Case Name: J. H. Bunn et al. v. Kinney & Lodwick
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1864-12
Citations: 15 Ohio St. 40
Docket Number: 
Parties: J. H. Bunn et al. v. Kinney & Lodwick.
Judges: Brinkerhoee, C.J., and Ranney, Wilder and White, JJ., concurred.
Reporter: Ohio State Reports, New Service
Volume: 15
Pages: 40–43

Head Matter:
J. H. Bunn et al. v. Kinney & Lodwick.
1. The act of March 14, 1850 (2 Curwen, 1569), only authorized parties “to stipulate for interest at any rate not exceeding ten per centum yearly,” hence, a contract, under this statute, for a rate of interest exceeding this, is illegal and void; and the result is the same, whether the illegal rate is contracted for in express terms, or by stipulating for interest at the highest legal rate upon a sum consisting in part of usury.
2. The right to demand, and the obligation to pay, interest at a higher rato than that of six per centum yearly, can only be created under this act, by special contract, evidenced in the mode prescribed by the statute,' and where money is loaned at interest, in the absence of any valid contract fixing a different rate, the interest is to be computed at the rate of six per cent, per annum, agreeably to the act of January 12, 1824.
3. Therefore, where money was loaned, and a promissory note taken therefor, payable in four months, calling for the payment of an amount greater than the aggregate of the sum loaned, and the interest thereon for four months, at the rate of ten per cent, per annum, and providing for the payment of interest on the note after maturity, at the rate of ten per cent. — Held: that the payees could recover no more’ than the sum loaned with interest thereon from the date of the note, at the rate of six per cent, per annum.
Error to tbe district court of J ackson county.
Tbe original action was brought in the court of common pleas of Jackson county by the defendants in error, against the plaintiffs in error, as the makers of a promissory note of which the following is a copy:
“ $950.00. Jaclcson, Ohio, Nov. 26, 1858.
“ Four months after date; we promise to pay to the order .of Kinney & Lodwick nine hundred and fifty dollars, value received, with interest at ten per cent, after due.
(Signed) ' “ J. H. Bunn,
“H. C. Hale,
“John Nelson.”
Upon the trial, the only question being as to the amount which the plaintiffs were entitled to recover, the case was submitted to the court on an agreed statement of facts substantially as follows:
The note was executed and delivered by defendants, at its date, and was in terms, as hereinbefore stated. The only consideration of the note was the loan by the plaintiffs to the defendants of $891.57 for four months, from the 26th day of November, 1858, till the 26th day of March, 1859; and the sum of $58.42i was included in said note as interest on said sum of $891.57 for said term of four months, and for no longer time; and the said sum of $950, so made up, was to bear interest at ten per cent, per annum, from said 26th day of March, 1859.
Upon this agreed statement of facts, the court held that the plaintiffs were entitled to recover the sum actually loaned, with interest thereon from the date till the maturity of the note, at the rate of six per cent, per annum; and with interest thereon at the rate of ten per cent, per annum, after maturity.
A computation having been made upon this basis, the plaintiffs recovered judgment accordingly, for the sum of $1031.24, to bear interest from rendition, at the rate of ten per cent.
To this ruling and judgment of the court of common pleas, the defendants excepted, and upon their petition in error, the district court of Jackson county, subsequently rendered a judgment of affirmance, which is now sought to be reversed.
Keith, $ Hastings, for plaintiffs in error:
1. The court of common pleas erred — 1. In rendering a judgment bearing interest at the rate of ten per cent, per annum. 2. In rendering judgment for interest at ten per cent, per annum on the $891.57 from 26th March, 1859. 3. In rendering judgment for interest on that sum at a higher rate than six per cent, per annum.
2. The district court erred in affirming the judgment of th« common pleas.
JE. Glover, for defendants in error.

Opinion:
Scott, J.
By the agreement of the parties, under which the note sued upon, in the original action, was executed, it was intended to provide for the payment of interest on the sum loaned at the rate of nearly twenty per cent, per annum, foi the period of four months; and that the aggregate sum compounded of the money loaned and this usurious interest, should thereafter bear interest at the rate of ten per cent, per annum.
The statute in force at the date of this transaction, did not permit parties to contract for the payment of interest at a rate exceeding ten per cent, per annum.
It would have been entirely competent for them to contract for the payment of interest on the sum loaned, without designating the rate, in which event the lender would be entitled to the statutory rate of six per cent, per annum, and no more. Or by special contract, evidenced as the statute requires, they might have fixed upon any different rate of interest not exceeding ten per cent, per annum. But the special contract in this case required the payment of interest at a rate higher than this, during the whole time that the loan should be retained by the borrower.
So far, therefore, as the contract purported to prescribe a special rate of interest, it was in violation of the statute, and wholly void. It needs no argument to prove that a contract to pay ten per cent, on a sum greater than the indebtedness arising from the loan, is, in substance and effect, a contract to pay more than ten per cent, interest on the real principal.
It follows, therefore, that in the absence of any valid contract for a special rate of interest, the plaintiffs below were entitled to recover interest on their loan, only at the statutory rate of six per cent.
This conclusion is not only warranted by the logic of the case, but is required by the policy of the statute, which was not intended to hold out inducements to usurious contracts, by securing to the usurer, at all events, the highest rate of interest which he could have legally obtained by special contract.
The judgment of the district court will therefore be reversed ; and, proceeding to render the judgment which that court should have rendered, the judgment of the court of, common pleas will be reversed, and judgment entered for the plaintiffs below, for the amount actually loaned, with interest thereon from the date of the note, at the rate of six per cent, per annum.
Brinkerhoee, C.J., and Ranney, Wilder and White, JJ., concurred.