Godfrey v. Leigh, 28 N.C. 390, 6 Ired. 390 (1846)

June 1846 · Supreme Court of North Carolina

28 N.C. 390, 6 Ired. 390

JOSEPH G. GODFREY vs. JAMES LEIGH.

Under our statute of Usury, Rev. St. c. 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.

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 receives it, he forfeits double the sum lent.

If a bond be given upon an usurious consideration, and -a new bond of th* borrower is afterwards substituted for it, the offence is not committed so as to subject the lender to the penalty, until the second bond be paid.

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.

Á payment in money’s worth, received as a payment, is considered in law to be the same as a payment in cash.

A contract for usurious interest may be laid, in a declaration for the penalty, as of the day when the illegal interest was paid.

The cases of Brisendine v. Martin, 1 Red. 286 and Ligón v. Dunn, 6 Ired. 133, eited and approved.

Appeal from the Superior Court of Law of Perquimons' County, at the Spring Term, 1846, his Honor Judge Baic.ey presiding-.

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 the 23d of March, 1842, at, &c. 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 $340 54 therefor, viz. on the first day of January 1841, at, &c. lent and advanced by the said J. L. to the said J. G. from the said 1st day of January 1841, until the said 23d of March 1842 ; which said sum. so taken &c. exceeds the rate, &c. Pleas: nil debctT and statute of limitations.

This action was- brought on the 1st of 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 the 1st of 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 the 12th of 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 percent, 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, competed the sum due on the bond and ascerT tained that the nett 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 the money in case he could raise the money on it. Pie 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 the 23d day of March, 1842, the plaintiff re-paid to the defendant the said sum of $346 54, and also the 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 Ree'd to God-frey, 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 offence was complete when the money was advanced on thé 1st day of Jan. 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 1st of January 1841, viz. the sum of $346 54, as a Ipan for Godfrey and to be paid to God-frey, and took from Godfrey, through the hands of Sawyer, the bond of Godfrey for $382 70; and that on the 23d of March 1843, Godfrey paid the defendant on the said contract, the snm of $470 50 — being $124 03 for the use of the money from the 1st of January 1841, to the 23d of 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 the 23d of 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 in money.

Heath, for the plaintiff.

As to the first point, it is not necessary, in actions on the statute of usury, to set out the time of the corrupt -contract, as distinct from the time of lending: all that is required to be set forth in the declaration, is, that the time of the corrupt contract or lending shall be correctly stated. Comyns on TJsury, 231, 232. The time of the contract, and the time of the loan, are one and the same thing. Here, the time of the loan is correctly set forth: even were the declaration defective, in this particular, as all the facts appear of record, it would be a proper case for amendment, in this Court. State v. Muse, 4 Dev. and Bat. 319.

2d. The second objection is covered, by the finding of the jury for the plaintiff. The jury have found, that the note of Godfrey was passed to the defendant Leigh, by Godfrey, and not by Sawyer, the witness; and there being evidence to this effect, the defendant is concluded by the finding.

3d. Without prejudicing his case, the plaintiff may admit, that Godfrey’s note or bond was extinguished by this transaction, as contended by defendant, in his third objection ; for the case would then be nothing more nor less, than a loan of $346 54 by Leigh to Godfrey, and' a receipt of usurious interest thereon.

4th. As to the fourth objection, it is to be remembered, that there is a marked distinction between the avoiding* of a contract infected with usuiy, and the accruing of the action for a penalty, under the statute ; the contract is declared void ; the penalty does not accrue till the receipt of usurious interest thereon. Comyns, 222, and Seq. Chitty on Contracts, 711. The usurious interest, in the present case, was received on the 23d March 1842, at which time the action accrued, and having been brought within three years thereafter, the action is not barred.

5th. In the last objection, it is urged, that the action- has not yet accrued, inasmuch as the debt and usurious interest were received in Reed’s note or bond, which note or bond does not yet appear to be paid ; and therefore, Leigh has received nothing, either of principal or interest. Without adverting to the inconsistency between this and the objection just disposed of, an answer to it may be found, in this — that Leigh received Reed’s note or bond, as payment; and, as the note or bond was valuable, in itself, (Brisendine v. Martin, 1 Ired. 286,) and, particularly, as the case states, was received as payment, it must be considered as a payment of the debt and interest, at that time, though not in cash, and the action accrued at the date thereof.

JL Moore, for the -defendant.

Ruffin, 0. J.

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 defendants Taking it then, to have been a loan to Godfrey, it seems clear, that all the opinions delivered by the Court were 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, a,nd 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, y et 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. 196. Floyer v. Edwards, Cowp. 114. Fisher v. Bearly Dougt. 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 be 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 the 23d of 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 call 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 offence is not committed, so as to subject the lender to the penalty, until the-second bond. be paid. But when 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 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, 1 Ired. 286, to be the same as cash. And lastly, in Ligon v. Dunn, at the last term, 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. PI. 514, or the common c'ount for usury under the St. 12 Anne. It omits all the transaction previous to the 23d of March 1842, except the loan of the money on the 1st of January 1841, (which it may be supposed was made fairly,) and then it alleges that tire defendant took, on the 23d of 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 offence 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 affirmed.

Pee Ouetam. . Judgment accordingly;