Case Name: S. M. Siesel & Brother, plaintiffs in error, vs. West Harris, defendant in error
Court: Supreme Court of Georgia
Jurisdiction: Georgia
Decision Date: 1873-01
Citations: 48 Ga. 652
Docket Number: 
Parties: S. M. Siesel & Brother, plaintiffs in error, vs. West Harris, defendant in error.
Judges: 
Reporter: Georgia Reports
Volume: 48
Pages: 488–492

Head Matter:
S. M. Siesel & Brother, plaintiffs in error, vs. West Harris, defendant in error.
(Atlanta,
January Term, 1873.)
1. Usury — Plea of — Sufficiency—Variance. ;—Although a plea of usury does not “set forth the sum upon which it was paid, or to be paid, the time when the contract was made, where payable, and the amount of usury agreed upon,” etc., as required by section 3419th of the Code, yet if it does state the rate per cent, of interest which was agreed to be paid, and that the usury in the contract sued on amounts to as much as is due on the contract, and no demurrer or exception is taken to the plea, it is error in the Court to charge the jury that because the plea does not set forth the foregoing specifications they cannot consider it.
2.. Same — How Purged — Novation.—Money was loaned at usurious'rates to a firm composed of A, B and C, and a mortgage given by the borrowers on their stock of goods to secure the debt. The mortgage was foreclosed, and the fi. fa. was about being levied on the goods, when the mortgagors, insisting upon indulgence being given them, and threatening to raise the question of usury against the debt, it was agreed that the mortgage should be given up, a portion of the debt be paid in cash and the balance in three installments. The notes of A and B, who had formed a new partnership, (C having withdrawn and left the State,) were given for these installments. One of these notes being paid, suit is brought on the .other two:
Held, That the contracts sued on are not purged of usury.
Usury. Pleading. Before Judge Core. Bibb Superior Court. April Term, 1872.
*West Harris brought complaint against Siesel & Brother, upon two promissory notes, dated December 27th, 1867, payable to plaintiff or bearer, each for the sum of $450 00, one due April 15th, 1868, and the other October 15th, 1868. On the last note there were two credits, bearing date Pecember 28th, 1867, one for $216 77, the other for $62 50.
The defendants pleaded as follows:
That they were engaged in business at Cuthbert, Georgia, with one Jacob Miers, under the firm name of Siesel & Miers, the said Miers being the partner residing at Cuthbert and attending to the business there; that while so engaged and employed, he, the said Miers, without the knowledge or consent of these defendants, and without these defendants having any interest whatever in the transaction, executed and delivered to the plaintiff a mortgage deed, conveying to him all the stock of goods in the dry goods store of Siesel & Miers, in.Cuthbert, to secure the payment of one note of $1,500 00, payable to plaintiff, and another note for $405 00, bearing date Pecember 16th, 1867, payable to James M. Harris, and due at the date thereof. That on December 27th, 1867, plaintiff foreclosed said mortgage, and had the execution issuing therefrom levied upon the stock of goods of Siesel & Miers, and then, for the first time, these defendants had positive knowledge of the existence of said debt and mortgage; that defendants being pressed by said levy, and being ignorant of the consideration of said notes, and believing that they were bound for said debt, because the said Miers had executed said notes and mortgage, and being anxious to save their mercantile credit and honor, did enter into a settlement with the plaintiff, by which they paid him in cash $500, and executed and delivered .to him their three notes, one for $500 00, due at sixty days, one for $450 00, due April 15th, 1868, and one for a like amount, due October 15th, 1868; that defendants.afterwards paid off the note for $500 00, and made the payments credited on one of the notes sued on, the day it was given. That defendants have since ascertained that said mortgage was given by Miers to secure an individual *debt of his own, in which these defendants had no interest whatever; that the indebtedness was created for money borrowed by Miers, at usurious rates of interest, for his own private use; that the payments made by these defendants upon said debt, together constitute more than the principal sum borrowed by Miers, with legal interest thereon; that defendants, if liable at all upon said debt, have fully paid off and discharged that liability, and now owes the plaintiff nothing.
For further plea, the defendants say that plaintiff was indebted to them at the time of the commencement of said action, and is still indebted to them in the sum of $1,278 50, for so much money paid to plaintiff under a mistake, and to which he was not justly and legally entitled. Wherefore defendants pray that they may have judgment against the plaintiff for said sum of money.
For further plea, the defendants say that the money borrowed was at the rates of three per cent, per month, and five per cent, per month, and that the usury in said notes amounts to as much as the sum due upon said notes.
The evidence discloses the fact that no actual levy of the mortgage execution was made, but that the settlement set forth in the plea was effected under threats of such a levy. As to whether the usury was expressly embraced in the settlement, the testimony is conflicting. Miers left the State, and is not a member of defendant’s firm. The remainder of the evidence being unnecessary to an understanding of the decision, is omitted.
The Court charged the jury as follows:
1st. “The plaintiff having put in evidence the.notes of the defendants, is entitled to recover the amount of those notes,, less the credits thereon, with legal interest, unless the defendants have, by the proof, made out a good defense, or shown some reason, valid in law, why the plaintiff should not recover.
2d. “The defense set up is, that Miers, one of the partners, borrowed money from the plaintiff, not for the use of the firm, but on his own private account, giving "the firm notes therefor; *but I charge you, gentlemen, that all the partners are bound by the acts of any one, within the legitimate business of the partnership, because any partner has a right to examine into the affairs of the firm, and unless otherwise agreed, to have joint possession of its effects, to collect and apply its assets, to contract or otherwise bind the firm in matters connected with the business, and to. execute any writing or bond in the course of the business, and a person lending money to a partner for the firm, is not bound to see to its application, if the money was lent for the use of the firm. The plaintiff is, therefore, entitled to recover upon a contract made by one. of the partners for the use of the firm, against the others, unless there is fraud in the transaction. You will look into the evidence and see if there was any fraud in the transaction between Miers and the plaintiff. Fraud must be proven; it is not to be presumed. But I charge you, that it does not require as strong circumstances to prove fraud as in other cases. Slight circumstances may be sufficient to prove the existence of fraud. If there was a fraudulent combination between the plaintiff and Miers, by which the Siesels were injured, and that fact did not come to the knowledge of the Siesels until after the giving of these notes, and that fact has been proven to your satisfaction, then the plaintiff cannot recover.
3d. “The defendants also plead that Miers borrowed money from the plaintiff at usurious rates of interest, and that, if liable at all, they are only liable for the money borrowed, with legal interest thereon, but I charge you, gentlemen, that the defendants must set forth in their plea, tbe sum upon which the usury was paid or to be paid, the time when the contract was made, and the amount of usury agreed upon, taken or reserved. And unless they have done this, you cannot consider the plea of usury at all.
4th. “I charge you, gentlemen, that although the note and mortgage given by Siesel & Miers may have been affected by usury, yet, if you believe from the evidence that the parties agreed that the same should be taken up, and the usury and all other matter in dispute between them settled, and in consideration ^thereof the notes sued oh extending the time of payment should be given by S. M. Siesel & Brother, then there has been a novation of the contract. In that case, these notes rest on a good' consideration and are valid. If you believe from the' evidence that such a settlement was made; covering all matters of controversy between the parties, including the usury, then I charge you that the question of usury, and of all the matters in dispute between them, were merged in this, settlement, and the usury existing in the former contract cannot be set up against these notes. If, however, you should find from the evidence that there was fraud in the transaction between the plaintiff and Miers, and that the defendants, S. M. Siesel & Brother, did not discover the same until- after they had given their said notes, then I charge you that defendants are not foreclosed from setting up that fraud now.”
The jury returned a verdict in favor of the plaintiff for $620 73, with interest and costs of suit. Whereupon, the defendants moved for a new trial, upon the grounds that'the verdict was contrary to evidence and to law, and because the Court erred in the second, third and fourth divisions of the charge.
■ The motion was overruled, and the defendants excepted.
Lyon &. Irvin, for plaintiffs in error.
C. B. Wooten ; S. Harr, by John Ruti-iereord, for defendant.
Usury — Plea of — Sufficiency—Variance.—“The allegata and probata do not agree with that exactness which, in our judgment, should characterize strict pleading, and which it is the better plan in all cases to adopt; yet, inasmuch as the variance is only in the execution of the contract as made and alleged, and was only in substance what the parties agreed was the better plan to carry it into effect, we shall hold that the pleading and the evidence substantially agree, especially as the defendant made no objection to the introduction of the proof.” Watson v. Brightwell, 60 Ga. 214; principal case cited with approval.
Same — Same.—“An examination of this case will show that the plea, though informal and defective, was good in substance, and of course in such case the plaintiff by failing to demur waived the formal defects in the plea, and the court should have treated) the plea as good for the purposes of the case.” Crew v. Hutcheson, 115 Ga. 535, 42 S. E. Rep. 16; principal case cited with approval.
Same — Same.—Principal case cited with approval in Haiman v. Moses, 39 Ga. 708.
Same — Same.—Principal case cited with approval in W. U. T. Co. v. Fain, 52 Ga. 18.
Same — Same.—Principal case cited with approval in Guthman v. Castleberry, 49 Ga. 272.
Same — Same—Same.—Principal case cited with approval in Smith v. Rawson, 61 Ga. 210.
Same — How Purged. — Principal case cited with approval in Houser v. Bank. 57 Ga. 98.

Opinion:
Trippe, Judge.
The plaintiff below, on the trial, did not except or demur to the plea of defendant, on the ground that it was not as specific in its details as section 3419 of the Code requires. The evidence on the question of usury was all admitted without objection; the whole argument to the jury was on that evidence, indeed, the plea of usury was the only defense insisted on, and it was error in the Court to charge the jury that because the plea did not contain all the specifications the law *required, they could not consider it. The plea did state the rate per cent, of interest which was agreed to be paid, and that the usury in the notes sued on was as much as the amount of the notes. This may have been a defective plea, and a demurrer for want of being full enough as to -all the facts required by the Code, might have been sustained. But it was too late to raise this objection after all the evidence was introduced and argument heard, by asking the Court to charge the jury that they could not consider the plea. If the plaintiff would not have been bound by a waiver of a plea altogether, he certainly could bind himself by waiving a plea defective only in not being full in all the details entering into it. His ; ction in this case was as strong a waiver as if it had been in writing, and it would be giving a party an unjust advantage to permit him to raise Such a point by a request for the Court so to charge. See 39 Georgia, 708.
The doctrine of novation insisted on by the counsel for defendant in error does not apply in this case. The question is, was' the contract purged of the usury. We do not think it was. Two of the original three debtors made the new noces, (the third debtor having left the State, insolvent) the notes were given to the same party who held them before, and the full amount of the claim, usury and all, was included in the new contract. It is true the mortgage was given up; but if that were sufficient to purge a contract of usury, it would open the djir so that the whole law of usury could have been set aside, if the lender ever demanded and took a mortgage as a security and afterwards, upon agreement, canceled it.
Section 2025 of the Code says: "The effect of usury is co annul and make void the contract for the usury; the lender having the right to recover the principal sum loaned, with interest." If, by the statute, that portion of the contract in excess of the lawful rate of interest is annulled and made void, the parties to that contract cannot make it valid and binding. The substitution by the parties of a new note or bond for one affected by usury will not avail: 3 Esp. 22; 8 T. R., 390.
If the parties agree that the bond or note shall hr destroyed, *and that the borrower should give a new one to a 'third party to whom the lender owed the same amount, and it be done, the new obligation was held good: 7 Mod., 118. So where a promissory note, tainted with usury, was transferred to a third party, who knew nothing of the usury, for a valuable consideration, and the maker of the note afterwards gave that party a bond for it, such bond was held valid: 8 T. R., 390. But if that holder, upon being informed of the usury, take a new bill in lieu of it, drawn by one of the parties to the original usury and accepted by a third person for the accommodation of the other party, he cannot maintain an action against the acceptor: 2 B. & A., 588.
Comyn on Usury, page 185, lays down the general rule, that when the original parties to the usury are parties to the new contract or security, and it be given in substitution of the old one, such new cpntract or security will be void. If when the new security is given, the usury is deducted, and the new promise is to pay only the principal with lawful interest, that promise, according to all the authorities, is valid. But as we have said, in this case the present parties to this contract were original parties to the first contract, and it is given for the unpaid balance of that contract, usury included.
Judgment reversed.