Miller v. Bates , 35 Ala. 580 ( 1860 )

A. J. WALKER, C. J.

An injunction may be dissolved, either on account of the denial in the defendant’s answer of the equity of complainant’s bill, or on account of the want of equity in the bill. The two subjects of inquiry, therefore, involved in the revision of the chancellor’s decree dissolving the complainant’s injunction, are the sufficiency of the denials of tlfe answer to authorize the decree, and the equity of the bill. To the former of those inquiries we will first direct our attention.

[2.] The debts which the complainant alleges are tainted with usury, consist of a bill of exchange, drawn in favor of the defendant Bates, and three claims purchased by Bates. The bill of exchange was given in renewal of a pre-existing debt, which was also evidenced by a bill of exchange. One of the charges of usury in the last' bill of exchange rests upon the fact, that 15 per - cent, upon the amount of the original debt is embraced in the last bill of exchange. It appears, both from the bill and answer, that the original bill of exchange was drawn in Alabama, and made payable in Georgia. It was, therefore, a foreign bill, and the imposition of 15 percent, damages was one of the legal incidents of its protest for non-payment. — Code, §§ 1537, 1549. These 15 per cent, damages are, however, to be computed “ on the sum drawn for.”. There was certainly nothing unlawful, in the parties so shaping their contract as to make the evidence of the debt a foreign bill, with a view, on the creditor’s part, of adding 15 per cent, to the debt, in the event of non-payment. It is alleged, however, by the complainant, in effect, that this was a mere device to evade the statute against usury, and that payment at the specified time and place was not anticipated by either party; but that the making of the evidence of the debt a foreign bill, was a sagacious contrivance to justify the addition of 15 per cent, to the debt, when it should be extended. These allegations of the bill, designed to give the charge of 15 per cent, damages the character of usury, are clearly and unequivocally negatived by the answer, and we find nothing to excite our suspicion of the correctness of the denial. The imputation of usury, in that particular, must, for the purposes of the motion to dissolve the injunction, be regarded as removed by the answer.

[3.] The original bill of exchange is alleged to have been given for tbe purchase of cotton, at a price much lai’ger than its value, and that this was a mere shift or device to evade the usury law. This is, in terms, denied by the answer, which asserts, that the bill of exchange was given upon a bona-fide sale of cotton, and that there was no design to evade the usury laws. In estimating this denial of the answer, there are accompanying admissions, which must be considered. — See 2 Dan. Ch. Pl. & Pr. 986, and notes. The defendant admits, that the complainant applied to him, to borrow money ; that he replied, he had no money to lend, bat would sell bis cotton crop of the previous year, if he could get bis price and satisfactory security for the payment of the purchase-money ; that tbe complainant expressed his willingness to buy, and inquired the price, which wras stated to him ; that the defendant fixed his price, without any knowledge of its quality, and that the complainant proceeded with the negotiation in like ignorance; that the defendant exhibited to the complainant a letter, dated two clays before tlio sale, from his factor in Apalachicola, whither the cotton had been shipped, stating that the cotton was worth from 12-j} to 12£ cents, and that the complainant yet contracted to give 15J cents; and that the complainant’s necessities induced him to make the purchase. Besides, it is admitted by the answer, in responding to the bill, that the complainant probably expressed his apprehension of losing 16 per cent, by the purchase ; and that it is likely the respondent assisted him in figuring to arrive at the probabilities.

Do not these admissions of the answer sustain the charge of usury, notwithstanding the express denial ? In order that we may answer this question, “ we mustget at the nature and substance of the transaction: the view of the parties must be ascertainedand if there was, in real truth, a loan of money, “the wit of man cannot find a shift to take it out of the statute.” — Floyer v. Edwards, 1 Cowp. 114; Dubose v. Parker, 18 Ala. 780. The object in such inquiries must be, to ascertain the intention of the parties. If a loan was not within their intention, there was no taint of usury. If a loan for illegal interest was intended, whatever color or disguise ingenuity may have thrown over the transaction, there is usury. — Bank of the United States v. Waggenor, 9 Peters, 878-879; Ely v. McClung, 4 Port. 136. Coming to the precise point involved, we must decide, whether there was a real, truthful sale of cotton to the complainant, or whether the sale was a more covering for a loan of the proceeds of the sale of the cotton at an interest equal to the excess above the value which the complainant agreed to pay. If the latter was the true character of the transaction, then the contract was usurious, to the extent to which such excess would exceed legal interest. The sale of wares, for a price beyond their real value, seems to have been frequently resorted to, as a plan for tlie evasion of the usury laws: and where goods have been sold to the buyer’, at a price beyond their real value, for the purpose of enabling Mm, by selling them at what they will bring, immediately to relieve bis necessities; and where the seller gets in the excess of price an undue compensation for the credit, the courts have uniformly pronounced the transaction usurious. — Comyn on Usury, 94 (5 L. L. 36;) Barker v. Vansommer, 1 Brown’s C. C. 149 ; Kelly on Usury, 34, (75 L. L. 29 ;) Lowe v. Waller, Douglass, 708 ; Eagleson v. Shotwell, 1 Johns. Ch. R. 536; Doe v. Barnard, 1 Esp. 11; Matlock v. Mallory, 19 Ala. 694; Grimes v. Shrieve, 6 Monroe, 554.

In cases with features not so strong as those presented by the defendant’s answer, the contract has been pronounced usurious, as will be seen by reference to the authorities above cited. The complainant in this case desired to borrow money — not to speculate in cotton. This was known to the defendant, who met the proposition to borrow by the declaration, that he had no money to loan, but that he had cotton to sell; which was tantamount to saying, “I have no money to loan, but I have cotton which you can convert into money.” The defendant knew that the object of the purchase of the cotton by the complainant was to convert it into money, and with its proceeds to meet the pressure of his necessities ; for he does not deny, but almost admits, that the complainant made at the time a calculation of the per cent, which he would lose in the process of procuring the money, and that he assisted in making the calculation. In addition to this, the defendant, although cotton was then high, and he wanted to sell it, exacted a price beyond its value as represented by his factor; and the complainant, knowing the excess of the price above the value, consented to give it; and this was done under the pressure of the complainant’s necessities. We cannot hesitate to hold such a contract usurious. It was an arrangement, by which complainant procured money to meet his necessities, and the defendant enabled him to obtain it through the machinery of a sale of cotton, exacting a compensation beyond the interest, under the guise of an excess of price.

[4.] The counsel for the appellee is, as we think, in error, as to the want of the necessary proposal to pay in the complainant’s bill. The last paragraph of the bill seems to meet and satisfy the principle, that in bills of this character, there must be a proposal to pay the principal and legal interest. It is there stated, that “the complainant hereby offers to pay the real advance and lawful interest.” — Branch Bank v. Strother, 15 Ala. 57 ; Tucker v. Holley, 20 Ala. 426 ; 1 Story’s Eq. Jur. 301; Fanning v. Dunham, 5 Johns. Ch. 143.

[5.] Notwithstanding the bill contains equity, and the equity in one aspect is not negatived by the answer, as we understand it, the injunction certainly ought not to be retained as to the entire amount of the complainant’s indebtedness. The clear and unequivocal denial of the answer, as to the usury alleged to have been intended by the charge of fifteen per cent, damages, leaves the complainant without any right to a continuance of his injunction as to the value of the cotton at the time of the purchase, fifteen per cent, thereon, and lawful interest on those amounts; and thus far the injunction ought to be dissolved.-Maulden,Montague & Co.v. Armistead, 18 Ala. 500; 1 Waterman’s Eden on Inj. 140-141. The bill alleges, that the cotton would have been worth only between nine and ten cents, if it had corresponded in quality with the defendant’s representations. All misrepresentations are positively denied by the answer, and the answer also denies that the cotton was worth no more than is alleged in the bill. But the answer does not state that the cotton was worth 15-| cents, the price which the complainant agreed to give. The defendant does aver what was the price of cotton generally in the Eufaula market, and that he sold cotton to responsible and reputable merchants, about the same time, at 15 cents. But, in so answering, the defendant does not meet the question, what was the value of the particular cotton, or whether it was equal to the price which the complainant contracted to give. The defendant also exhibits a letter from his factors in Apalachicola, dated two days before the sale, estimating the value of the cotton at from 12-jf to 12f cents;' but the answer neither affirms nor denies the correctness of that estimate.

Having nothing to guide us upon this interlocutory motion to disolve the injunction, save the bill and answer with the statements above noticed, we are left in doubt and uncertainty as to the value of the cotton, and, consequently, as to the extent to which the injunction should be dissolved. If the answer had disclosed the true value of the cotton, it might have been proper for us to have adopted that as the basis of our estimate. But, as the defendant has omitted to state the value, and as the subjection of the mortgage property to sale for an amount, which, peradventure, the chancellor may, upon a final hearing, ascertain to be excessive, would probably injure the complainant more than the retention of the injunction to too great an extent would injure the defendant, we shall, for the purposes of the motion now in hand, adopt the statement of the bill as to the value ; and as the bill, without regard to precision, states the value at from nine to ten cents, it is proper to regard it in the light most unfavorable to the pleader, and take ten cents, the maximum of the allegation, as the value.

Our conclusion, that the injunction should be retained as to all the price of the cotton, save the value stated by the bill, is sustained by the decision in Maulden, Montague & Co. v. Armistead, 18 Ala. 500. In that case, an injunction was retained, notwithstanding the denials of the answer showed that there was no right toan injunction as to a part of the judgment, because the answer did not afford the means of ascertaining how much of the judgment was improperly enjoined.

This case differs from that in the fact, that the bill itself shows the absence of all right to a continuance of the injunction as to the price of the cotton beyond its estimated value of ten cents; and therefore we cannot in this case, as was done in that, retain the injunction for the entire amount. But we are left without any criterion by which to fix a value, if wo go beyond ten centsper pound, and we think the injunction ought to be retained as to the entire price beyond.

It is not an unbending rule, that an injunction shall be dissolved, even when the equity of the bill is denied. The court may, notwithstanding such denial, retain it, when it finds in the facts disclosed good reason for doing so. Rembert & Hale v. Brown, 17 Ala. 667.

The decree of the court below is reversed, and the cause remanded for further proceedings in accordance with the foregoing opinion. The appellee must pay the costs of the appeal.