Case Name: McEwin vs Humphrey
Court: Court of Appeals of Indian Territory
Jurisdiction: Oklahoma
Decision Date: 1898-04-02
Citations: 1 Indian Terr. 550
Docket Number: 
Parties: McEwin vs Humphrey.
Judges: Clayton and Thomas, JJ., concur. I
Reporter: Indian Territory Reports
Volume: 1
Pages: 550–556

Head Matter:
McEwin vs Humphrey.
Opinion delivered April 2, 1898.
Usury — Promissory Note — Extension.
A promissory note was executed drawing 10 per cent, per an: Tire payee of the note sold same to appellant. When the became due, appellant refused to extend same unless apj would pay H per cent, per month Interest. This appellee Also paid $1.50 to the original payee for attending to the ter. Held, Such usurious payments did not render the note Yoid hut should he credited on the note.
Appeal from the United States Court for the Northern istriot.
William M. Springer, Judge.
G-. W. McEwin brought a suit in replevin against ivid Humphrey. The court directed a verdict for defend-Lt. Plaintiff appeals.
Reversed.
This was an action of replevin, brought by the appel-nt, who was the plaintiff below, against the appellee, who is the defendant below, to recover certain live stock upon aich had been given a chattel mortgage to secure the pay_ snt of a note described as follows, to wit: “$82.80. nita, I. T., October 24th, 1894. For value received, on e 24th day of January after date, I promise to pay to the der of F. G. Smith, the sum of eighty-two i80°0 dollars, pay-le at the office of Smith & Smith," Vinita, I. T., with 10 per nt. interest per annum from date until paid. The makers d indorsers of this note severally waive protest or notice 1)U nonpayment hereof. David X Humphrey. Witness: mark bn W. Scott. P. O.: Vinita, Cherokee Nation, Indian ¡rritory.” Indorsed on back: “F. G. Smith, F. M. Smith.” Le defendant alleged in his answer that the note and mort-ge were void, for the reason thatF. G. Smith, the payee, s taken from the defendant interest on the debt evidenced said note and mortgage corruptly and knowingly at a eater rate than allowed by law, to wit, interest at the rate 2 per cent, per month. On the trial the plaintiff introduc-F. M. Smith as a witness, and the'whole question turns on his testimony. And at the close of the evidence the fendant moved the court to instruct the jury to render a verdict for the defendant, on the ground that the evidence plaintiff shows that upon the note secured by the mortga¿ and relied upon by the plaintiff as the foundation of th action there was taken, reserved, received, and agreed to 1 received and reserved, a rate of interest greater than 10 p cent, per annum, namely, interest ranging from li per cen per month to 2 per cent, per month, both by F. M. Smit' the agent of McEwin, the plaintiff in this suit, and by M Ewin himself. Whereupon the court decided as follow “By the Court: At the close of the testimony in this case the part of the plaintiff, defendant asked peremptory instr tions of the court to the jury to return a verdict for him. T grounds of this motion are set out in it. The statute gover| ing the rate of interest in the Indian Territory is found Mansf. Dig. § 4732, including section 4735. Section 4732 p: vides ‘that all contracts for a greater rate of interest th; ten per cent, per annum shall be void as to principal a: interest. ’ ' Section 4735 provides ‘that all contracts whatev| whereby there shall be reserved, taken or secured or agrei ' to be taken or reserved any greater sum or greater value f| the loan or forbearance of any money than is prescribed this act shall be void.’ The note in evidence embracesl valid contract on its face, as by its.terms it draws a rate interest of ten per cent, per annum. The defense is bas< not upon the face of the contract, but by the facts establish] by the evidence, and not disputed, which occurred subsequ to the signing of the note, and before its final payment, appears from the evidence of payment that the plaintiff take a rate of interest for the note in question greater th| ten per cent., and whether a greater rate than ten per cei| is mentioned in the note to be taken or not is immaterial, it appears from the undisputed evidence that a greater rs] was actually taken. The evidence, as the case now stam shows that the plaintiff did take a rate of interest of 1 and pej; cent, per month, which, from the opinion of the cou| «rings this contract or this note within the purview of the tatute with reference to interest, and, a greater rate óf in-erest than ten per cent, having been taken by the plaintiff, he note is void, and all interest thereon; and the mortgage used upon it is not given for the security of any valid obli-ation, and is also void. The motion is therefore allowed, nd the j ury will return a verdict for the defendant. ” Wher-pon the plaintiff excepted to the ruling of the court, where, pon the jury returned the following verdict: “We, the [iry, find for the defendant against the plaintiff. T. B. Montgomery, Foreman. ’ ’ And plaintiff thereafter filed his otion for a new trial, which was overruled by the court, d judgment rendered upon the verdict. Thereupon plain-I! prayed an appeal to this court, which was granted.
William T. Hutchings, for appellant.
W, H. Kornegay, for appellee.

Opinion:
Townsend, J.
(after stating the facts); The de|ise in this action is that the note which is secured by the attel mortgage is void for usury. The burden of proof is, jnce, upon the defendant to establish this fact by a pre-iderance of the evidence. The note was payable to the iler of F. G-. Smith, who was the wife of F. M. Smith, lo claims to be a loan broker and attorney, and the only pess introduced on the trial was F. M. Smith, except one [ness, who simply testified to the value of the property |luded in the chattel mortgage. The defendant introduced fjesfcimony, and relies upon the cross-examination of said I. Smith to make out his case, Smithtestifi.es that his i has no interest in the note; that it was made payable to as a matter of convenience, and that he acted as agent of the defendant in the making and sale of note and mortgage to raise the money for the de fendant to purchase a span of mules; that the defendant re ceived $81.05 out of the sale of said note, and that he (Smith got $1.75 for making the mortgage in duplicate and for filing the same, and that constituted the $82.80, the amount of thi note, which was payable 90 days after date, with interest a the rate of 10 per cent per annum. The following questio: by plaintiff's attorney, and answer by Smith, were giver viz: "Q. Was there any understanding between you and th: defendant, at the time this note was executed, or at anl time prior thereto, that he was to pay any sum as interel on said note in excess of ten per cent. ? A. No, sir. Frol a careful reading of Smith's, testimony, while defendant! counsel seems to think there are some admissions by hi| that go to show that Smith was agent for plaintiff, and thi Smith either owned the note or had some understanding wif the defendant that a higher rate of interest was 'agreed upJ between him and the defendant, when the contract wl made, yet we think the court stated the effect of the ei| dence fairly in sustaining the motion of defendant to 9 struct the jury to find for defendant. It was certainly will in the knowledge of the defendant to establish cleam whether any agreement had been made between himself afl Smith for a higher rate of interest than 10 per cent, befdj or at the time of the execution of the note and mortgage, n sustaining the motion of the defendant, the court used fl following language in regard to the evidence: "The nil in evidence embraces a valid, contract on its face, as by 9 terms it draws a rate of interest of ten per cent, per 9 num. " "The defense is based, not upon the face of the cjjl tract, but by the facts established by the evidence, and 9 disputed, which occurred subsequent to the signing of 9 note, and before its final payment. " The plaintiff, in 9 reply to defendant's answer alleging usury, denies that tifl was any usury in the note, but that at its maturity heH fused to extend the note at a less rate of interest than 1|H nt. per month.. The plaintiff alleges he bought the note :om Smith, who was a loan broker at Yinita, Ind. Ter., ad agent of the defendant, about a week or ten days after íe execution of the same, and the plaintiff states he is a jsident of the state of Kansas. The defendant paid the rate interest demanded by the plaintiff, through Smith, for ime months, and Smith each time charged the defendant or §1.50 for attending to the matter for him, though it es not appear that there was any agreement between ith and defendant authorizing him to do so; hence the ¡fendant for some months was paying to plaintiff usurious |terest, and each time the note was extended a fee to Smith, .ich, without agreement, would also be properly charged usury. Now, the question presented is: It being con-sive that the original note and mortgage are not shown the proof to be tainted with usury, did the act of the intiff in demanding and receiving a usurious interest after iurity of the paper, for extending the same, make the Ite and mortgage void? "Where the original transaction |>s valid, but subsequently by a usurious agreement the íe of payment was extended, the taint of the subsequent tal contract does not effect the original contract. Where lyments on such usurious agreement were made to plain-rs husband as her agent, and plaintiff knew and permitted pm, she is chargeable with the sums so paid. Where Iney is due on a lawful debt, in connection with which a pious contract has arisen, all payments made on either |e must be credited on the valid claim. " Humphrey vs Cauley, 17 S. W. 713, 55 Ark. 143. "The loan and the se-rity being complete and valid, neither of them was affect-jby the usurious rate of interest inserted in the note and rtgage subsequently executed for the same debt, unless | unlawful interest was contemplated by the original agree-it; and there is nothing to show that it was." Johnson Hull, 57 Ark. 553, 22 S. W. 176, and cases cited. These are Arkansas cases, and are conclusive. The defendai seems to rely upon Garvin vs Linton, 35 S. W. 430, but a examination of this case shows it to be in harmony with tl cases cited above. The parties in Garvin vs Linton unde took to rescind a usurious contract, and eliminate the usur; Held, they could do so, and, upon rehearing in this case, r ported in 37 S. W. 569, it was held that where, by mistak part of the usury included in the first contract was carric into the second contract, the second contract was valid, e: cept as to the usury thus by mistake carried into the secoi contract. We think the usurious interest paid by the d fendant should be credited on defendant's note, and the fe charged by Smith, if he was acting for the plaintiff in e tending the paper, or the charge was known to the plainti should also be credited on defendant's note, and the ca should be reversed and remanded. |
Clayton and Thomas, JJ., concur. I