DEFENSE OF USURY.

Court of Appeals for Franklin County.

#### Clutch v. Ebright et al.

Decided, October 10, 1916.

*Usury—Defense of, in Action on a Note—Evidence Necessary to Establish Usury—Verdict for Defendant for More Than the Principal May be Ignored—Negotiable Instruments.*

1. In an action on a promissory note tbe defense of usury may be established by a preponderance of the evidence.

*2.*Where, in such an action, the jury returns a verdict for defendant upon his cross-petition for t'he recovery of usurious interest in an amount in excess of extinguishment of the principal, the court may ignore such finding and render a simple judgment for the defendant.

*A. Ward Clutch, P. P.,*for plaintiff in error.

*Belcher & Connor,*contra.

*252Aldkead, J.

The parties stand in this court as they did in the court below. Plaintiff, A. Ward Clutch, brought suit against the defendants, L. P. Ebright and others, upon a promissory note. Defendants answered with a plea of payment. During the trial leave was obtained to file an amended answer, adding a plea of usury.

The trial resulted in a verdict in favor of the defendants in the sum of $22.48. A motion for a new trial was overruled, the affirmative finding of $22.48 was ignored, and a judgment rendered simply in favor of the defendants.

The case is here upon petition in error. 'The chief assignments of error relied upon by counsel are, first, the granting of leave during the trial to file an amended answer tendering an issue as to usury; second, the charge of the trial court that .the deense of usury might be established by a preponderance of evidence ; third, that the trial court erred in not setting aside the verdict entirely, because of the erroneous finding of $22.48 in favor of defendants, and in rendering a judgment upon' the verdict after eliminating such finding; and, fourth, that the verdict is not sustained by sufficient evidence.

We think it was discretionary with the trial court to allow the amended answer to be filed and that there was no such abuse of discretion in respect thereto, under the circumstances disclosed in the record, as would justify the granting of a new trial.

Upon the contention that the defense of usury must be established by clear and convincing evidence, cases .have been cited from the states of New York, New Jersey, Virginia and Georgia. In these states, however, it will be observed that usury involves a penalty or forfeiture, and the decisions requiring clear and convincing evidence are based upon the proposition that a penalty or forfeiture is involved.

There are many cases from other states holding that the defense of usury may be established as in other civil eases, by a preponderance of evidence.

In 39 Cye., page 1055, the author, after reviewing eases holding that the defense of usury must be established by clear and convincing evidence, says:

*253“This, however, is a higher degree of proof than is required by the great majority of eases in which the question of usury is involved. The rule is that the degree of proof required is the same as in other civil cases, and that the usury need not be proved with that strictness required to support a criminal charge. In other words, as in other civil eases, usury must be established by a preponderance of evidence, but this is all that is required.”

Section 8306, General Code, provides that payment of money or property by way of usurious interest shall, as to the excess of interest above the rate allowed by law, be taken to be payment on account of the principal. In other words, páymets of usurious interest are declared by our statute to be payments upon the principal. There is no forfeiture of the principal, nor is there any forfeiture of legal interest. The statute is remedial and not penal. See *Wheatley*v. *Waldo,*36 Vt., 237; *Nichols*v. *Stewart,*21 Ill., 106, *and Musselman*v. *McElhenny,*23 Ind., 4.

.Counsel for plaintiff in error, however, relies upon the case of *Boone*v. *Andrews et al,*10 C.C.(N.S.), 377. In the syllabus of this ease it is held:

“Where usury is pleaded as a defense to a written instrument in contradiction to the terms of such instrument, the burden is on the party so asserting it, and the plea must be supported by clear and satisfactory evidence.”

The case was not an action upon a promissory note where the usurious payments were asked to be credited on the principal under our statute. The case involved the setting aside of a written contract of a more or less intricate nature. We do not controvert the correctness of this decision and of the syllabus above quoted, but we have reached the conclusion, after full and careful consideration, that in an action upon a promissory note, where the usurious payments of interest are set up and asked to be applied as credits upon the principal, such defense1 may be established by a preponderance of the evidence.

The next objection relates to the affirmative verdict upon the cross-petition in favor of the defendants.

It is clear that, the defendants were not entitled under our *254statute to recover the excess of the usury after liquidating the principal. To that extent the verdict was erroneous.

Still we think the trial court was authorized to reject the erroneous part of the verdict and render a simple judgment for the-defendants. This the court did.

We have carefully considered the other objection, relating to the sufficiency of the evidence. As to the amounts of payments upon the principal and interest, and as to the amounts of commissions paid by the plaintiff, there is some conflict, but we are clearly of the opinon that the verdict and judgment in respect thereto are not against the manifest Aveight of evidence.

Counsel for plaintiff in error insists, however, that the plaintiff had a legal right to charge commissions in the making of a renewal of this loan, because he claims that the evidence shows that the loan Avas really for his brother and that plaintiff was acting as agent.

The controversy here is as to the fact. The notes were made to the plaintiff and the suit was • brought in plaintiff’s name. There is also evidence to the effect that the loan was made by plaintiff. There is evidence of some force to the effect that as between the plaintiff and his brother the loan was regarded as that of the brother. The trial court submitted this as a question of fact to the jury and their verdict implies a finding upon their part that the loan AA'as that of the plaintiff. While different juries might have arrived at different conclusions upon this question of fact, yet Ave are of opinion that a reviewing court would not be justified in disturbing the verdict upon this issue.

Finding no prejudicial error, the judgment will be affirmed.

Judgment affirmed.

Ferneding, J., and Kunkle, J., concur.