Quint v. First National Bank

The opinion of the court was delivered by McElroy, J. : This action was brought by the First National Bank against Peter Quint and Margaret — 475 — Quint to recover an amount claimed to be due upon five promissory notes, the first three notes for $890 each, the fourth for $537.65, and the fifth for $800. The plaintiff in its petition set out its first, second, third and fourth causes of action in the usual form, referring to the notes as exhibits “A,” “B,” “ C,” and “D.” Copies of the notes, together with the credits and indorsements thereon, were attached to and made apart of the petition. “Exhibit A” was indorsed “ ll-9-’93, this note is extended to September 1, a. d. 1894. Int. paid by note” ; and exhibits “ B ” and “ C ” were indorsed the same. In its fifth cause of action, the plaintiff set out that, at the time of the execution of the note set out as “exhibit A,” the defendants also gave to plaintiff two notes, one for $185.80, and one for $851.85 ; that defendants thereafter paid a sum sufficient to reduce the amount of these notes to $800 ; that on the 2d day of March, 1893, defendants made and delivered, in lieu thereof and as a renewal, a note in the sum of $800, by which they agreed to pay to plaintiff that sum of money. This note was set out as “exhibit D” and indorsed: “5-13-’93, int. paid to June 15, ’93. “6-28-’93, int. paid to July 1, 1893. “ 7-20- 93, int. paid to Aug. 1, ’93, by Yost’s check. “11-9-93. This note is hereby extended to Sept. 1,1894. Int. paid by note.” The defendants moved that plaintiff be required to make its petition more definite and certain as to the first, second, third and fifth causes of action, which motion was overruled. The defendants filed a demurrer to the fourth cause of action, which was sustained. Thereafter defendants filed their answer, consisting of a general denial and pleas of usury, payment, want of consideration, misappropriation of — 476 — mortgaged property, and fraud, and prayed judgment against the plaintiff in the sum of $920.03. The reply was a general denial. A trial was had before the court and a jury, which resulted in findings and judgment for plaintiff for $1833, with interest at ten per cent. and costs of suit. A motion for a new trial was overruled, and the defendants, as plaintiffs in error, present the case to this court for review. The assignments of error present but three questions for consideration, which we will take up in order. First. That the court erred in overruling the defendants’ motion to make the petition more definite and certain. The defendants by their motion sought to have plaintiff’s petition made more definite and certain in this, that the bank specifically state the amount of interest paid on exhibits “A,” “B,” and “C” ; that it state the amount paid in reducing the indebtedness on the two notes mentioned in the fifth cause of action to the sum of $800 ; that it set out the amount and date of each payment; that it state the amount of interest paid by each, by note and by Yost’s check. The action was upon promissory notes for the unconditional payment of money. Section 119 of chapter 95, General Statutes of 1897 (Gen. Stat. 1899, § 4373), reads: “In an action, counter-claim or set-off founded upon an account, promissory note, bill of exchange or other instrument for the unconditional payment of money only, it shall be sufficient for a party to give a copy of the account or instrument, with all credits and indorsements thereon.....” The notes were set out as exhibits, together with all the credits and indorsements as they appeared thereon. It is not claimed that there were other credits or in — 477 — dorsements upon the notes than those set out, but it is insisted that the credits and indorsements as they existed upon the notes were insufficient. This section authorizes t.he party to set out as an exhibit copies of' his notes, together with all the credits and indorsements thereon as they are on the original. The pleader fully complies with this statute when he sets out an exact copy of the instrument sued upon together with all the credits and indorsements which have been made thereon. The motion that plaintiff be required to make the petition more definite and certain was properly overruled. Second. That the verdict is not sustained by sufficient evidence and is contrary to law. The plaintiff upon its several causes of action claimed judgment for something over $3000 ; the defendants denied any indebtedness, pleaded usury, payment, want of consideration, misappropriation of mortgaged property, and fraud; they prayed judgment against the plaintiff for something like $900. Each of the parties introduced ' testimony tending to support his claim. There áre about 200 pages of testimony. The evidence is very conflicting. There is some testimony, however, tending to show usury charged in all of the notes set up in plaintiff’s petition, and in some of the notes of which these were renewals. Some of the testimony tends to show cash payments made upon account of the notes, and the delivery of wheat for credit on the indebtedness. Nearly all of this testimony was contradicted by plaintiff. Upon this conflicting testimony, the jury returned a general verdict for plaintiff in the sum of $1833. It is evident from this verdict that the jury did not believe all of the defendants’ testimony, nor all of plaintiff’s; that there was some usurious interest included in these notes, the exact — 478 — amount, however, is not clear ; nor does it clearly appear from what date the bank commenced to charge usurious interest. The weight of the evidence tends to show an indebtedness upon the part of the defendants upon the notes in question. However, it was solely within the province of the jury to say from all the evidence whether there was an indebtedness, and if so, the amount. There is some competent evidence tending to support the findings of the jury and the judgment of the court. The findings are therefore conclusive so far as this court it concerned, both as to the fact of the indebtedness and the amount. Third. That the court erred in instructing the jury. The court instructed the jury upon the question of usury as follows: “3. If you believe from the evidence that the plaintiff bank knowingly charged or received, on the notes sued on, interest at a greater rate than ten per cent, per annum since May 25, 1889, or greater than twelve per cent, prior to that date, and you further believe that these notes were only renewals of other notes which the bank held, and that on such other notes interest was knowingly charged or received by the bank at a greater rate than ten per cent, per annum, then you should, in arriving at your verdict, only allow the bank the actual amount of money represented by such notes without any interest, and if you find that the defendants have paid to the bank a sufficient sum to cover such original amount without interest, you should find for the defendants. “4. You are further instructed that, if you find any usurious interest was contracted for as to any of the notes at any time by the parties to this action, such contract for usury would not offset the legal interest previously charged or contracted for, but you should not allow the plaintiff anything upon account of interest after the date of said usurions contract, upon the notes sued on/' — 479 — It is the last paragraph of the instructions which is complained of by the plaintiffs in error. Section 5198, Revised Statutes of the United States, provides: “The taking, receiving, reserving or charging arate of interest greater than' is allowed by the preceding section, 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.” There is some evidence in the record that the notes were tainted with usury and that the jury so found. The transactions between the Quints and the bank cover a period of about nine years and a large number of notes. The original notes were given in 1888 ; there is no testimony showing these original notes contained usurious interest. The testimony tends to show that at a later period, however, certain renewal notes became tainted with usury; it is evident from an examination of the record the jury made some allowances for such usury. The contention of plaintiffs in error in substance is, that section 5198 destroys the interest-bearing power of a note; that if a usurious contract is entered into at any point of time in relation to the note, or renewals thereof, such contract relates back to the inception of the note, and works a forfeiture of legal interest which had accrued prior to its renewal into a note at an illegal rate. This section clearly means that the entire interest upon a note'or bill on which an illegal rate of interest has been charged, received or contracted for shall be forfeited. We are of the opinion that a valid, preexisting debt, including principal and legal interest, is never affected by the vice or taint of usury subsequently agreed upon. We find nothing in the case of Shafer v. National Bank, 53 Kan. 614, 36 Pac. 998, in — 480 — conflict with, this view. The principle seems to be that a contract which in its inception is not affected by usury can never be invalidated by any subsequent usurious transaction. If the original notes were valid, but in subsequent renewals they become tainted with usury, the taint of the second illegal contract does not affect the validity of the original notes. (Nichols v. Fearson, 7 Pet. [U. S.] 109; Burnhisel v. Firman, 22 Wall. 174.) In the case at bar there was some evidence tending to show that there was usury in some of the later renewal notes involved; it therefore became the duty of the court to instruct the jury : ‘ ‘ If you find any usurious interest was contracted for as to any of the notes at any time by the parties to this action, such contract for usury would not affect the legal interest previously charged, or contracted for, but you should not allow the plaintiff anything upon account of interest after the date of said usurious contract upon the notes sued on.” From the amount of the verdict, it is evident that the jury found that the notes in question were tainted with usury. Usury destroys the interest-bearing quality of a note. The court was not authorized therefore to render judgment for ten per cent, interest. The judgment should bear interest at the rate of six per cent. The judgment will be modified in this respect and affirmed as modified.