Opinion ID: 1771061
Heading Depth: 1
Heading Rank: 4

Heading: can barber and labarre use the usury statute to avoid payment of a debt which gold incurred for barber's benefit?

Text: Bell loaned Gold $46,000 for which Harvey Gold signed a $48,760 note. Gold in turn loaned the $46,000 in cash to Barber. When the property sold, Bell was to receive the $48,760 at 10% interest in addition a $7,500 profit from the sale of the property. All the parties expected to sell the house within a year. Thus, Bell would receive $15,136 [(48,760 - 46,000) + 4,876 + 7,500 = 15,136] for the use of his money which calculates to be 31% interest on a one-year note. Thus, Bell's loan was usurious to Gold. Miss. Code Ann. § 75-17-1 (Supp. 1985). LaBarre and Barber, however, cannot utilize usury as a defense against Harvey Gold. Usury is a personal defense which is only available to the debtor. Chandlee v. Tharp, 161 Miss. 623, 137 So. 540 (1931). In this case Bell loaned the money to Gold. Thus, the defense of usury is only available to Gold against Bell. More importantly, (the usury) statute protects and safeguards the borrower by penalizing sharply the lender in the usurious contract; that it is not meant to give the borrower an unjust advantage of the lender. Its good purpose should not be perverted to a source of legal fraud by borrowers upon lenders. The statute provides a severe penalty or forfeiture of the principal and all interest for its violation and should be strictly construed, [quoting from Byrd, et al. v. Newcomb Mill & Lumber Co., 118 Miss. 179, 79 So. 100, 101 (1918)]. Fry v. Layton, 191 Miss. 17, 2 So.2d 561 (1941). The case of Crabb v. Comer, 190 Miss. 289, 200 So. 133 (1941), demonstrates this Court's application of the usury statute in a similar factual situation. In Crabb the defendant admitted that he converted the plaintiff's property, but claimed he would not be financially liable for his wrongdoing because his transaction with the plaintiff was usurious. The Court rejected the defendant's argument holding: It is one of the oldest maxims of the law that no man shall, in a court of justice, take an advantage which has his own wrong for the foundation for that advantage. Id. at 190 Miss. at 296, 200 So. 133. Barber seeks to invoke the usury statute to avoid payment of a debt which Gold incurred for Barber's benefit. All these transactions were designed to allow Barber to live in and make a profit from a sale of the property and at the same time avoid attachment by his creditors. Barber and LaBarre also plead the usury defense to avoid liability for conversion and in turn enable Barber to retain the proceeds from the sale of the house. Applying the rule that no man should profit from his own wrongdoing, we find that the lower court did not err in dismissing the usury defense.