The age-herald. [volume] (Birmingham, Ala.) 1897-1902, 1899-06-15
IMPORTANT DECREE
IN LINDSAY CASE
Handed Down by Chancellor
Carmichael Yesterday.
THE QUESTION OF TENDER
Decision Materially Affects Building and
Loan Associations, and Was Await
ed With Much Interest-Win
Probably Be Appealed
THE QUESTION OF TENDER

yesterday by Chancellor John c. Car
michael in the celebrated case of Hen
rietta A Lindsay vs. the United States
Saving and Loan company, of ST. Paul,
Mimi, which has been in the courts since
1893.
The decree was rendered on an amended
complaint in which it was sought to in
yoke the benefits of section $3.50 of the
present code, which provides that all con-
tracts of a usurious nature can not be en-
forced except as to principal.
On an appeal to the supreme court from
q former decree of the chancery court the
contract was declared to be usulious and a
decree of reference was ordered.
The full text of the decree is given as
follows:
In the chancery court of Jefferson county,
F.. Alabama, Henrietta A. Lindsay VS..
. United States Savings and Loan COM
pany, et al.
The bill in this cause was filed by the
complaint as mortgagor to compel an ac-
counting from the defendant as mortgage
and to redeem from the defendant. 1t is
alleged and shown that the contract con-
tanned in the mortgage, or the loan, is
usuriouS. The respondent Savings and
Loan company is a building and loan asso-
citation, and on an appeal from a former
the contract to be usurious. The sole
question now for determination is: Does
the present code by section $3.50 abrogate
the long established rule of courts of
equity which requires a borrower coming
into such court to have a usurious con-
tract purged of illegal interest to pay the
amount borrowed with legal interest. This
section reads: "All contracts for the pay
ment of interest upon a loan or forbear-
ance of goods, money, things in action or
upon any contract whatever at a higher
rate than is prescribed in this chapter are
usurious and cannot be enforced either at
law or in equity, except as to the princi-
pal"
1t is contended by the complainant that
the words Eat law in equity" which
We're added to the statute as it existed
prior to the adoption of the code of 1895
(see section 1854 code of 1886, section 2092
code of 1850 have the effect to so change
the equitable rule requiring a borrower to
offer to pay the principal and legal inter-
est thereon, that such tender is not now
required to be made.
In paragraph of the original bill, COM
plant submits herself to the jurisdiction
of the court, and offers to do equity in the
following language: "Your oratrix is able
and willing, and hereby offers to pay to
said defendant corporation whatever this
court adjudges is fairly and justly due to
1t from your oratrixfor and on account of
may be adjudged to be entitled to and
hereby offers to do equity in the premises
as may appear to and be so adjudged by
this honorable court"
on the 18th day of December. 1898 (the
original bill was filed September 8, 1880,
complainant amended her bill, among other
things, as follows: Comes the complain
ant and moves the court to amend her bill
of complaint by adding to the Sth section
of the bill these words: THAT complain
ant Is advised by counsel that since the
filing of this bill the chancery rule requir-
ing complaint in a bill seeking relief from
a usurious contract to offer to pay per
cent. interest has been abrogated and
amended by the adoption of the code of
1896 of Alabama and that she. In equity, Is
only required to pay back all the principal
of the debt she contracted by borrowing
said sum of defendant corporation, and
that she is entitled to have all the pay
ments she has made on said loan. to-wit:
the sum of 81 800 deducted from the prin-
cipal and then pay the residue which IN
this case is the sum of $1,o13-5o, which she
hereby offers to pay.
When a borrower files bill IN court OF
equity to purge a transaction of usury,
he does not seek to enforce tie contract;
he seeks indeed to change Its terms, to
diminish its amount and to relieve 1t oil Its
illegal faint. In the case at bar the COM
plainant seeks to change the terms of the
contract DOtn as 10 the lllIt VI phy
and as to the amount contracted to be
maid thus varying the contract in two i'm
portant particulars. Courts of equity as
well as courts of law act upon the principle
that where wrongdoers come into court to
enforce an illegal executory contract or to
be relieved of the same where they are in
pari delicto they will be let severely alone;
The court VIII not lend Its mid to any of
them The exception to this rule is the
case where the borrowers seek relief in
equity against usury. Both borrower and
lender In usurious contracts are involved
in the unlawful transaction; tboth are
guilty. But the rule HAS been relaxed in
favor of the borrower upon the presump
ton that the lender has taken advantage
of the borrowers necessities, and that
hence his conduct is not as culpable as that
OF the lender. In the case of Henkle VS.. the
Royal Assurance society, | Vesey Sr. Re-
ports, ~Dage go Lord Chancellor Hardwick
says: Therefore, on an action to recover
money taken by way of a bride to a GUS
tom house officer or on a corrupt agree
ment, the court says 1T will not lie, as the
plaintiff was party thereto; nor is 1t any
answer that the defendant knew of this
illegality, for that answer would serve in
all these cases and in which equity differs
from the common law; for generally the
rule is the same, only equity adhers lit
tie stricter to ii; and that is the case in
usury in which equity suffers the party to
the Illicit contract to have relief. But that
depends on distinct reason; that whoever
brings a bill in a case of usury must sub
nit to paying principal and interest due on
which courts lay hold and viii relieve5 with
this further reason, that this court con-
siders usurious contracts in somewhat diff
ferent from what the law does. which con-
siGers them upon the foot of the statutes;
but this court, as fraud and advantage
taken on necessitous persons" Dowdal
VS.. Lenox, Ed Oh. IN. W 30 $. c. n.
Il. Chan. Reps, law ed.
Neither courts of law nor courts of
equity have in this state, prior to the pres
ent code, enforced usurious contracts ex-
cept as to the principal The statutes
against usury in the code of 1876 and in the
code of 1885 did not seek to enforce any
forfeiture in usurious contracts. except that
OF entire interest. 1t is not the policy of
our law to infict in any event any greater