Opinion
December Term, 1849.
Where, upon an usurious contract, the lender receives from his debtor, in payment of the principal and the usurious interest, the note of a third person, he makes himself liable to the penalty for usury in the same manner as if he had received payment in money.
APPEAL from the Superior Court of Law of RANDOLPH, at Fall Term, 1849, Settle, J., presiding.
This was an action of debt for the recovery of the sum of $200, incurred by the defendant under the statute against usury.
The plaintiff's declaration charged that the defendant, on 9 February, 1842, entered into a corrupt agreement with one John Hutson to advance to him, by way of loan, the sum of $100, and the latter was to give him the sum of $5 for the forbearance of payment on the same for one day; that, in pursuance of the agreement, a bond was executed by the said Hutson to the defendant for the sum of $105, bearing date 9 February, 1842; that, on 14 August, 1843, a credit of $14.50 was entered on said bond, and a note given by the said Hutson to the defendant for that sum, payable one day after date; that on .... March, 1844, a payment was made by said Hutson of the balance of said bond, being the sum of $103.40, principal and interest then due; and that the $14.50 was paid to the defendant by one Reuben Hendricks, on 20 January, 1846.
(316) The plaintiff called the said Hutson as a witness on the trial, who proved the agreement, the loan, and the execution of the bond, as stated in the plaintiff's declaration; that in August, 1843, the defendant was about to enforce the payment of the money by suit, and, in order to save costs to said witness, the interest was calculated up to the said 14 August, 1843, and the note for $14.50 given, which included the interest and $5 of the principal, and a credit for that sum entered on the original bond, which reduced the debt within the jurisdiction of a magistrate; that a judgment was then taken against him before a magistrate for the balance due upon said bond, being the sum of $100, which he paid on .... March, 1844, with interest; that at the same time he paid the defendant $300 in part of the purchase money for a tract of land which he had previously purchased of him; that the defendant at the same time held another bond against him for the residue of the said purchase money for the sum of $100, which bond had some time to run before its maturity; that his equitable interest in said tract of land was subsequently sold under an execution at the instance of one Horney, and purchased by the Randolph Manufacturing Company for the sum of $175; that he then entered into an arrangement with the said company and the aforesaid Reuben Hendricks, whereby the said Hendricks was to pay the said company the sum paid by it for the land, the two notes held by the defendant — the one for $100 and the other for $14.50 — and a sum sufficient to make him up the sum of $400.
The said Hendricks, then being called as a witness, proved the agreement between himself, the aforesaid company, and the said Hutson, as stated in the testimony of the latter; that, in pursuance of this agreement, he went to the defendant and informed him of the arrangement that had been made between himself, the said company, and the said Hutson, (317) and proposed to take up Hutson's bonds and substitute his own in their place; that a calculation was made by him of the interest due upon both his bonds against Hutson on 20 January, 1846, which, together with the principal, amounted to the sum of $123.28, and he gave the defendant his own bond for the sum of $109.28, and paid him the balance in money, and took the said two bonds, to wit, the $100 bond and the $14.50 bond, and the defendant made him a deed; that, in pursuance of his agreement with Hutson, he then carried the bonds, thus taken up, and surrendered them to him; that nothing was said, either by him or the defendant, at the time the money was paid, as to its application; that no payment on the bond given by him to the defendant for $109.28 was made until January, 1847, which was eight months after the issuing of the writ in this case, when the sum of $20 was paid; and that the balance still remained unpaid at the time of his examination.
The defendant's counsel insisted that, upon this evidence, if believed, the offense was not complete, for the reason that the defendant had not received the usurious interest; that, inasmuch as the defendant held two bonds upon the said Hutson — one arising out of a lawful contract and the other out of a contract forbidden by law — and inasmuch as the payment was made upon the general account, and was not specifically appropriated to either of the debts by either of the parties at the time of payment, the law would apply the payment to the debt upon the good consideration, and not to the one forbidden by law; that the payment made by Hendricks was thus appropriated pro tanto to the bond of $100; and that the other was included in the bond for $109.28, given by Hendricks, and not paid until after the commencement of this suit; and they requested his Honor so to instruct the jury.
His Honor refused the instruction thus prayed, and (318) charged the jury that if they believed the evidence of Hutson and Hendricks, the offense was complete when Hendricks made the aforesaid payment — substituted his own bond for Hutson's, and surrendered said bonds to him.
The jury rendered a verdict against the defendant for the sum of $200.
Rule upon the plaintiff to show cause why a new trial should not be granted for the refusal of his Honor to charge as prayed and for misdirection to the jury. Rule discharged, and new trial refused. Whereupon the defendant prayed for and obtained an appeal to the Supreme Court.
Iredell for plaintiff.
No counsel for defendant.
The case presents this question: Upon a usurious lending, the creditor receives the note of a third person in payment of the money lent and the usurious interest; does the creditor thereby incur the penalty? We had supposed this question too well settled to admit of doubt.
If a surety pays "money's worth," as bank notes, a horse at an agreed price, the note of a third person or the like, which is received by the creditor in payment, the action for money paid will lie. Brisendine v. Martin, 23 N.C. 287.
If a constable receives goods or labor in satisfaction of the claim, a warrant may be brought against him and his sureties, under the act to recover money collected. It is not necessary that he should have received the actual money. Wilson v. Coffield, 27 N.C. 513.
In Stedman v. Bland, 26 N.C. 296, it is taken for granted that the reception of land at an agreed price would (319) complete the offense of usury. His Honor, Judge Nash, says: "It is not necessary that the usurious interest should have been received in money — if received in property, it is sufficient."
The law must be so; otherwise no payment would subject the usurer to the penalty, unless made in gold or silver. Bank notes would not suffice; they are the notes of a corporation — not money.
The same reasoning by which it is insisted that, where the note of a third person is received in payment the offense is not consummated until the creditor collects the note, will apply with equal force where a horse is received in payment; and it will follow that, in such case, the offense is not consummated until the horse is sold and the creditor receives the money. And in the case of bank notes, the offense will not be consummated until the creditor collects the specie from the bank.
The defendant, by his exception, attempted to put the case upon the fact that Hendricks paid $14 in money and gave his note for the residue, $109.28, and insisted that the usurious interest would be presumed to be included in the note — so, as he contended, was not paid when the note issued.
His Honor very properly put the case upon the broad ground that, if no money had been paid, but a note of a third person was given for the whole amount and received in payment, the defendant had thereby incurred the penalty.
PER CURIAM. Judgment affirmed.
(320)