Anderson v. Scandia Bank

Dickinson, J.

Appeal from an order overruling a demurrer to the complaint. It appears from the complaint that the plaintiffs .are husband and wife; that, pursuant to an usurious agreement between them and the defendant, the latter loaned to the plaintiff Carolina Anderson, for the period of six months, the sum of $14,-5Ó0, for the use of which the plaintiffs gave their promissory note for the payment of the sum of $16,000, with interest thereon at the rate of ten per cent, per annum, and secured the same by a mortgage of real property owned by the plaintiff Carolina; that pursuant to the agreement between these parties, and for the purpose of evading the usury law, the note and mortgage were made, on their face, in favor of one Holmer, who in fact had no interest in the transaction, and he indorsed the note, and assigned the mortgage to the defendant, at the time of their delivery; that the plaintiff Carolina has paid $4,600 of the principal, and $2,280 as interest, and. that she has demanded the repayment of the same. The relief sought is (1) that the note and mortgage be adjudged void, their enforcement enjoined, and their surrender compelled; and (2) the recovery by the plaintiff Carolina of the money so paid by her.

1. Holmer was not a necessary party, and his nonjoinder did not constitute a sufficient ground of demurrer. According to the complaint, he has no interest in the subject of the action, or in the relief sought, and never had any interest in the matter.

2. The defendant demurred specially to that part of the complaint upon which is based the claim of the plaintiff Carolina to recover back the principal and interest paid by her. If this part of the complaint sets forth a cause of action, it is one in favor of the plaintiff Carolina only, and is a different cause of action from that pleaded in favor of both the plaintiffs; and it may properly be demurred to, although it is not separately stated. Bass v. Upton, 1 Minn. 408, (Gil. 292.) We should therefore consider the sufficiency of the case stated to entitle Mrs. Anderson to recover the principal and interest paid by her. It does not appear from the complaint that the interest paid ($2,280) exceeded the interest which had accrued at the ’ time of such payment on the money loaned, ($14,500,) computed at the rate of ten per cent, a year. The interest at that rate up to the time of the commencement of the action would exceed the sum paid as interest, and it is not shown when the payment was made. Neither does the complaint show .that the payment was not voluntarily made. The question then arises whether money voluntarily paid to the usurious creditor on .account of the principal, or for interest, and not exceeding what would be the interest computed at the rate of ten per cent, a year, can be recovered back. It cannot be so recovered unless Laws 1879, ch. 66, § 2, gives a right of recovery. Cornell v. Smith, 27 Minn. 132, (6 N. W. Rep. 460.) Irrespective of the rule which requires a strict construction of statutes imposing a liability in the nature of a penalty, or subjecting to a forfeiture, this statute .cannot be given the extended construction which would be necessary to support the plaintiffs’ claim of right, upon the facts alleged, to recover the principal or interest paid.

Such payment we must assume to have been made voluntarily. Section 1 of the statute cited prohibits the taking of more than ten per cent, interest. Section 2 provides that any person who “shall have paid” for interest “any greater sum or value than is above allowed to be received may * * * recover, in an action against the person who shall have taken or received the same, * * * the full amount of interest or premium so paid.” This does not authorize the recovery of the principal, .if that has been voluntarily paid; and only those who have paid as interest a “greater sum or value than is above allowed to be received” (ten per cent.) can recover the “interest or premium so paid.” Hence, so far as appears from the complaint, the plaintiff Mrs. Anderson is not entitled to recover the money paid, either on account of the principal or as interest. The provisions of the third section of the act, allowing a recovery from the original holder of negotiable paper, tainted in his hands with usury, of both the principal and interest paid by the maker to an innocent purchaser of such paper, affords no reason for a construction of the previous section different from that above indicated. In such case the payment is not properly voluntary. The innocent holder of such paper is, by the terms of the statute, entitled to recover notwithstanding the usury, and the maker is compellable to pay. Hence the statute gives him the right to recover from the person chargeable with the usury what he has paid pursuant to his obligation towards the innocent holder of the paper. The case is different where the payment has been made to the original party to the usurious contract. It is ordinarily optional with the debtor whether he will pay either principal or interest, and the necessity for statutory protection, by means of a right given to recover back money paid, is not the same as in the case of negotiable paper held by innocent purchasers. For these reasons we think that the demurrer should have been sustained as to this separate demand of Mrs. Anderson.

3. It is further pleaded as a general ground of demurrer to the complaint that two causes of action are improperly united. As already intimated, we are of the opinion that the plaintiffs seek to recover on two causes of action, which are separate, and which cannot be properly joined, because, even though they may both be “connected with the same subject,” they do not both “affect all the parties to the action,” which is one of the statutory conditions of a joinder of separate causes of action. 1878 G-. S. ch. 66, § 118, subd. 7. The cause of action for the cancellation of the usurious securities given by both the plaintiffs is one existing in favor of both. The right to recover the money paid by the wife is hers alone. Her husband is in no legal sense interested in it. It is a distinct cause of action in her favor alone. The order overruling the demurrer will be reversed.

Vanderburgh, J., did not take part.

(Opinion published 51 N. W. Rep. 1082.)