Case ID: ohio_13/html/0093-01.html
Source: Caselaw Access Project
Author: {"author": "Birchard, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*Zion Rains, Balaam Thompson, and William McDaniel v. William Scott.
    A court of equity will not relieve against a judgment, on the ground that it has been taken for a greater rate of interest than six per cent., where the defense might have been made at law.
    Nor will equity aid, unless the debtor tender the amount justly due for principal and legal interest, or show a sufficient reason for not making such tender.
    Former decisions of this court respecting legal interest are in this case examined and explained.
    This is a bill in chancery, from Highland county.
    The bill sets forth that, for the sum of forty dollars, and a note of sixty dollars, complainants executed to respondent a note for $125, payable in 341 days, with a power of attorney to confess judgment thereon. That on January 25, 1840, and soon after said note fell due, complainants being in straitened circumstances, and Scott threatening to take a judgment, they raised thirty dollars and paid it to Scott, who consented that two of complainants should give a note to the third for $118.75, payable December 25, 1840, and that he should indorse it to Scott, which was done, and the first note was surrendered and canceled. That when the second note fell due, under like circumstances as attended the discharge of the first, complainants gave a new note for $150.56, payable December 25, 1841, upon which suit was commenced in the court of common pleas, and judgment by default was rendered at the July term, a.d., 1842, for the sum of $150.56 debt, $6.10 damages, and $11.68 costs of suit. That there was no other consideration for the note than the said sum of forty dollars, and the note of sixty dollars, but that the entire balance was made up of usurious interest. That complainant has issued executions, and is about to levy, etc. That they could not make defense to the suit at law, because the facts were not susceptible of proof. The bill avers a tender of the sum actually due, and avers that the same is in court. Prays a discovery, an injunction, and for relief.
    The defendant demurs.
    ^William Scott, in support of demurrer:
    At the time of filing the bill and demurrer, and for a long timo subsequent, there was no pretense of a tender of money, nor was there-any statament in the bill in regard to a tender. That statement was made afterward, and without authority. Tet the bill, as it now stands, is regarded as so defective, that the demurrer ought to be sustained.
    It is defective because:
    1. It does not show what amount of money was tendered and deposited in court.
    This is material, for if the demurrer is overruled, the. court ought in justice at once to give the money deposited to the defendant; but this they can not do, because the bill does not show, nor is there any evidence in the case to show the amount. Besides, although the court would not probably require the same strictness as in a plea of tender at law, yet, a tender of the amount less than the sum which the complainants admit to be due, would be regarded as no tender. The statement in the bill on this subject is, therefore, thought to be too vague to avail the complainants. Rogers v. Rathbun, 1 Johns. Ch. 367; Tupper v. Powell, Ib. 439.
    2. The bill does not show that the complainants had not complete and adequate remedy at law. On this point the following authorities are referred to:
    Usury is a good defense at law, and can not be set up in chancery, when it might have been made in a court of law. Morgan v. England, Wright, 112.
    
      A court of equity will not relieve against a judgment at law, when there was a defense equally available at law. 2 Story, 178. So relief will not be granted when complainant has been guilty of laches, or might have procured the necessary proof at law as by filing a bill of discovery, etc. Ib. 179.
    A court of equity will not entertain a bill of discovery to assist a suit in another court if the latter is competent to grant the same relief. 2 Story’s Eq. 710; Galston v. Hough, 1 Johns. Ch. 547.
    *The complainants should have made a defense at law, and during the pendency of that action, filed their bill of discovery against the plaintiff at law, fully setting forth the nature of their defense, that the aid of a court of chancery was material, and that the matters upon which they asked a discovery, rested in the knowledge of the plaintiff at law alone, and were susceptible of no other proof. McIntire v. Mancius et al., 3 Johns. Ch. 45; 1 Ib. 543; 2 Marsh. 323; Brown v. Swan, 10 Pet. 502.
    After verdict and judgment at law without defense, complainants are not entitled to relief by discovery. Duncan v. Lyon, 3 Johns. Ch. 357; Thompson v. Berry and Van Buren, 3 Johns. Ch. 395; Brown v. Swan, 10 Pet. 502.
    Chancery will not relieve against a judgment at law, unless the defendant was ignorant of the fact in question pending the suit, or it could not be received as a defense. 1 Johns. Ch. 219, 98; 4 Ib. 510; 6 Ib. 87.
    To show that complainants are too late in asking for discovery or relief, and that the demurrer in this cause ought to be sustained, the court are particularly referred to the case of Duncan v. Lyon, 3 Johns. Ch. 357; Brown v. Swan, 10 Pet. 502; Story’s Eq. 422, 429.
    The complainants can not allege that they were taken by surprise in the case at law, because they acknowledged service of the writ when the suit at law was commenced, and there was a period of four months between the service and final judgment against the»complainants, without their taking any steps for their defense.
    The complainants had a remedy at law, if anywhere, which they have neglected, and a court of chancery can not, without departing from well-settled rules, take jurisdiction of their case.
    Jambs H. Thompson, for complainants:
    As the transcript does not show when the amendment to the original bill was made, or when the demurrer was filed, the court must presume that the demurrer was intended to meet complainants’ *whole case case, and to deny that there is any equity presented by the bill as amended, though it alleges that the money has been tendered, and is now in court.
    Upon the assumption that the court will hold the demurrer as intended to meet the whole case, I do not regard .the objection made by the defendant, that the amount tendered and brought into court is not specified, as availing anything in the present attitude of the pleadings, because the demurrer must admit the statement made in the bill as' true, and as by calculation the amount due can be ascertained, the objection can only fail on final hearing, when, if the fact be untrue, and it be found that a sufficient amount has not been tendered, the court would refuse relief, and then only would the objection avail.
    This case then, considered in the true light in which the pleadings present it, brings up but one question, to wit, Whether, after judgment at law on a usurious contract before satisfaction, a court of equity will grant relief against the payment of the usury, when the borrower offers to do equity by tendering the principal with legal interest?
    The case is not analogous in its principles to the case in Shelton v. Gill, 11 Ohio, 417, because the money due has been tendered and is brought into court, and the usury has not been paid, and there is no reported decision touching the question, except the one in Brockway v. Clark, 6 Ohio, 51, where relief was granted under somewhat similar circumstances without a tender. But as I suppose the court on the circuit regarded the proposition as an open question, I present it without any reference to the above cases.
    At law, according to the more recent authorities, the complainants bad a remedy, but they show sufficient i*easons why they did not avail themselves of it by the averment that they had no proof of the facts other than that which was to be found in the disclosure of the defendant, and which could only be obtained from him by a bill of discovery. Now it is true, under some circumstances, this bill of discovery might be used to aid a defense at law, but as a court of chancery *takes jurisdiction for one purpose, is not this in that class of cases where such court, having the case in possession, will afford the remedy concurrently with the courts of law? The jurisdiction of the court of chaneery is founded, in cases like this, on the assumption that the contract by construction is fraudulent, and as it grants relief in cases of fraud, the only proposition necessary to be maintained, is to show in what manner the fraud has been perpetrated. In all cases of this kind, the courts have decided that a usurious contract like the present is against public policy, and in violation of the statutes forbidding the taking of usury, and on this ground, from time immemorial, relief has been granted. 1 Story’s Eq. 300, and authorities there referred to.
    There is another reason, still more urgent on the enlightened judgment of the chancellor, requiring his interposition, and which excludes all doubt as to his power, to wit: that the contract in this case is against all conscience, and is grossly unreasonable and oppressive. 1 Story’s Eq. 324.
    On this last ground I rest the case, perfectly satisfied that on the statement of facts, the court can not hesitate. The law says, the lender shall have six per centum per annum. How is this case?
    January 12, 1839, money and note advanced, $100.
    January 20, 1840, paid in cash...........^........................ $ 30 00
    Executed a note for................................................... 118 75
    148 75
    Usury in this note, $42.75.
    On March 10, 1841, note executed for........................... $150 56
    Due on March 10, 1841, about..................................... 113 00
    37 56
    Add amount paid January 20,1840.............................. 30 00
    Usury of note sued on............................................... 67 56
    Intdrest on this note in judgment about........................ 5 00
    Total usury.............................................. $72 56
    Can such percentage be tolerated?
    ^McDowell and Collins submitted an argument on the same side.
    Scott, for defendant in reply:
    The counsel for the complainants in their brief, quote the cases of Brockway v. Clark, 6 Ohio, 45, and Shelton v. Gill, 11 Ohio, 418, to show-that a court of chancery will take jurisdiction of such cases as the one now before the court.
    
      In Brockway v. Clark, the bill was filed in aid of an action at law then ponding. Had the bill in this case been filed during the pendency of the action at law, and contained the proper averments, we do not deny but that the court might have granted relief.
    In Shelton v. Gill, the bill was dismissed: 1. Because no tender of the money acknowledged to be due, was alleged to have been made (which is in fact the case here). 2. Because the interest alleged to be usurious had been paid, and could not recovered back. And, 3. Because the comjfiainant had adequate remedy at law. And the court held either of these grounds to have been sufficient to defeat the bill.
    The first and third grounds are appli cabio to the present case, and ought to defeat, instead of sustaining the bill. Some of the material statements in the complainants’ bill are untrue, and should the court overrule the demurrer, the defendant will ask leave to answer.
   Birchard, J.

Two points are relied upon in support of the demurrer:

1. That the averment of tender is insufficient.

2. That defense should have been made at law.

As to the first objection it may be remarked, that in this respect the bill is vague and indefinite. Admitting that it is not necessary in a bill in chancery to sot forth a tender of money with the same precision that is required in a special plea at law, it is still necessary to state in substance the amount ^admitted to be due, so that the party may, if he desires, at once receive it, and if the precise amount duo is unknown, the bill should state that .fact, and aver the tender of a sum certain, charging it to be sufficient to cover any amount that, upon equitable principles, could be found against him. An averment of a tender of the amount admitted to be due is indispensable, in all bills of this description. It is held by all the elementary writers to be a general rule, that whatever is essential to the rights of the complainant, and is necessarily within his knowledge, should be alleged positively, and with precision. The same degree of certainty necessary in many casos of pleading at common law is not required. It is sufficient if the material facts are plainly and succinctly alleged with the necessary circumstances of time, place, manner, and other incidents. Mitford’s Equity Pleadings, 41.

The pleader in this case has not ventured to aver that he tendered any specific sum of money, at what time his tender was made, the manner of making it, or in what it was made. The bill says it was all that was due. He should have informed us how much he actually tendered, the time when the tender was made, and the manner of making it, and have averred that no more was due, leaving to the court to judge whether he could sustain his averment by proof, and if sustained, whether the ten-, der was sufficient.

We come then to the second point. The law is well settled, that where a party has had an opportunity of making his defense at law, and has neglected to do so, chancery affords no relief.

The allegation of the bill, upon which chancery jurisdiction is sought to bo given is, “ that the various matters of fraud and error alleged by your orators, are not apparent upon the record of said judgment, so as to be corrected at law, the whole matter having been so managed by the said Scott, as to deprive your orators of all remedy, without discovery from himself.” The bill does not anywhere inform us what was the peculiar management here alluded to, which prevented the facts of the case from appearing of record. We'are left in *the dark upon this point. Was there any specific act of fraud, which deprived the complainants of the right to appear, defend, and place upon the record, in the form of a bill of exceptions, the facts of the case? Nothing of the kind is averred; and certainly nothing of the kind can be inferred, when we consider the last clause of this vory vague statement, where the summing of the whole matter is, that a defense was not made for the want of a discovery of the facts from Scott. But the bill offers no reason, and states no matter of fraud which tends to excuse the neglect to file a bill for discovery in aid of the defense at law. The case is left, then, in this position. A bill is filed for discovery, substantially in aid of a defense at law, but after the suit at law is determined, and after it is too late to make any use of the discovery if allowed. This must be the true character of this bill, if, as we shall show, all the relief now sought could have been had, by making the proper defense to that suit. A court of equity will not entertain a bill for relief when a party, being sued on usurious notes at law, suffers judgment to be taken against him, without making a defense, or applying in due season for a discovery. 3 Johns. Ch. 395; 2 Story’s Eq. 178, 179.

We will next consider whether, upon the facts stated, a defense at law could have been made. The case at law, as shown by the bill, was debt upon a promissory note for $150.56, which was without any other consideration than the sum of $70, and interest thereon at the rate of six per centum per annum, from the date of the original loan. It was a clear ease of suit upon a note, as to which there was a partial failure of consideration. Since the passage of the act of 1834 (Swan’s Stat. 685), such a defense is allowed. Prior to the passage of that act, equity alone could afford relief. The observance of this change in the law will tend much to aid careless reasoners in reconciling, what they now suppose, conflicting decisions of this court upon questions of excessive interest.

The statute fixing the rate of interest is not a statute against usury, technically so called. It does not avoid the contract, for anything except interest beyond six per centum per annum. *It has been held, therefore, that on a contract to pay more than six per cent., the principal, with six por cent., maybe recovered. Lafayette Society v. Lewis, 7 Ohio, 80, pt. 1. That illegal interest once paid, can not be recovered back again. Shelton v. Gill, 11 Ohio, 417; Commercial Bank of Cincinnati v. Reed, Ib. 498; Spalding v. Bank of Muskingum, 12 Ohio, 544.

That when a note is renewed from time to time, and illegal interest added in, the jury may, in a suit upon the last note, examine the whole transaction and give the lender only the sum loaned, with six per cent, interest thereon. Baggs v. Loudenback, 12 Ohio, 153.

A slight examination will show that these decisions are consistent with each other, with the statute, and with reason. Interest once paid, can not be recovered back, fii’St, because if paid to a cox’poration prohibited from taking it, both parties are in pari delicto, Spalding v. Bank of Muskingum, 12 Ohio, 544; or, second, because if the contract be between natux’al persons, it has been paid on an executed contract which the parties were not forbidden to make, and changes the right of property. Illegal interest unpaid, whether sued for in an oi'iginal, a renewed, or sepai’ate note or bond, can not be l’ecovered, because the act of 1824 declares that six per cent, shall be recovered, and no more; ” and the act of 1834 allows the defense to be made at law.

Counsel have relied much upon the case of Brockway v. Clark, 6 Ohio, 51, and perhaps it deserves some notice in this connection. The bill in that case was filed while suits upon the notes were pending in the court of common pleas, on appeals from the judgments of a justice of the peace.

It was tried before the passage of the act of 1834, and at a time when a partial failure of the consideration of a note could not bo established at law. It is not a case in point.

The main ground taken by complainants’ counsel in support of the bill, and upon which they profess to rely with entire confidence is, that “ the contract in this case is against all conscience, and is grossly oppressive.” Far be it from us to apologize *for conduct like this. Yet in this case, as not unfrequently occurs in practice, the complainants have, by their own neglect, placed themselves in such a situation that relief can not be extended to them without adopting a rule contrary to well-settled law, and that would work much wrong if established.

The injunction must be dissolved, and decree entered under the statute for the amount of the judgment at law, with interest and penalty. Decree accordingly.