Kendig v. Marble

Beck, J. I. The petition asks the foreclosure of a mortgage, which, with the note secured thereby, is set out as an exhibit. The plaintiff is the assignee of the mortgage. The [387] petition shows that defendant executed in writing a confession of judgment which was filed in the same court in which this action is prosecuted, and before this suit was commenced the clerk entered a judgment thereon. It appears that the judgment does not foreclose the mortgage. The petition asks that the judgment may be declared to be a lien upon the land described in the mortgage from the date thereof. The answer of defendant alleges, among other defenses, that the note and mortgage are usurious, providing for the payment of unlawful interest, and that the confession of the judgment was a fraudulent device adopted to enable the plaintiff to evade the statute against usury, and that plaintiff was induced to sign it through the fraudulent representations of plaintiff. The paragraphs of the answer containing these allegations and others were assailed by a demurrer, which was sustained by the court. i. usury: pleading?" II. The court erred, we think, in sustaining the demurrer. The law will permit no device to cover and protect a usurious contract. If a judgment by confession, or otherwise, be a part of such device intended to prevent the disclosure of the real character of the contract, it will not bind the parties.- If the-law were otherwise the usurer could with little trouble defeat the statute by taking cognovits,, or warrants of attorney, upon all his contracts and thereon fcause judgments to be entered. The usual ingenuity exhibited in evading statutes against usury would discover forms of proceedings under which this could be done in all C&S6S. Counsel insist the allegation that the confession of judgment was a device to evade the statute is the averment of a conclusion of law and not of fact. But if such an objection to the pleading exists it ought to have been assailed by a motion for a more specific statement. If it was sufficiently explicit to enable plaintiff to demur to it there can be no doubt that it was fully understood and disclosed the defense [388] intended to be made. This was all that could have been required upon the consideration of the demurrer. It may be conceded that ordinarily a judgment cannot be assailed on the ground that it is for usury, but if it be a part of a device for evading the statute against usury, or was procured through fraud, it may be defeated* by showing the true character of the transaction. The answer assails the judgment by confession upon these grounds, and the demurrer thereto ought not to have been sustained. The confession of judgment was made after the note and mortgage were executed. In our opinion it matters not at what time it was made so that it be a device or a part of a plan for evading the statute. The devices which the law will defeat are not alone those that are contemporaneous with the usurious contract. They will be set aside without regard to the time when they were devised and perfected. Other questions discussed by counsel need not be determined, as the judgment, for the error pointed out, must bo Neversed.