Court Opinion

ID: 7208008
Source: CourtListenerOpinion
Date Created: 2022-07-24 17:17:36.837828+00
Date Added: 2024-06-11T16:16:44.245855
License: Public Domain

*225Same Case — Application Poli a Ré-heaiuííg.
Although the Civil Code, art. 1929, speaks of interest as “ the damages due for delay in the performance of an obligation to pay money,” it is perfectly clear, that a note may be taken, either for property sold on a credit., or for an existing debt, with interest from its date, without being usurious. Had the note in suit stipulated for interest at ten per cent absolutely from its date, the debtor would not have been in mora, until after its maturity. Such a note would only differ from the one sued on, in this, that in the latter a condition was inserted favorable to the debtor, the performance of which was optional with him, and which if performed would have exonerated him entirely from the payment of any interest whatever. Can such a condition be construed to make a cbntract usurious, which, without it, would have been binding and legal 1 Will not a creditor who loses his money by such a process of reasoning, consider himself a victim to one of those hard constructions and strained inferences, of which Lord Bacon says, that wise Judges should beware ? Much importance has been attached to the fact, that by the published terms of the sale, it was to be on a credit bf one, two, and three years. On this fact the decision of the court seems to have been entirely based. It is argued, that in consideration of this extended credit, the purchaser paid more for the property than he would otherwise have done — that he paid for the time, in the enhanced price. But the court should also have inferred, that the purchaser likewise took into consideration, that, on failure to pay at maturity, he would be responsible for interest from the day of sale. If the credit operated to enhance, the penalty tended to diminish the price.
By the English law, which is extremely rigid against usury, which vacates the contract entirely, and renders the taking of more than legal interest an indictable offence, it is not considered usurious to stipulate for even a higher rate of interest than that allowed by law, where the debtor is permitted to discharge both the interest and principal, by paying the latter at the time fixed on. 7 Bacon’s Abridgment, 190, etseq. Chitty on Contracts, and Hawkins’ Pleas of the Crown.
As to the ownership of the note : The court say, that D. M. Cotton alleged, that the note was received by the appellants, Lambeth & Thompson, as collateral security for future advances, and that this has not been denied by them. No inference unfavorable to Lambeth & Thompson should be drawn from this circumstance, as they could not have denied this allegation. To have done so would have been in the nature of a replication, not allowed by our practice. The note, whether given as a payment, or to secure future advances, was a negotiable instrument, transferred before maturity, which Lambeth & Thompson received as so jnuch money. If V. F. Cotton chose to pay, both for himself and his partner, he cannot recover back what he has so paid. Had he not volunteered the payment, Lambeth & Thompson might have secured from his partner, the share for which he was responsible to them. Cotton’s wife has no more right than her husband to claim the note. There was nothing on it to show her title. It was endorsed in blank, and in the possession of the husband.
Morphy, J.
A re-hearing is prayed for in this case. No new arguments, or authorities, have been adduced, in relation to the question of back interest, (as it is called,) but the rule stare decisis, has been pressed upon us with zeal and ability. The counsel has shown, by the original record of the suit of Lauderdale v. Gardner, that the facts in that case were different from what we supposed they were, from the imperfect and incorrect report of it found in 8 Mart. 716. The note sued on apears to have been given in that, as in the present case, in payment for slaves sold on credit; but the question of usury was not even raised by the pleadings in the inferior court. The only defence set up in the answer was, that the defendant, Sarah Gardner, having renounced the community existing between her and her late husband, was not liable for its debts. The point in relation to the stipulation of back interest, seems, however, to have been made in the argu*228ment in the appellate court, as we find that in deciding the case, the court express their opinion on the legality of such a covenant, although they do not state as fully, as could be desired, the grounds on which it was contested. It is evident, from the manner in which the question was disposed of, that the point was not fully developed, as it has been on the present occasion. The case was, moreover, decided under the Code of 1808, which in its provisions is far from being as explicit on the subject, as that of 1,825. Had the question occurred under the latter Code, and had it been then presented to the court in the same light as it has been to us, it is doubtful whether they would have come to the same conclusion. But be this as it may, this decision is the only one in our reports in which the point appears to have been at all considered. In the two other cases referred to by the counsel, that of Glover v. Doty, and that of Hooper and Thomas v. Hyams, Executor, the point was passed sub silentio. We cannot consider the case in 8 Martin, as so settling our jurisprudence on this subject, as to make it our duty to surrender to it our deliberate opinion on this question. The rule stare decisis, is entitled to great weight and respect, when there has been on a point of law, a series of adjudications all to the same effect; but when we are presented with a single decision, which we believe to have been unadvisedly made, it is incumbent on us to overrule it, if we entertain a different opinion on the question submitted. As to the stress laid on the circumstance, that in the section of country from which this appeal has come, the practice has long and universally obtained under that decision, of taking notes for the price of property sold on credit, conditioned to bear interest at ten per cent per annum from date, if not paid at maturity, we have only to say, that the sooner a stop is put to such a practice, the better. It is no great hardship, that the parties making such contracts should be restricted to the highest rate of conventional interest allowed by law, for any delay they may experience in the collection of their debts. Even for the sake of preserving our consistency, (so earnestly recommended to us.) we cannot believe ourselves justifiable in allowing, over and above such interest, a penalty or damages amounting, in this instance, to thirty per cent of the instalment claimed, and in some instances, as we under*229stand, to fifty per cent on the debts due. On the illegality of such a stipulation, we can not entertain a doubt. Conventional interest, whether it is stipulated eo nomine, or in the shape of a penalty for the default, or delay in the performance of an obligation to pay money, can not exceed ten per cent per annum, on the amount due, Civil Code, arts. 1929, 2121, 2395. There is no difference between stipulating a higher rate of interest than ten per cent per annum, for the delay, and stipulating only ten per cent, but to be calculated on a longer time than the delay which has occurred, or may really occur. In the present case, nothing was due before the maturity of the note sued on. Had the drawer then paid it, nothing in the shape of interest could have been claimed of him. If the holder is entitled to any, it is clearly due ex mora, and cannot exceed ten per cent per annum, for the time that the payment of the capital has been delayed. In a sale on credit, the price the purchaser agrees to give, is larger in proportion to the credit given, and pays not only for the property, but for its use and enjoyment between the day of the sale and the stipulated time of payment; therefore, any interest that might be stipulated to run during that interval, forms no part of the price, and can be viewed in no other light than as a penalty for the delay, or default to pay such price. But it is urged, that if, by the published terms of the sale, the extended credit was announced to the people, it was also made known to them, that they would have to give notes bearing interest at ten per cent from date, if not paid at maturity ; that if, on the one side, the long credit operated upon the minds of the purchasers to increase the price, the danger of having to pay back interest must, on the other side, have operated to its diminution. Admitting this to be true, does it in any way render such a stipulation more legal ? If, instead of such back interest at ten per cent, the published terms of the sale had announced that the notes, in case of non-payment, should bear twenty per cent from their maturity, would the announcement of such a stipulation render it less usurious 1 Could it be pretended that, because the purchaser had it in his power to relieve himself from such interest by paying the principal at the time fixed, there was no usury, and that the stipulation should be enforced ? Could it be said, that as he had so made his contract, he should *230be bound by it ? A purchaser, under such circumstances, may well flatter himself, that he will be able to pay the price, which he considers moderate by reason of the credit allowed, and that he will not incur the penalty. The law protects contracting parties against their own imprudence and folly in such a case ; and a stipulation, úsurious in itself, cannot be rendered legal by the inconsiderate consent that may have been given to it, at the time of the contract. 6 Duranton, No. 488.
In relation to the ownership of the note of $1966 66-|, we have no reason to be dissatisfied with the conclusion to which we came.

Re-hearing refused.