Case ID: tenn_14/html/0398-01.html
Source: Caselaw Access Project
Author: {"author": "Peck, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Coleman and others vs. Childress.
    
      A court of chancery has jurisdiction and will relieve against usury where the remedy is not plain and unembarrassed at law.
    The statutes against usury contemplate an equitable proceeding.
    Where one note is given for principal, and another note given for the usurious interest, and the note for the usurious interest has been paid off, a court of equity will apply the payment as a credit upon a judgment obtained on the principal notes.
    On the 9th of May, 1829, complainants borrowed of defendant Childress, for the use of Coleman, five hundred and fifty dollars, upon an agreement to pay defendant two hundred and fifty dollars besides lawful interest, making two hundred and eighty-three dollars for the use of the sum borrowed for one year. Notes were accordingly executed as follows; a note for the five hundred and fifty dollars borrowed, and another note for two hundred and eighty-three dollars, the interest agreed to be paid, in which all the complainants joined. Suits were afterwards brought upon both notes against complainants, and-upon the plea of usury being filed to the two hundred and eighty-three dollar note, the suit upon it was dismissed. Afterwards, and before final judgment in the circuit court upon the five hundred and fifty dollars, Daniel Ma-ding, one of the complainants, voluntarily paid the defendant the two hundred and eighty-three dollar note, and took a receipt therefor, which was lost before the trial. The defendant refused, upon the trial at law, to credit said five hundred and fifty dollar note with said payment. Upon an application to a circuit judge, upon a bill for an injunction filed in the chancery court, setting up the usury, praying a discovery and account, and that the payment made by Mading be credited upon the judgment obtained against the complainants on the five hundred and fifty dollars, an injunction was granted for the money stated to have been paid. The defendant answered the bill, and admitted the usury as stated in the bill, and that Mading had paid the two hundred and eighty-three dollar note, but insisted that it was paid in consideration of further advances made to Mading on his individual account, and objected- to the jurisdiction of the court. The Chancellor dismissed the bill, from which decision the complainants appealed to this court.
    
      J. Read, for the complainants.
    1. That there is nothing in the objection that the usury complained of is referable to the transaction or second contract between D. Mading and Childress for the loan of four hundred and fifty dollars, the court can need no authorities. The notes were given by all jointly, and severally, for the gross sum of eight hundred and eighty-three dollars. The judgment complained of is against them all. The money bona.fide due has been paid, and therefore the excess, in all conscience, should be enjoined.
    2. The trial is no bar to a hearing here. Upon the first note there was no usury, therefore no plea as to the usury could be of any avail. The payment of the two hundred and eighty-three dollars, though it operates in equity as part payment of the original sum, it is doubtful whether under the plea of payment it could avail at law against the five hundred and fifty dollar note. Equity would say that it should, but the strict rules of law might reject it. Where the question is doubtful and perplexing, equity will entertain jurisdiction. 1 Ten. R. 489: Cooke, 238, 374. Equity will take cognizance if the subject matter was originally equitable, though a trial has been had at law. 2 Ten. R. 266: Cooke, 178,417, 242: 3 Hay. Rep. 4 Hay. 197.
    3. Will take cognizance if the party has been prevented by accident, &c. 2. Ten. 269: Cooke, 421: 3 Hay. 305: 3Yerg. 167.
    4. Usury relieved in this State in equity. 2 Ten. 267: 3 Hay. 89, 211, 220, 305,128, 138, 305,
    
      5. That this court will order defendant to account for moneys overpaid. See case of Dey vs. Dunham, 2 John. Ch. R. 191.
    
      A. B. Bradford, for the defendant,
    made and relied on the following points:
    1. That the two hundred and eighty-three dollars were paid by Daniel Mading, one of the complainants, on his own account, out of his own effects, and in consideration that respondent would loan him, on the 4th day of April, 1829, four hundred and fifty dollars, therefore complainants Coleman and Champress are strangers to the consideration , and no one can complain but Daniel Mading on account of the payment, and that only when he applies for relief from the contract for the loan of the four hundred and fifty dollars.
    2. If the payment of the two hundred and eighty-three dollar note should be considered as part of the five hundred and fifty dollar debt or note, still complainants have not applied in time, but have suffered a verdict and judgment to be taken against them at law without making a defence or applying for the aid of a bill of discovery, and are therefore not entitled to relief. 3 John. R. 399, Thompson vs. Berry and Van Burén. The reason given for failing to have the matter settled at law is a bad one, and not such as to ground an application for relief in this court. King vs. Baldwin and Fowler, 2 John. Ch. R. 555. 2 Scott, 485, sec. 2, expressly gives the right to plead usury, and the matter to be tried by the jury.
    3. Whoever comes into this court to relieve himself from a judgment at law, founded on a usurious contract, must pay the amount really due. 1 Vesey 320: 3 Ves. andBeame, 14: Ex parte Serevener, 5 John. Ch. Rep. 142, 143: Fanning vs. Darkorn. And should the court consider the borrowing of five hundred and fifty dollars by complainants, and the payment of the two hundred and eighty-three dollar note by D. Mading one entire transaction; yet there is a balance due to the respondent by complainants for excessive interest of upwards of one hundred and fifty dollars.
   Peck, J.

delivered the opinion of the court.

We consider this a clear case for relief. The usury is confessed by the answer, and there is no justification in Childress’ receiving the usury from Mading. Though it was Coleman who borrowed the money on which the usury was taken, still, we are not to overlook the fact that Mading, who makes the payment, was a joint obli-gor with the borrower. Admit it to be true that Madmg made the payment voluntarily, still it was usury, and as the money was advanced, no matter on what pretence, equity will apply it as so much paid of the debt, in like manner as if the payment had been advanced prior to the loan to obtain it; otherwise this would be a shift and device to cover the usurious transaction. If no shift or device shall be permitted to cover usury, then it cannot, in this case, be tolerated that the money shall be paid and not allowed. All the parties are before the court, equity can be done and is done amongst the whole of them by giving to Childress what the law allows him to receive, and by allowing the payment as a credit - on the joint demand for which Coleman and Mading stand bound. They will be relieved of the hardship, which in the view the Chancellor has taken of the case, would otherwise rest upon them. On this point, the court really think the case too plain for grave consideration.

As to the question of jurisdiction, it is equally plain. The case, even though relief might have been reached at law, is certainly not plain and unembarrassed. The -very circumstance of the payment being made by Ma-ding, as well as the manner and time of it, render the question of coming at the right embarrassing; and surely when there is a clear equity, no demurrer to the bill, and in a case, too, where our statutes contemplate an equitable proceeding by requiring an answer as to tbe usury, we will not be astute in ousting the jurisdiction. The decree must bereversed, and an account be taken between the parties disallowing all the usury, and crediting the judgment with the money paid by Mading.

Decree reversed.

Catron, Ch. J. absent.