Opinion
(June Term, 1846.)
1. Under our statute of usury, Rev. Stat., ch. 117, the reservation of usurious interest makes the contract void, but it does not incur a forfeiture. The forfeiture is incurred only by taking usurious interest, as such.
2. Although there be a corrupt agreement for excessive interest when the money is advanced, yet no action lies for the penalty until some illegal interest has been received.
3. So, on the other hand, if the contract was not for excessive interest, but the lender afterwards receives it, he forfeits double the sum lent.
4. If a bond be given upon an usurious consideration, and a new bond of the borrower is afterwards substituted for it, the offense is not committed so as to subject the lender to the penalty until the second bond be paid.
5. But where the debtor does not give his bond merely as a security, but gives that of another person, payable to him and belonging to him, in payment, and it is accepted as a payment, it is a payment in law as well as in the common understanding of men.
6. A payment in money's worth, received as a payment, is considered in law to be the same as a payment in cash.
7. A contract for usurious interest may be laid, in a declaration for the penalty, as of the day when the illegal interest was paid.
APPEAL from PERQUIMANS Spring Term, 1846; Bailey, J.
Heath for plaintiff. (394)
A. Moore for defendant.
This is an action of debt founded on the statute of usury. The declaration contained two counts, but all the evidence was directed to the first, and on that the judgment was rendered for the plaintiff. It demands $693.08 and lays the case thus: That on 23 March, 1842, at, etc., upon a certain corrupt contract then and there made between the defendant and the plaintiff, the said J. L. took, accepted, and received of and from the said J. G. the sum of $124.03 by way of corrupt bargain and loan for the said J. L. forbearing and giving, and having forborne and given day of payment, of the sum of $346.54 therefor, viz., on 1 January, 1841, at, etc., lent and advanced by the said J. L. to the said J. G. from the said 1 January, 1841, until the said 23 March, (391) 1842, which said sum so taken, etc., exceeds the rate, etc. Pleas, nil debt and statute of limitations.
This action was brought on 1 March, 1845. On the trial the plaintiff produced one Sawyer as a witness, who stated that the plaintiff applied to the witness to assist him to borrow a sum of money; and that on 1 January, 1841, he applied, on behalf of the plaintiff, to the defendant to lend the plaintiff the sum he needed, and offered, if he would, to transfer to him a bond which he, the witness, then held from the present plaintiff to the witness for the sum of $382.70, bearing date 12 September, 1839, and due one day after date; and that the defendant agreed to take the said bond and advance the amount thereof to the plaintiff, deducting 16 per cent from the amount of the principal and interest thereon; that this was communicated to Godfrey, who consented to take up the money on those terms; and that, then, the witness and Godfrey and Leigh, being together, he, Sawyer, computed the sum due on the bond and ascertained that the net proceeds of it after deducting the 16 per cent was $346.54, and the defendant then handed to him that sum, and he immediately handed it to Godfrey, all three of them at the time sitting at the same table. The witness upon cross-examination stated positively that he did not borrow the money, nor sell the bond to the defendant, but that Godfrey did, and the defendant understood it so, though he said that if the defendant had not taken the bond and advanced the money he, the witness, would have carried the bond home as his own, as Godfrey only wished to borrow money on it. He also stated that the plaintiff again gave to the witness his bond for the sum due on the bond transferred to the defendant, and that on 23 March, 1842, the plaintiff repaid to the defendant the said sum of $346.54, and also the (392) further sum of $124.03 in discharge of the said bond, which the defendant then delivered to Godfrey as satisfied. But he stated that the payment was not made in cash, but was made in a bond executed by one Reed to Godfrey for a larger sum, which Leigh accepted from the plaintiff in payment of the said debt, and the excess of Reed's bond above this debt was applied as a credit on another debt which Godfrey owed Leigh.
The counsel for the defendant insisted that as the bond of Godfrey was payable and belonged to Sawyer until the latter transferred it to the defendant, the transaction was a sale of the bond by Sawyer to Leigh; and, secondly, that if Sawyer lent the bond to Godfrey, the obligor, it thereby became extinguished; and that though Leigh might have lent the money to Godfrey, yet it would not be usurious, because the bond had ceased to be binding; and, thirdly, that as the bond of Godfrey to Sawyer was good in its inception, the discounting it at the rate of 16 per cent constituted usury, and the offense was complete when the money was advanced on 1 January, 1841; and, fourthly, that if the last position should not be true, then no action had yet accrued, as it did not appear that the defendant had received payment of Reed's bond.
The court instructed the jury that if, in their opinion, the defendant purchased the bond from Sawyer, and paid him or the plaintiff the money, the plaintiff could not recover. But if, in their opinion, Sawyer applied to the defendant to borrow the money for Godfrey, and explained to him that he was willing to let Godfrey have the use of the bond, provided he could raise the money on it from the defendant, and that thereupon the defendant agreed to advance to Godfrey, as a loan, the amount of the bond, deducting 16 per cent, and did pay the same into the hands of Sawyer on 1 January, 1841, viz., the sum of $346.54, as a loan for Godfrey and to be paid to Godfrey, and took from Godfrey, through the hands of Sawyer, the bond of Godfrey for $382.70; and that on 23 March, 1842, Godfrey paid the defendant on the said contract (393) the sum of $470.50 — being $124.03 for the use of the money from 1 January, 1841, to 23 March, 1842 — it was usurious, and the defendant forfeited double the sum so lent by him.
The court further instructed the jury that the penalty was not incurred by making the loan to Godfrey, but only receiving usurious interest thereon, which was not until the payment on 23 March, 1842; and, therefore, the statute of limitations was not a bar.
And, lastly, the court told the jury that if the defendant took and accepted from Godfrey the bond of Reed, payable to Godfrey, and by him transferred to the defendant as payment of the sum lent by the defendant to Godfrey, and the usurious interest thereon, it was the same as if the payment had been made in money.
Whether the transaction was in fact a purchase of the bond of Godfrey by the defendant from Sawyer, or was a loan to Godfrey himself, was fairly left to the jury, and has been found against the defendant. Taking it, then, to have been a loan to Godfrey, it seems clear that all the opinions delivered by the court were (395) correct. That the bond was good in the hands of Sawyer, or that it was good or not good as a security in the hands of Leigh, can make no kind of difference as to the liability of the defendant; for there is a clear distinction between the part of the act which avoids the agreement or securities and that which gives the penalty. The reservation of usurious interest makes the contract void, but it does incur a forfeiture. The forfeiture is incurred only by taking usurious interest as such. Therefore, although there be a corrupt agreement for excessive interest when the money is advanced, yet no action lies for the penalty until some illegal interest has been received. So, on the other hand, if the contract was not for excessive interest, but the lender afterwards received it, he forfeits double the sum lent. Rex v. Allen, 1 Mod., 69; Sir Tho. Raym., 169; Floyer v. Edwards, Cowp., 114; Fisher v. Bearly, Dought, 235. So if the bond could be supposed to be extinguished because Sawyer appeared to let Godfrey have the benefit of it in this manner, it would not be material, for every security for an usurious loan is void; and yet, if illegal interest is paid on it, the penalty arises.
As to the statute of limitations, it is clear that it did not begin to run until the payment of the debt on 23 March, 1842. However it might be if the bond had been discounted for Sawyer, and less than the sum due on it for principal and interest had been paid to him, yet as in this case the loan was to Godfrey of a certain sum of money, as found by the jury, and Godfrey's bond was transferred to Leigh by Sawyer merely as a security, no interest can be considered as having been kept back or as taken by Leigh, as such, before he received the payment in 1842.
It is true that if a new bond be substituted for one that is usurious, the offense is not committed so as to subject the lender to the penalty until the second bond be paid. But when the debtor does not (396) give his bond merely as a security, but gives that of another person, payable to him and belonging to him, in payment, and it is accepted as payment, it is a payment in law as well as in the common understanding of men. Bullion, taken at an agreed price, may be stated in pleading as so much money lent or paid. Barbe v. Parker, 1 H. Bl., 283. So payment in money's worth, as a horse, bank notes, the note of a third person, and the like, was said in Brisendine v. Martin, 23 N.C. 286, to be the same as cash. And, lastly, in Ligon v. Dunn, ante, 133, the Court held that the acceptance by an obligor of a bank check in payment of a bond supported the plea of payment in debt on the bond.
It has been further objected in arrest of judgment that the declaration is defective in not setting forth the day of making the corrupt contract. But it seems to be sufficient in that respect, following literally, we believe, the precedent given in 2 Chit. Pl., 514, or the common count for usury under the St. 12 Anne. It omits all the transaction previous to 23 March, 1842, except the loan of the money on 1 January, 1841 (which it may be supposed was made fairly), and then it alleges that the defendant took, on 23 March, 1842, upon a corrupt bargain then made with the plaintiff, the sum of $124.03 by way of unlawful interest. Now, we have seen that if, upon a good agreement, usurious interest be afterwards received, the offense is consummated, and, therefore, it is plain that the very fact of paying and taking the usurious interest constitutes an agreement for it, and that it may be laid as such, and, consequently, laid as of the day when the illegal interest was paid.
Judgment for the plaintiff on the first count of the declaration
PER CURIAM. Affirmed.
Cited: Cobb v. Morgan, 83 N.C. 215; Pritchard v. Meekins, 98 N.C. 247; Rushing v. Bivens, 132 N.C. 275.
(397)