Case Name: Moore v. Johnson
Court: Supreme Court of Appeals of West Virginia
Jurisdiction: West Virginia
Decision Date: 1891-02-02
Citations: 34 W. Va. 672
Docket Number: 
Parties: Moore v. Johnson.
Judges: Luoas, P., concurred with Holt, J.
Reporter: West Virginia Supreme Court
Volume: 34
Pages: 672–681

Head Matter:
CHARLESTON.
Moore v. Johnson.
Submitted January 21, 1891.
Decided February 2, 1891.
Usury — New Promise — Payment.
Where A. lends B. money at usurious interest taking B’s bond with C. and D. as sureties, and B. executes a deed of trust to C. & D. to save them from loss, and subsequently A. surrenders to C. & D. the bond taking instead their note, and C. & D. foreclose the deed of trust and purchase the land giving in payment the bond, and afterwards A. brings suit against C. & D. on the note, the noto is not in payment of the bond, and C. & D. are entitled to credit under the Code, c. 96, s. 6 for the interest paid by them in excess of the legal rate. (By a Divided Court.)
Henry Gilmer for plaintiff in error.
6r. W. Warren and L. J. Williams for defendants in error,
cited:
28 W. Ya. 473 ; 26 W. Ya. 116; 29 Graft. 591; 3 Min. Inst. 384; 20 Johns. 76; 1 Wend. 172; 23 Graft. 551; 30 Am. Hep. 385; 28 Am. Hep. 490; 21 W. Ya. 108; Acts 1882, p. 104.

Opinion:
Holt, Judge:
This was^ an action of debt brought in the Circuit Court of Greenbrier county, and tried by the court in lieu of a jury, on the 2d day of May, 1890, on a plea of usury, under our statute, putin by defendant Johnson alone, and without other plea. The finding and judgment were for defendants, to which plaintiff below excepted, and his bill of exceptions brings all the evidence into this record brought here on writ of error allowed to him.
The facts are as follows: On 6th October, 1881, plaintiff', Moore, loaned to one C.. C. Maddy one thousand five-hundred dollars for one year, at ten per cent, interest, four per cent, in excess of what our law allows. The interest for the year, one hundred and fifty dollars, was put into the note (single bill, it appears to have been.) * This note, hereafter called "old note," was dated 6th October, 1881, was for one thousand six hundred and fifty dollars, due twelve months after date, and executed to Moore, the lender, by Maddy, the borrower, together with defendants here, Johnson and Brown, as his sureties. It shows by indorsement thereon the following payments, and no others are claimed; 6th October, 1883, eighty two dollars and fifty cents by Johnson, eighty two dollars and fifty cents by Brown; 6th October, 1884, one hundred and sixty five dollars by Johnson ; 6th October, 1885, one hundred and sixty five dollars by Johnson ; and 6th October, 1886, eighty two dollars and fifty cents by Johnson. On the same day, 6th October, 1881, the borrower, Maddy, together with his wife, conveyed to M. T. Fenner, of Gallia county, Ohio, certain real estate in the deed mentioned and described, lying in that county, in trust to secure Brown and Johnson as in-dorsers and sureties from any loss or damage they might thereby sustain. Maddy, the borrower, was and is insolvent. He never directly paid anything, but Johnson and Brown, his sureties, paid all, as already stated. In 1886 the mother of Maddy who had dower in the Ohio land died, leaving it unincumbered, except a small judgment-lien having-priority over the deed of trust. Johnson and Brown wished to foreclose and buy at the sale, but Johnson was advised that he -would have to lift the old Maddy note (bond) in order to buy in the Ohio land under these procéedings. Johnson and Brown acted on this opinion ; went to Moore, the creditor, told him the dower was off the Ohio land; that they wanted to bring it to sale under the deed of trust, and buy it in for the old note; but, in order to do this, requested Moore to give them up the old note and take their note. To this Moore agreed; gave them up the old note ; took a new note for one thousand seven hundred thirty two dollars and a half, dated 6th October, 1886, due on demand, which is the note sued on. Johnson then took the Maddy note to Ohio, bought the Ohio land worth, say, two thousand five hundred dollars, valued at that for taxation, and paid for it with the Maddy note, except a prior lieu and costs, together amounting to about three hundred and fifty dollars. Johnson says he considered it a renewal of the old note. Defendant Brown, who does not join in the plea, says the consideration of the new note was the surrendering up of the old note to them for the purpose of enabling them to bay in the Ohio land under their deed of trust. Moore says he expressly sold them the old note at their instance,. to enable them to buy the land.
Our legal rate of interest is, and for a long period has been six per cent, per annum, and all contracts made directly or indirectly for the loan or forbearance of money or other things, are at that rate when none is mentioned, and are void as to any excess of interest agreed to be paid above that rate, and void no further. The defence of usury is personal but that includes the sureties sued on the usurious contract.
' Thus our present statute conforms to the equitable doctrine that be who seeks equity must do equity. That there may be no trouble as to the mode of defence and procedure, the statute further provides that the debtor may, as he has done in this case, say in a general way in his plea that the contract on which the action is brought was for the payment of interest at a greater rate than is allowed by law, to which the plaintiff shall reply generally, but may give in evidence any matter which could be given in evidence under a special replication ; and under his plea the defendant may give in evidence any fact showing, or tending to show, that the contract was for a usurious consideration; and upon such plea the court shall direct a special issue to try and ascertain (1) whether or not the contract is usurious; (2) if usurious, to what, extent; and (3) whether or not interest has been paid on the contract above six per cent., and, if so, to what extent. And if a verdict be found upon the plea of usury for the defendant, a judgment shall be rendered for the plaintiff for the principal sum due, with interest at the rate of six per cent, per annum, and, if any interest has been paid above that rate, the excess over and above that rate shall be entered as a credit on the sum due; and, if nothing be found due after applying all credits and all excesses of interest above six per cent., judgment shall be entered for the defendant. The old remedy in equity for discovery and relief is also retained. This statute by its terms, as I think, disposes of all the questions raised.
1. The sureties may avail themselves of this defence, not only because they are parties to the contract, but because they are contemplated and designated by the statute tinder tile term "defendant."
2. If the borrowers have paid off the usurious debt, they can not by an independent suit recover it back, nor when they are sued can they, after getting credit for all excess of interest paid, have judgment against plaintiff'for any overplus.
There cau be no bar to what is to be credited as a payment. If the new note sued on was but a renewal, a new note evidencing the old loan, with eighty two dollars and a half back interest on the old note added, the excess of interest paid on the old note, as well as that paid on the new, would have to be credited. But that in my view is not the case here. Defendants, Johnson and Brown, asked the creditor, Moore, in effect to take their new note, without Maddy, in absolute and unconditional payment and discharge of the old or Maddy note, and the equitable transfer thereof to them for their own purpose and for their own benefit, and to Moore's disadvantage, so far as it was a release of Maddy as his debtor, and so far as it was a relinquishment to them of his right to look to the deed of trust on the Ohio land for his pay. To this Moore assented, and a new note was given. That was as absolute and unconditional a payment of the old note by Johnson and Brown as if it had been in legal tender, operating also as an equitable transfer thereof to them, and was as full and as absolute payment by Moore to them of the excessive interest paid on the old note as if Moore had counted it out to them dollar by dollar. There could have been no device or evasion unless it was on tlieir part, and, I am sure, they were acting in good faith, although for their own advantage, and that they have on this trial related the facts just as they occurred. What has been said shows that the Circuit Court was right in crediting the amount found due, with the excess over and above six per cent, paid on or contained in the new note, treated as a new contract. But this Court being equally divided in opinion, the judgment of the Circuit Court must be affirmed.
Luoas, P., concurred with Holt, J.