Wild v. Crum

Appellant filed the bill in this cause, praying to be relieved of the usury in appellee's mortgage contract and to redeem. The trial court overruled appellant's exceptions to the register's report, ruling in effect that there had been no usury, decreed foreclosure accordingly, and this appeal followed.

There were two mortgages executed by appellant to appellee. In the first transaction, dated November 28, 1906, appellant received a loan of $2,000, for which he executed 11 notes for $13.33 each, payable one on the 1st day of each succeeding month, and one for $2,013.34, payable November 1, 1907. The parties concur in their testimony that it was their mutual intention that the loan should bear interest at 8 per cent., the lawful rate. In view of this testimony — which the trifling difference between the interest the papers purport to secure and that allowed by law is hardly sufficient to overcome — we hold the contract of November 28, 1906, to be free of the taint of usury. Ely v. McClung, 4 Port. 128; Van Beil v. Fordney, 79 Ala. 76. It follows that the account between the parties down to January 10, 1910, was correctly stated.

On the date last mentioned appellant paid to appellee the sum of $1,000, raised by a sale of part of the property, and executed a new mortgage on the remainder, payable in the sum of $1,100 January 1, 1911; $1,000 being the balance due on the mortgage debt of November 28, 1906. This contract, though it secured a part of the indebtedness which had formed the consideration of the mortgage of November 28, 1906, discharged the former contract and substituted another entirely new. On the undisputed facts, the concurring testimony of the parties, this new contract intended to secure the payment of interest at the rate of 10 per cent. per annum, and, since it was a new contract, with new security, operating to cancel and discharge the original, the conclusion that it was obnoxious to the statute of usury is irresistible. Read v. Flaketown Graphite Co., 206 Ala. 611, 91 So. 258.

This contract was negotiated and the papers prepared by Brook, appellee's agent. There does not seem to be any contention that Brook acted without authority in any respect; but, if he did, appellant adopted his work, and, for a time at least, accepted payments of interest thereon at the usurious rate. At law and in equity he must be held responsible for the contract, with all its intendments, so long as he stood as grantee thereunder and accepted the benefits thereof. Logan v. Chastang (Ala. Sup.) 91 So. 867;¹ Hartley v. Frederick,191 Ala. 175, 67 So. 983.

After three years the parties agreed, appellant to pay and appellee to accept interest at the legal rate, and thereafter no interest was paid at the usurious rate of the original contract — that is, the contract of January 10, 1910. This promise on the part of appellant was supported by the consideration of the loan, and, under some circumstances, would have sufficed to purge the contract of usury. Jackson v. Jones,13 Ala. 121. But there was no restitution of usurious payments nor any credits therefor on the principal sum to carry out the mandate of the statute. Code, § 4623. Subsequent payments were made as payments of interest, and some of them were in excess of the legal rate on the sum then due computed as the statute requires. In these circumstances the rule laid down in Nicrosi v. Walker, 139 Ala. 369, 37 So. 97, and Masterson v. Grubbs,70 Ala. 408, requires us now to hold that the contract was not purged by the subsequent agreement. From this it results that all payments of interest made on the new contract should have been credited to the principal sum, and a decree rendered allowing redemption upon the payment of the balance — $270, if we are not in error — plus a reasonable attorney's fee calculated on this basis.

The decree will be reversed, and the cause remanded for a decree in accordance with the view here expressed.

Reversed and remanded.

ANDERSON, C. J., and GARDNER and MILLER, JJ., concur.

¹ Ante p. 52.