by the pleadings. It is maintained by the defendants’ counsel, however, that an agreement is usurious when a party seeks to obtain for a forbearance to enforce a legal remedy a greater compensation than is allowed by law for the use of money; that a creditor, in the absence of directions, cannot apply money received upon an illegal claim; and that the court properly devoted the sum specified in the check as a payment on account of the principal. The editors of Encyclopedia of Pleading and Practice, in discussing the necessity of pleading usury as a defense, say: “As a general rule, both at law and in equity, where usury does not appear on the face of the plaintiff’s pleadings, a defendant who desires to avail himself of that defense must plead it, or in some way give notice thereof to the adverse party; and this rule will be departed from only in exceptional cases, as, for instance, where the defendant has had no opportunity to plead”: 22 Enc. Pl. & Pr. 421. In the case at bar the defense interposed is based on the alleged payment of $500 made by the defendants November 13, 1905, for which sum they assert proper credit was not given; and the allegation is denied in the reply. From the issue thus framed, the defendants had the right to suppose that the only question involved was the payment of the sum alleged. At the trial, however, the plaintiff admitted he received the money, but applied it on another account. The defendants, therefore, had no opportunity to plead usury; but, as an issue on that question was made by the evidence, it was proper [120] for the court, as intimated in Sujette v. Wilson, 13 Or. 514-518 (11 Pac. 267), to consider the matter. 2. The right of a debtor, at or prior to making a payment, to direct the application thereof to a particular debt, where he owes more than one, and the corresponding duty of a creditor to obey the command, are recognized and fully established: Montour v. Grand Lodge, 38 Or. 47 (62 Pac. 524). In the absence of such direction, the creditor may apply the money or property received to any lawful demand he has against the debtor: Trullinger v. Kofoed, 7 Or. 228 (33 Am. Rep. 708). In Greene v. Tyler, 39 Pa. 361, the court, in speaking of the application of a payment, says: “It could not be made to a spurious or pretended claim; nor to an immoral one, like a gambling contract; nor to usury, for that is forbidden by statute.” To the same effect, see Real Estate Trust Co. v. Keech, 7 Hun (N. Y.), 253; Turner v. Turner, 80 Va. 379; Stone v. Talbot, 4 Wis. 442-468. 3. Ten per cent interest per annum is the highest rate allowed by law in this state for the use of money: B. & C. Comp. § 4595. The payment of $500 for the use of $2,025 for 2 years, 5 months, and 19 days would have been no more than 10 per cent interest for that time, and therefore not usurious. It will be remembered that the mortgage note matured March 19, 1902, and that the mining claims were sold August 25, 1903.. For this extension of 1 year, 5 months, and 6 days $500 was appropriated by the plaintiff, who, after the sale of the premises, charged 6 per cent interest per annum for the use of the money. The plaintiff could have received $500 for the use of the money for that time, and if he had thereafter permitted the defendants to retain the entire sum for 2 years, 7 months, and 2 days at 6 per cent per annum, making in all 4 years and 8 days, the interest received would not have exceeded 10 per cent per annum. The entire money was not retained for that [121] length of time, and hence the sum sought to be recovered for the use of it would have been usurious. 4. Permitting the plaintiff to recover the sum deposited is tantamount to a recission of the agreement to pay $500 for the forbearance. In such cases the parties should be placed in statu quo, thereby entitling the plaintiff to interest at 6 per cent per annum from March 19, 1902, when the note matured, instead of August 25, 1903, when the mining claims were sold. Computing the interest at the legal rate from the maturity of the note, and deducting the payments as they were severally made, there remained due from the defendants to the plaintiff, February 13, 1906, when this suit was instituted, $349.95, instead of the sum' as found by the lower court. 5. It will be remembered that the defendants made a written offer to pay the plaintiff $350.20, or 25 cents more than was due him; but they did not keep their offer good by depositing that sum with the clerk, and left with that officer only $160.89. The decree will therefore be modified, so as to allow the plaintiff the sum of $349.95; but, as he refused that offer when it was made, we believe he is only entitled to the costs and disbursements incurred in this court, which.are awarded him. Modified.