Dufrense v. Hammersten

The authorities cited in the foregoing opinion, commencing with Grace Co. v. Strickland, 188 N.C. 369, 124 S.E. 856, 35 A.L.R. 1296, and ending with 7 Am. Jur., page 941, section 248, except. 66 C.J. 174, 175, section 65, do not treat of usury, and have, at most, a very indirect bearing on the subject under consideration here. 66 C.J., pages 174, 175, treats of usury and is as follows:

"It may be stated generally that the elements of usury consist of: (1) An unlawful intent. (2) Money or money's equivalent. (3) A loan or forbearance. (4) An understanding that the loan shall or may be returned. (5) The exaction for the use of the loan of something in excess of what is allowed by law. To determine whether all these requisites are present, the court will disregard the form which the transaction may take, and look only to its substance, and if all the requisites are present, the transaction will be condemned as usurious, whatever form it may assume and despite any disguise it may wear, but if any one of these requisites is lacking, the transaction is not usurious, although it may bear the outward marks of usury."

That text does not support the foregoing opinion, but is to the contrary.

It is said in 66 C.J., 180, section 73:

"Since the purpose of usury statutes is to prevent excessive charges for the use of money, they apply only to those contracts that in substance involve a loan of money or forbearance to collect money due."

A renewal of a promissory note does not create a new indebtedness. In this case the contract sued on is a promissory note, not given to evidence an agreement to pay a loan made at the time it was executed, but to evidence an agreement of forbearance, for a time, to collect money then due.

When the original indebtedness from respondents to appellant was incurred, and the note was given to evidence the agreement to repay it was executed and delivered, ten per centum per annum was the maximum rate of interest which parties might agree in writing to pay. March 13, 1933, the legislature amended I. C. A., section 26-1905, which fixed the maximum rate of interest, and caused it to provide:

"MAXIMUM RATE OF INTEREST. — Parties may agree in writing for the payment of any rate of interest, on money due or to become due on any contract, not to exceed the sum of * eight per cent per annum; . . . ." (Sess. L. 1933, 391.)

At the time the indebtedness was incurred the maximum rate of interest, by written contract, in Idaho, was ten per centum per annum. At the time the note sued on was executed it was eightper centum per annum. Both the original note and the one sued on, called for interest at the rate of ten per centum per annum. The first note was not in violation of the law; the second violated the law and the public policy of the state limiting the rate of interest to be charged, collected and received.

The 1933 act of the legislature also amended section 26-1907, defining usury, as follows:

"USURY. — The taking, receiving, reserving, or charging a rate of interest greater than is allowed by this chapter, when knowingly done, shall be deemed a forfeiture by the person sotaking, receiving, reserving or charging to the benefit of theperson paying or being charged, of the entire interest which the contract carries with it or which has been agreed to be paid thereon, plus twice the amount of such interest. In case the greater rate of interest has been paid, the person by whom it has been paid, or his legal representatives, may recover back the amount of the interest thus paid from the person taking or receiving the same, plus twice the amount ofsuch interest in addition. No indorsee in due course of negotiable paper is affected by any usury exacted by any former holder of such paper unless he have actual notice of the usury previous to his purchase." (Italics indicate amendatory matter.)

The record in this case shows appellant, after the statute prohibiting the collection of interest in excess of eightper centum per annum became effective, took the promissory note sued on, given in consideration of his forbearance to sue on the original note, and, knowingly, charged, took and received ten per centum interest, per annum, on the principal of respondents' indebtedness to him.

The judgment should be affirmed.