#### Howland and another vs. Marr and another.

*Usury*— NI *te ante-dated*— Previous *oral agreement*— Interest *upon interest.*

By ch. 160, Laws of 1859, parties were allowed to contract for twelve per cent, interest on the loan and forbearance of money, bnt such rate was required to be clearly expressed in writing. By ch. 202, Laws of 1860, such contracts thereafter made for more than ten per cent, interest, were avoided. After this act *276was in force, a creditor took from his debtor a note for interest which had falle11 due on former notes at various times, before the passage of the act, ante-dated it to the average of the times when the several sums included therein had become due, and made it draw interest at *twelve*per cent. It appearing from the evidence that said note was executed in pursuance of an understanding and agreement between the parties had in 1859: *Held,*that it was not usurious.

APPEAL from tbe Circuit Court for *Kenosha*County.

Action to avoid a note and chattel mortgage, and to restrain tbe seizure and sale of tbe mortgaged property. Tbe defendant *Marr*was tbe mortgagee, and tbe sheriff of tbe county was also made defendant.

In April, 1860, in an accounting between tbe plaintiff *Meredith Howland*and said *Marr,*it was found that upon various notes running from tbe former to tbe latter, interest bad fallen due in various sums amounting to $831.00, and at various times, ranging from October 15, 1859, to February 2d, 1860 ; and that tbe average of said times, as computed by said *How-land,*was December 5th, 1859. *Howland*thereupon executed a note as of tbe last mentioned date, for said sum of $331.00, payable with interest at *twelve*per cent.; although cb. 202, General Laws of 1860, (which took effect on tbe 81st of March of that year,) limited tbe rate of interest which should be reserved on special contract to *ten*per cent. Tbe note was also executed by tbe plaintiff *Thomas*Howland; and a chattel mortgage was executed in part as security therefor. Interest was paid on tbe note at tbe rate of twelve per cent, for several years ; but in February, 1865, this action was brought to avoid tbe same, &c., on tbe ground of usury.

Tbe general effect of tbe testimony as to tbe previous course of dealing betweeen tbe parties, and as to an alleged special agreement between them in tbe fall of 1859, will appear from the opinion.

Tbe circuit court found for tbe plaintiffs, and rendered judgment in accordance with tbe prayer of the complaint; and tbe defendants appealed.

*J. J. Pettit,*for appellants.

*277*O. S. & F. H*Head, for respondents,

cited 9 "Wis., 361; 2 Cow., 678; 3 Green, 255 ; 2 Scam., 333; 1 Gilm., 690.

Cole, J.

Tbe evidence in tbis case abundantly shows that it was the custom between these parties to convert interest already due into principal, and to give notes drawing twelve per cent, interest for the amount of such interest. This was the course of dealing between the parties, and in some cases it appears the notes thus given were ante-dated to the time the interest became payable. Whether this was in pursuance of a general understanding and agreement between the parties, that interest, if not paid when due, should become principal and draw interest, it is perhaps unnecessary to determine. *Marr*says that there was such an understanding or agreement made as early as 1856. But *Meredith Howland*denies that there was a general agreement between him and *Marr*that if any interest became due and unpaid it should chaw interest at 12 per cent., and that he was to give his note for it accordingly; yet he does say it was so arranged from time to time, because he could not pay the interest, and *Marr*insisted that the interest should draw interest at 12 per cent. So that there is no room to doubt as to the custom of the parties. It was to convert the interest due into principal, the debtor giving a note for the amount, which drew the same rate of interest as the sum loaned. The circumstances of the giving of the $331 note are stated by *Marr*to be as follows. He says: “In the fall of 1859, I was'about going south to spend the winter, and I called on *Meredith How-land*for $1000, or so much of the money [as] he was owing me, and he could not pay me any money. I then wished to look over and see how we stood, and take a note for interest then due me ; *Howland*said it would make no difference; that he could not then well attend to it,, that he was going that winter to the legislature at Madison, and wanted to use all the money he had; and that he would arrange it up in the spring, the same as though it was clone then. *” Marr*farther states that, *278in tbe spring of 1860, be and *Howland*looked over their matters, and ascertained tbe amount due for interest on several notes wbicb be beld against Howland; that tbe time for tbe payment of tbe interest was equalized; that tbe note in question was given for the balance of tbe interest; that December 5th, 1859, was tbe time, as arranged by Howland, that interest was to be cast to, and therefore tbe note was dated as of that day. Howland, although be was subsequently called, does not deny that this agreement was made in tbe fall of 1859 in respect to the settlement of tbe interest then due; and therefore we may fairly assume that tbe note was given in May, 1860, in pursuance of tbe previous understanding and agreement between tbe parties. And tbe question arises, whether, in consequence of tbe note being ante-dated so as to carry out this agreement between tbe parties, it became affected with usury. At tbe time tbe note was actually given, tbe law limited tbe rate of interest to 10 per cent. (Laws of 1859, chap. 160; Laws of 1860, chap. 202); although in December, 1859, it was competent for parties to contract for tbe payment of 12 per cent, interest, in wbicb case such rate, exceeding seven dollars on tbe one hundred dollars, was required to be clearly expressed in writing. Sec. 1, chap. 160, *supra.*There certainly is not tbe least ground for saying that tbe parties resorted to this expedient of ante-dating tbe note as a cover for usury, or to evade any law upon that subject. There is not a particle of proof to show any corrupt motive in thus dating tbe note, or an in tention of taking more interest than tbe law allowed for tbe use of money. But tbe note was ante-dated simply for tbe purpose of carrying out tbe agreement and understanding of tbe parties, entered into tbe fall before, that tbe lender should receive interest upon interest after it became due and payable, at tbe rate of 12 per cent. Had tbe note been actually given in December, it would have been valid beyond all question. And does tbe circumstance that tbe note was not executed until some months after render tbe contract void ? It appears to *279us not The contract was in fact made in the fall, and it was subsequently reduced to writing so that tbe lender might have the necessary legal evidence of its terms and conditions. The interest was actually due in the fall, and should have then been paid, or a note given for the amount But as the borrower could not then attend to the matter, and wanted to use his money, he agreed to arrange it in the spring so that the transaction should have the same legal effect as though then consummated. Hence the note was ante-dated in conformity to this understanding and agreement. We do not think the facts show that the instrument is usurious. See *Patterson v. Storm,*14 Wis., 648; *Banks v. Van Antwerp,*5 Abbott, 411; *Andrews v. Hart,*17 Wis., 307.

*By the Court.*— The judgment of the circuit court is reversed, and the cause remanded with directions to dismiss the complaint