Stevens v. Lincoln

Hubbard, J.

It is found, by the verdict of the jury, that the charge of $260*49, exchange on note unpaid, in the account between the defendant and P. & B. S. Hale, was a cover for usury for the forbearance of the notes there mentioned ; or that it was not a regular allowance of exchange in the course of business; and the question is, whether this usury has been paid to the defendant, as alleged in the declaration.

This sum of exchange constituted one of the items of the account, to settle which the note of $ 1958-91, bearing date January 1st 1840, was given; and it is contended by the defendant, that the giving of this note was a payment of the account, and consequently that the usury was paid more than two years before the commencement of the suit. But this was no payment of the usury. It was the mere promise to pay it; and though the items of account were merged in the note, the usury was neither purged nor paid. This note was taken up on the 4th of March 1840, by the payment of $ 1458'91 in money, and by a memorandum check of $500, and the plaintiff assumes that this was a payment of the. note ; and he relies upon it to prove the receipt of the usury. If this was a payment of the usury, it would admit of very serious question whether the action was brought within the time limited by the statute. But we are of opinion that the memorandum check was not a payment of the balance due on the note. It was a mere substitution of another promise. A memorandum check is merely prima facie proof that the drawer owes the holder, and is open to explanation, and may be controlled by evidence, like a receipt.

In regard to the payment of the $ 1458-91, whether this was a payment of the usurious interest or a part of it, we are of opinion, that while the usurious interest is unpaid, there remains the lotus penitentice; that the party may relinquish it, and recover for the balance of his debt — the contract not being rendered void by the statute. And in the absence of proof as to any appropriation of a partial payment, the law will apply a payment to the valid demand rather than to the illegal one; and the balance which remains unpaid, if it exceeds the usury agreed to be paid, includes the usury ; so that, on the one side, the debtor shall not recover back any part of that which he honestly owed, by the allegation, on his part, that the payment made by him was the payment of the usury; nor, on the other hand, will the law permit the creditor to secure to himself the avails of his illegal contract, and when he sues for the balance due on the contract, to aver that the usurious interest was contained in the previous payment, and that the residue is justly due. This view of the law, we think, is fully sustained in the case of Wright v. Laing, 3 Barn. & Cres. 165. That was an action to recover the penalty upon a usurious transaction, in which the creditor had sold goods to the debtor and had also lent him money on usury, and in a settlement took three bills for the whole amount, in which the usury was included. The court held, that where a payment was made without any special appropriation at the time, the law would appropriate the payment towards the extinguishment of the legal demand, because the lender might repent of the illegal bargain and refuse to receive the usury ; that space should be given for repentance; and that he should not be treated as having completed the offence, without full proof that he had not only agreed to receive, but had actually received, the usurious interest. In this action, whether the debtor or his assignee is plaintiff, the burden is on him to prove the receipt of the usury, and where no appropriation of a partial payment is made, the law will not presume it was on account or in fulfilment of the usurious bargain.

In regard to the payment of the 35 per cent., if it was a payment to the defendant by the plaintiff, as assignee of the Hales, of a dividend on their debt to the defendant, we think it does not prove the averment, in the declaration, of a payment of usury by the Hales, but that the variance is a fatal one.

Verdict set aside, and a new trial granted.