Rosenda v. Zabriskie

Garland, J. This case was before us in May, 1841, and remanded for a new trial, the injunction being sustained in part. 18 La. 346. We then directed, that oral evidence should be admitted to sustain the plea of usury. Judgment has again been rendered against the defendant, and he has appealed. When the case was tried, the District Judge permitted evidence to be given to prove, that usurious interest for one year was included in the last note and mortgage, but refused to admit any evidence of anterior usurious interest being added to the principal. He reduced the interest to ten per cent, and sustained the injunction for the excess. The defendant alleges, that the Judge below erred, in refusing to admit evidence of usurious interest for previous years having being charged, and included in the note. The defendant offered to prove, that the debt claimed was originally a loan of $3000, made some years (about four,) previous to the commencement of the suit; and that the note was renewed yearly, and usurious interest included in it at each renewal. It now amounts to $7905. The Judge refused permission to the defendant to go behind the last act of mortgage, because he considered the renewal of the note and mortgage, a novation of the debt; and secondly, because the promise to pay usurious interest creates a natural obligation, which may be the foundation of a new and valid obligation. The counsel for the defendant took his bill of exceptions, and the case is before us on the two points. The Judge of the District Court is, in our opinion, mistaken in supposing, that the renewal of the note and mortgage between the same parties, is a novation of the debt, although its amount may be increased by adding to it the interest that accrued. Novatiun is the substitution of either a new creditor, a new debtor, or a new debt. The renewal of a note between the same parties is but a [498] continuance of the same transaction. 8 Mart. 5 Ib. N. S. 157. Art. 2183, of the Civil Code, says, “the pre-existing obligation must be extinguished, otherwise there is no novation ; if it be only modified in some parts, and any stipulation of the original obligation be suffered to remain, it is no novation.” The Judge is also mistaken, in supposing that a promise to pay usurious interest, is such a natural obligation as will form a good consideration for a legal contract. A natural obligation, is something binding on the party who makes it, in conscience and natural justice. Civil Code, art. 1750, No. 2. To perform a promise is a matter of conscience, and if a contract, not illicit or immoral, but to enforce which the law gives no remedy, is actually performed, the money cannot be recovered back again. This was the ground of the decision in the cases in 2 La. 429, and 4 La. 544, so much relied on by the counsel for the plaintiff; and the court has never gone further than that. But the continuance of a promise contrary in itself to law, cannot be enforced, although the parties may change the evidence of it every year. The payment of interest beyond a certain rate is, under our law, a matter of convention ; and we think the doctrine has been extended far enough, in those decisions which rejected the demand to recover back usurious interest, after it had been paid. If the doctrine contended for by the counsel for the plaintiff, and sanctioned by the District J udge, were correct, a recovery could be had for any amount of usurious interest, if the contract had been reduced to writing, and then renewed. We cannot give our assent to such an interpretation of the law. It is well understood, that the law forbids more than ten per cent per annum, to be stipulated for in any contract; and neither the renewal of the contract, nor any devices to evade the law can be countenanced. On various occasions, this court has shown its determination to expose the means resorted to, for the purpose of evading the law, and has uniformly refused to enforce a usurious contract. 3 Mart. N. S. 622. 4 Ib. N. S. 167. 7 Ib. N. S. 409. 2 La. 115. And it is now the settled doctrine of this court, that any contract which stipulates for interest exceeding ten per cent per annum, is usu [499] rious and null, and that the creditor can only recover the principal debt. 3 La. 393. 6 La. 709.* We are of opinion, that the Judge below erred in refusing to permit the defendant to show, that a large portion of the demand against him, was made up of usurious interest, and we must again remand the case for a new trial. The judgment is therefore annulled and reversed, and the cause remanded for a new trial, with directions to the District Judge, to admit the testimony offered by.the defendant, for the purpose stated in his bill of exceptions, and in other respects to conform to the principles herein settled, and proceed according to law ; the plaintiff paying the costs of the appeal. Footnotes [*] Since the decision in this case, an act of the 19th February, 1844, chap. 25, has altered the law on this subject. It provides: Section 1. That article two thousand eight hundred and ninety-five, of the Civil Code o?Louisiana, be so amended, that the amount of conventional interest shall in no case exceed eight per cent, under pain of forfeiture of the entire interest so contracted. Section 2. That, if any person hereafter shall pay on any contract, entered into after the passage of this act, a higher rate of interest than the above, as discount or otherwise, the same may be sued for, and recovered within twelve months from the timo of such payment.