Cain v. Stacy

Hart, J. (after stating the facts). The first ground of usury relied upon by the defendant is that the notes bore 10 per cent, interest per annum from date until paid and that the plaintiff took out $200, the first six months’ interest, in advance. In Ellis v. Terrell, 109 Ark. 69, and in Bank of Newport v. Cook, 60 Ark. 288, the court held that the taking of the highest rate of interest in advance on negotiations having not inore than twelve months to run is not usury. Another ground for the alleged usury is that by the written agreement of the parties the payment to Stacy for his services in connection .with -the rice crop was a contrivance between the parties by which more than the legal rate of interest was to be secured to Stacy. If Stacy exacted of Cain as part of the consideration of the loan that Cain should employ him at an exorbitant price when his services were not needed, and were not in fadt to be rendered, the contract would be usurious. The form of the contract is immaterial if the intent exists at the time the contract is made to take and receive usurious interest. Habach v. Johnson, 132 Ark. 374. In the present case, the chancellor found that the defense of usury had not been established by the evidence, and we can not say that the finding of the chancellor is against the weight of the evidence. At the time of the loan Cain was in straitened circumstances. He had rented a rice farm, and was not able to grow a rice crop without pecuniary .assistance. He had the habit of getting drunk frequently, which habit was known to Stacy. According to the testimony of Stacy, the written agreement of the parties was given as a consideration for the services of Stacy in the matter of superintending the rice crop because Cain was in the habit of frequently getting drunk. It is true that Cain did not get drunk as frequently as usual during the rice season of the year 1919, but he did got drunk several times and needed the services of Stacy in assisting him about managing’ the crop. Stacy said that Cain was incapable of managing the crop when he was drunk. It is true the owner of the land on which the crop was grown said that he did not see. Stacy drunk often during the year 1919, but the reasonableness of the charge must be tested by the conditions existing at the time the contract was made. The question is whether the agreement between the parties was a contrivance by which more than the highest legal rate of interest was to be secured to the lender. The evidence shows that at the time the agreement was made Cain was in the habit of frequently getting drunk and Stacy had this in mind when he made the 'agreement. He knew that Cain was incapable of looking’ after the crop when he was drunk. Stacy felt like the hazard of lending money to a man of this character was so great that he must protect himself by knowing that every bit of the money loaned should be applied to the expense of raising the rice crop. To accomplish this purpose, he had the money deposited and the account named in the bank as the Cain-Stacy rice account. It is true he did not sign the cheeks, but he was president of the bank carrying the account and knew what each check was for before it was paid. Stacy also assisted Cain in other waj^s about the rice crop. He looked after the purchase of coal for him and in this way saved him at least $100: According to Stacy’s testimony he superintended the growing of the rice crop and Rendered valuable services in that behalf to Cain. Of course, according to the testimony of Cain, the transaction was intended as a cover for the advance of money with usurious intention. According to the testimony of Stacy, however, the amount to be received by him was a fair allowance for the trouble and inconvenience he was likely to be put to in assisting and superintending the growing of the rice crop. If agreements of this kind are made in good faith and not as a device to hide usury, they are valid, even though the compensation may be greater than usually paid for like services. 39 Cyc. 931 and cases cited in notes 8 and 9. As above stated, the chancellor found that the defense of usury should not prevail, and under the settled rules of this court his finding will not be disturbed on appeal unless it is against the preponderance of the evidence. Tested by this rule, we are of the opinion that the decree must be affirmed.