Ellis v. Terrell , 109 Ark. 69 ( 1913 )

Wood, J.,

(after stating the facts). Appellant contends that appellee did not set up in his answer a sufficient defense or plea of usury, but appellant did not challenge the sufficiency of the answer in the court below by demurrer or otherwise. He went to trial as if the issue were properly made, and we must so treat it here. The testimony was adduced on that issue, and appellant will not be heard here for the first time to raise the question that the answer was not sufficient.

The evidence was sufficient, in fact practically undisputed, to sustain the finding of the court to the effect that appellee executed his original note for $200 due in five years, bearing 6 per cent interest from date, and that he only received from the appellant, the payee of the note, the sum of $151.10, or, at most, the sum of $160, conceding that Hears was the agent of appellee. Appellee gave coupon interest notes payable annually, bearing 10 per cent interest after due. It thus appears that the appellant deducted at the time of the execution of the note sued on the sum of $40, or 4 per cent on the principal note of $200 for the period of five years.

Section .5389 of Kirby’s Digest provides that, “All contracts for a greater rate of interest than 10 per. centum per annum shall be void as to principal and interest.” Art. 19, § 13, Const, of Ark.

Appellant and appellee, under the above statute and Constitution, were forbidden to contract for a rate of interest whereby more than 10 per cent per annum would be paid. As appellee only received a loan of $160, at the highest rate of interest for the full period of five years he should have paid, including principal and interest, the sum of $240. But, under the contract, as expressed in the note and shown in the evidence of appellee and the correspondence, appellee was compelled to pay the principal note of $200 and five coupon notes of $12 each, making a total of $260, or $20 more than the legal rate. This is clearly usurious, unless appellant, under the law, could deduct the 4 per cent interest on the principal note of $200 for the full period of five years.

Our statute, Kirby’s Digest, § 5382, provides that: “It shall be lawful for all persons loaning money in this State to receive or discount interest upon any commercial paper for a period not exceding twelve months, at any rate of interest agreed upon by the parties, not to exceed 10 per centum per annum.” This statute was passed April 20, 1895, at the session of the Legislature following the decision of this court in Bank of Newport v. Cook, 60 Ark. 289, wherein we held that the taking of the highest rate of interest in advance on negotiable paper having twelve months to run is not usury. In that case the court had before it a negotiable note having only twelve months to run. The statute then in force only limited the right to discount commercial paper, but did not fix any limit as to time. The court having one year paper before it, only decided that there was authority for discounting such paper, but, of course, did not determine that the discounting of commercial paper for a longer period than one year was inhibited. Then, it being left open by the decision of the court, the Legislature following limited the time for discounting commercial paper to a period not exceeding twelve months. The Legislature having made it lawful to discount commercial paper for a period of twelve months, must have intended to prohibit the discounting of commercial paper having a longer time to run under the doctrine of expressio unius est exclusio alterius. This statute shows the legislative policy as to the subject of usury in this State. But even if there were no statute upon the subject, this court would not extend the doctrine announced in Bank of Newport v. Cook, supra, to commercial paper having a longer time to run than twelve months, for we are of the opinion that such time is as long as such paper should be allowed to be discounted under the trend of our own decisions and the weight of authority in other jurisdictions.

' Mr. Parsons, in his work on Contracts, says: “There seems to be a strong disposition to limit this practice to short paper, or at least not to apply it to long loans or discounts.” 3 Parsons on Contracts, No. 131, quoted by Mr. Justice Battle in his dissenting opinion in Bank of Newport v. Cook, supra.

If it be conceded that the note in suit was an Indian Territory contract, still the laws of the Indian Territory at the time the note was executed were the same on the subject of usury as our law on that subject. Chapter 109, Mansfield’s Digest of the Arkansas Statutes, was extended over the Indian Territory by act of Congress of May 2,, 1890, and section 4732, chapter 109, Mansfield’s Digest, provides: “All contracts for a greater rate of interest than 10 per centum per annum shall be void as to principal and interest.” Sulphur Bank & Trust Co. v. Medlock et al., 25 Okla. Rep. 73. See also Brewer et al. v. Rust, 20 Okla. 776.

This court must take judicial knowledge of the laws of other States. Kirby’s Dig., § 7823. See, also, St. Louis, I. M. & S. Ry. Co. v. Brown, 67 Ark. 302; St. Louis, I. M. & S. Ry. Co. v. Cleere, 76 Ark. 377.

The judgment is therefore affirmed.