Summary
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.
Summary of this case from Cavaness v. TroyOpinion
(June Term, 1844.)
1. An action for the penalty under the statute against usury cannot be supported unless the usurious interest, or some portion of it, has been actually received, either in money or money's worth.
2. A. loaned a sum of money to B. at usurious interest, and to secure the payment B. conveyed to a trustee a house and lot worth more at the time than the money borrowed and the usurious interest; afterwards, the property was sold by the trustee at public auction and purchased by A., who gave for it what was then its fair value, but owing to the depreciation of the property the sum for which it sold did not amount to the principal of A.'s debt: Held, that A. was not liable to the penalty under the statute against usury.
APPEAL from Dick J., at Spring Term, 1844, of CHATHAM.
George W. Haywood for plaintiff.
(299) J. H. Haughton for defendant.
Debt qui tam, etc., on the statute of usury. The plaintiff proved by H. H. Yeargain that on 22 February, 1839, he (Yeargain) borrowed from the defendant $50 and gave his bond for $105, payable 12 months after date; that on 23 February, 1839, be borrowed $225 (297) from the defendant and gave his bond, payable to the defendant, for $250, payable 12 months after date, with interest from date; that on the said 23 February, 1839, he (Yeargain) executed a deed of trust to one W. Hanks, by which deed he conveyed to the said Hanks his dwelling-house and two lots in the town of Pittsboro to secure the payment of the two aforesaid bonds. On 19 November, 1842, Hanks sold the house and lots at public sale to the highest bidder, when the defendant, being the last and highest bidder, at the sum of $400, became the purchaser. This witness further stated that, previous to 19 November, 1842, he had executed two other bonds to the defendant for borrowed money, one bond for $130 and the other for $77, and executed a second deed of trust to secure the payment of the two last-mentioned bonds; that the said Hanks was also the trustee in this second deed, and that the sale made on 19 November, 1842, as above mentioned, was under both deeds. This witness further stated that on said 19 November, 1842, after the sale, the defendant delivered to him the same bonds aforesaid and executed to him a receipt, as follows: "Received of H. H. Yeargain in full of the amount due me on account of two deeds of trust made to W. Hanks to secure me by said Yeargain. This 19 November, 1842. William Bland." The witness further stated that he did not pay the said Bland any money or other thing of value at the time the above receipt was given, or at any other time, in discharge of any of the aforesaid bonds.
The plaintiff then examined W. Hanks, the trustee, who stated that he sold the house and lots under the two deeds of trust aforesaid; that the sale was public and fair, as far as he knew; that the defendant became the last and highest bidder, for the sum of $400; that $400 was a fair price for the house and lots in November, 1842, and that the bonds were delivered up to Yeargain, and, by the consent or direction of Bland, satisfaction was entered on the deeds of trust. This witness was then asked by the plaintiff if he had executed a deed conveying (298) the house and lots to the purchaser, William Bland. This question was objected to by the defendant, because the deed was not produced by the plaintiff, and no notice had been served on the defendant to produce it. The court sustained the objection and rejected the evidence. This witness further stated that in February, 1839, the house and lots were worth $800. The witness, Yeargain, further stated that, some few months before the sale, he offered the house and lots to Bland at $800; that Bland refused to give that sum, but offered the witness $700, which the witness refused to take.
The court charged the jury that to entitle the plaintiff to recover he must prove that some part of the usurious interest had been received by the defendant; that it was proper for them to take into consideration the receipt in connection with the evidence of the witnesses, and if they believed the witnesses, and collected from the whole of the testimony that usurious interest had been received by the defendant, the plaintiff was entitled to recover. The court further stated, it was necessary for the plaintiff to prove that Hanks had conveyed the house and lots to Bland by deed before the title would vest in Bland, and if they believed from the testimony that the legal title was still in Hanks, and that Bland had received nothing in any other way, the plaintiff was not entitled to recover.
The jury found a verdict for the defendant, and judgment being rendered accordingly, the plaintiff appealed.
Several questions of law were made during the trial, and several objections taken to the judge's charge. We do not deem it necessary to notice any of them, for if his Honor did commit an error in his directions to the jury, it would do the plaintiff no good to grant him a new trial. Upon the case, as it appears before us, it is obvious he cannot recover. The simple statement is, that the defendant loaned to Yeargain at different times $482, upon which large usurious interest was reserved, but that he has actually received no more than $400 in return. So far from exacting usurious interest, he has not got back that which by law he might have received, which was the actual sum loaned with 6 per cent interest on it. He has not, therefore, according to the case, taken one cent of usurious interest, and, of course, has not incurred the penalty of the law. The plaintiff's right to a recovery has, before us, been placed on (300) the ground that, as the house and lot were, at the time they were conveyed to Hanks, worth $800, which is more than the sum loaned, with legal interest, the defendant has incurred the penalty designated by the act of the General Assembly by taking the house and lot in discharge of the bonds. We do not think so. The bonds which were given, as well as the conveyances, could have been avoided for the usury if suits had been brought to enforce them, as they were but securities for the money loaned. But this is an action to recover the penalty inflicted by statute for making an usurious loan, which is double the amount of the money loaned; and before the defendant can be subjected to this heavy penalty it must not only be shown that the loan was usurious, but that the defendant has received the usurious interest or some portion of it. And if in this case the house and lot were worth at the time $800 and had by Yeargain, the borrower, been conveyed to the defendant in payment of the bonds so given by him, and by the defendant so received, it would clearly have been usurious and the penalty incurred; for in order to complete the usury it is not necessary the usurious interest should have been received in money; if received in property it is sufficient, the law looking to the substance, and not to the form, of the transaction. That is not the case here. The house and lot are conveyed to Hanks, not that he shall convey them to the defendant, but that he shall sell them, and with the proceeds pay the debt due the defendant. The trustee, after due notice, sells the property at public auction, and the defendant becomes the purchaser for the sum of $400 — a sum the full value of the property and less than the moneys loaned, and the bonds are given up and the deeds satisfied. It may be that Yeargain has been injured by the deterioration of his property, but the loss to the borrower is not the only criterion by which to judge whether a transaction is usurious. Ehringhaus v. Ford, 25 N.C. 528. If a third person had purchased the house and lot at the sale, for the price the defendant bid for them, the loss to Yeargain would have been precisely the (301) same, yet no one could imagine for a moment that, upon trustee's paying over that money to the defendant and his surrendering the bonds, he would have incurred the penalty of the law. How is the principle varied by the defendant's purchasing?
However contaminated the contract was, and unquestionably, according to the statement of the case, it was usurious, we are of opinion that it does not appear that the defendant has received the usurious interest reserved, or any portion of it, and that he has not incurred the penalty of the law.
PER CURIAM. No error.
Cited: Cavaness v. Troy, 32 N.C. 318; Pritchard v. Meekins, 98 N.C. 247; Rushing v. Bivens, 123 N.C. 275.