Border State Perpetual Building Ass'n v. Hayes

Stone, J., delivered the opinion of the Court. On the 2nd of October, in the year 1873, the appellee executed to the appellant corporation a mortgage to secure the payment of a loan to him of- $2080, with interest at the rate of eight per cent, per annum. The appellee alleges in his bill that this interest is usurious, and asks to be relieved from the excess over six per cent. The appellant corporation contends that the mortgage has been paid and settled, and tbat the Act of 3876, chap. 358, is a full and complete bar to the claim of the appellee.

The first question in the case, therefore, is the question of fact, whether the mortgage has been fully paid and settled in purview of the Act of 1876, chap. 358. The evidence in this case satisfies us that the following are the facts: The appellee having become a member in 1873 of the appellant corporation, and taken eight shares of its stock, each share being oí the par value of $260, obtained the ⁶⁰⁰ loan of $2080 by virtue of his ownership of these shares, and continued to pay the dues required and the interest on the mortgage at the rate of eight per cent, until November, 1876. That about November, 1876, finding that he was unable to pay his dues and interest on eight shares, he determined to reduce the number of shares, and consequently the amount of his indebtedness to the appellant corporation. That to effect this purpose, he executed another and new mortgage on the same property for $1040' as an advance on four shares of stock.

Out of this $1040' so received he paid up seven of the eight shares of stock he had originally taken, but left one share of the original stock still outstanding, and this one share was not paid up-until August, 1879. The consequence of this transaction was, that the appellee after the reduction of the number of his shares had to pay his dues and interest on five, instead of eight shares, thus reducing his payments nearly one-half. The Act of 1876, chap. 358, is to be applied to-these facts. Prior to the Act of 1876 the debtor, who had paid, usurious interest, had the right to recover back the excess over the legal rate, in an action for money had and received, notwithstanding the debt had been fully paid, and the transaction closed between the parties.

This Act made a change in the law, and provided that usury should not be “a cause of action in any cáse where the bond, bill obligatory, promissory note, bill of exchange or other evidence of indebtedness, has been redeemed or settled for by the obligor or obligors, in money or other valuable consideration, except that of a renewal in whole, or in part of the original indebtedness.” It is the intention of that law that when a usurious,,^ contract is entirely paid, and the whole transaction closed:' between the parties, then no cause of action should lie against the usurer. But the Act is equally explicit in declaring that it means a real , and bona fide, and not a ⁶⁰¹ sham payment or settlement. It says in effect, that although the original bond, note, or other evidence of debt