Mann v. Brown , 71 Tex. 241 ( 1888 )

Walker, Associate Justice.

August 3, 1886, Brown the appellee, sued C. C. Fountain, C. M. Mann, J. J. Jackson and R. L. Dunman on a promissory note of date July 1, 1883, for three thousand one hundred dollars, and due twelve months thereafter bearing twelve per cent interest from date. Credits allowed in the petition were, June 18, 1883, three hundred and seventy-two dollars, and July 1, 1884, fourteen hundred and seventy-two dollars.

Defendants Mann, Jackson and Dunman pleaded that they were sureties, and further, that by parol contract between Brown and Fountain, made June, 1883, and in consideration of the payment of interest due for the first year, and the further sum of ninety-three dollars, being three per cent inter, est additional and for the next year, Brown had extended the payment of the note for one year from its maturity without the knowledge or consent of the sureties; and a like extension July 1, 1884, on payment of interest due and eleven hundred dollars on the principal, and sixty dollars, being three per cent interest in advance additional to the stipulated interest. The answer was not sworn to, nor was usury pleaded.

The defendant, Fountain, testified that he was principal on the note; that Brown knew that Mann, Jackson and Dunman were sureties. That in the latter part of June, 1883, in the town of Coleman, he saw Brown, and he agreed at that time verbally to extend the time of payment “if I would pay the three per cent additional interest and the twelve per cent interest then due as was shown by the note, and I paid him ninety-three dollars, that being the three per cent additional interest, and three hundred and seventy-twó dollars, that being the interest then due on the note. I believe I paid the money on or about June 24, 1883, at which time Brown again agreed to extend the time of payment until July 1, 1884.” The sureties knew nothing of this payment or the extension.

The Revised Statutes, articles 2978 and 2979, substantially reenacting sections 3 and 4 of an act to regulate interest, of January 18, 1840, provides:

“Article 2978. The parties to any written contract may agree to and stipulate for any rate of interest not exceeding twelve per cent per annum on the amount or value of the contract.

“Article 2979. All written contracts whatsoever which may, in any way, directly or indirectly, violate the preceding article by stipulating for a greater rate of interest than twelve per c.ent per annum shall be void and of no effect for the whole rate of interest only; but the principal sum of money, or the value of the contract, may be received and recovered.”

Article 2981 further provides that “Ho evidence of usurious interest shall be received on the trial of any case unless the same be specially pleaded and verified by the affidavit of the party wishing to avail himself of such defense.”

Our courts, therefore, can not pass upon facts making a contract usurious in absence of the special plea verified by affidavit and interposed by the party wishing to avail himself of such defense.

In 14 Texas, 601, Payne v. Powell, it is held that an obligation made to the payee for the payment of usurious interest, not being itself valid, was not a sufficient consideration for an agreement to extend the time of payment of a promissory note so as to discharge the sureties, such agreement to extend being held invalid for want of consideration.

It is evident that the reason given by Justice Wheeler for the invalidity of the agreement for the extension of the time of payment would be obviated by the payment of such consideration in money.

In 1 B. Monroe, 326, Kenningham v. Bedford, Chief Justice Robertson discussing like facts, holds: “The payment even of legal interest in advance would have been a valuable and valid consideration for forbearance; and so far as the validity of the contract, as to the creditor was concerned, the usury did not either affect the payment of the legal interest in advance on the principal obligor’s right (as against all the parties) to the indulgence for which he had paid a valuable consideration, which he had a perfect right, both legal and moral, to pay. His right to the indulgence can not be affected by the fact that either himself or his sureties might have elected to revoke the usury and make a different application of it.” (See also 7 B. Mon., 218; Brandt on Suretyship, secs. 309, 310.) It has been held otherwise where by statute “all contracts infected with usury” are declared void. In our statute the contracts.are, as before stated, void only as to interest, and at instance of the defendant. (Brandt on Suretyship, sec. 310 and cases.)

The testimony of Fountain is that the extension was agreed upon on or about June 18, 1883, between him and the payee of the note, Brown, for one year from maturity of it; that the contract was made and the money paid (ninety-three dollars for interest for the next year in advance in excess of twelve per cent, and the further payment of the full amount of the interest for the year ending July 1, 1883), the payment being made on June 24, before it was due; and that the extension was without the knowledge or consent of his sureties.

Our courts have frequently held that a valid agreement changing the terms of an obligation, as by extending the time of payment without the consent of the sureties, will operate as a discharge from their liability.

The judgment should have been for appellants. The judgment below is reversed and cause remanded.

Reversed and remanded.

Opinion delivered June 19, 1888.