Pope v. Solomons , 36 Ga. 541 ( 1867 )

Warner, C. J.

The error assigned to the judgment of the Court below in this case, is in dissolving the injunction and dismissing the complainant’s bill for want of equity. The complainant is a creditor of E. H. Williams & Co., who are insolvent. Williams sold out his stock of goods to Watkins, the latter obligating himself to pay certain debts due by Williams on account of the stock of goods so purchased, including a note of five hundred dollars due to Solomon. The complainant alleges that the note to Solomon was given upon an usurious contract — that Williams has already paid usurious interest upon that note, which, if it had been credited thereon, would have reduced the same to the sum of two hundred and sixty-two dollars: that is to say, after deducting the amount of the usurious interest paid by Williams to Solomon, there is now due upon the note, only the sum of two hundred and sixty-two dollars which Watkins ought to pay Solomon under his obligation as the purchaser of Williams’ stock of goods, instead of five hundred dollars; and that the complainant as the creditor of his insolvent debtor, is equitably entitled to have an account of the usurious interest paid by him to Solomon, and that the same be credited on the note; that Watkins be enjoined from paying to Solomon any more than what is lawfully due on the five hundred dollar note, after crediting the same with the amount of usurious interest paid by Williams to Solomon, and then to account with and pay over to complainant what may be remaining in his hands due to Williams for the stock of goods purchased from him — in payment of his demand against Williams. In other words, the complainant seeks to reach such an amount of the effects of Williams, his insolvent debtor, as may be remaining in the hands of Watkins, after the debt due by Williams to Solomon shall be purged of the usury; that Watkins ought not, either in law or equity, to pay more than two hundred and thirty-eight dollars out of the effects purchased by him from Williams, under his agreement to the Solomon note, and that as a creditor of Williams he is entitled to have the balance remaining in the hands of Watkins applied to the payment of his demand.

Such is substantially the case made by the complainant’s bill. Lawful interest in this State for the use of money loaned, is seven per eent. per annum. Usury is the reserving and taking, or contracting to reserve and take, either directly or by indirection, a greater sum for the use of money than the lawful interest. The effect of usury is to annul and make void the contract for the usury — the lender having the right to recover the principal sum loaned, with legal interest. All titles to property made as a part of an usurious contract, or to evade the laws against usury, are void. Eevised Code, sections 2023, 2024, 2025. The contract by Williams to pay the usury to Solomon, was void, aud he would have been entitled under the law to have recovered it back in a suit instituted therefor.

But it is said, no one but the party who pays the usury can take advantage of it — that it is a personal privilege not extended to strangers. As a general abstract proposition, it is true that a contract for usury cannot be avoided by a mere stranger to the transaction. But here the complainant is not a mere stranger having no interest in the result of this usurious transaction between Solomon and' Williams, he is a creditor of Williams, claims under and through the latter to the extent of his debt; his interest is affected by the usurious contract, and to the extent of that interest he is entitled to be heard in relation to it; there is a legal privity between the complainant and his insolvent debtor ; he is interested in his insolvent debtor’s estate, so far as the payment of his debt is concerned, and is not, therefore, an officious interloper. Dix vs. Van Wyck, 2d Hill’s N. Y. Rep., 522 ; Post vs. Dart, 8th Paige’s Ch. Rep., 639.

1. Having an interest as a creditor in the property and effects of his absconding insolvent debtor, he is equitably entitled to the assistance of the Court to restrain Watkins from paying over to Solomon the full amount of the five hundred dollar note out of the effiects of Williams in his hands, until the usurious transaction can be investigated, and to have his debt paid, if there shall be found sufficient funds for that purpose in the hands of Watkins, upon the final hearing of the cause.

2. It was also insisted that the complainant in this case had an adequate common-law remedy by garnishment. Although the complainant might have sued out a process of garnishment under the provisions of the Code, yet, upon the facts as stated in the record, we do not think his common-law remedy would have been as complete and effectual, as in a Court of equity; besides, the latter Court having first taken jurisdiction of the cause, will retain it. Revised Code, sections 3040, 3041.

Let the judgment of the Court below be reversed.