Court Opinion

ID: 7965286
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:50:02.849276+00
Date Added: 2024-06-11T16:34:37.492968
License: Public Domain

The following opinion was filed after a rehearing:
Dickinson, J.
After the filing of the former decision in this case,, a reargument was ordered by the court of its own motion, as to the question whether, under our statute, one who, as plaintiff, seeks the-avoidance and cancellation of securities for usury, must, as a condition of obtaining such relief, offer to repay what he has received, with legal interest. The rehearing was ordered for the reasons that this point had not been argued on the part of the appellants at the former hearing; that the court had been unable to agree upon the decision; and, even after it had been made by a divided court, some doubt had been felt by the majority of the court as to the correctness of its conclusion, and because the question was felt to be one of general interest. Since writing and filing the former opinion, and affected by some considerations presented at the reargument, the views of members of the court who united in that opinion have changed as to the proper construction and effect of the statutes, and we now concur-*465•with Justices Mitchell and Berry in the conclusion expressed by them in their dissent from our former opinion.
Our conviction that the construction before put upon the statute was erroneous, rests chiefly upon the following considerations, in addition to what was said in the dissenting opinion before filed:
Bearing in mind that the question is whether the legislature intended that the relief authorized by section 6 of the act of 1879 (Laws 1879, c. 66) should be afforded to a plaintiff only upon his complying with the general rule of equity, by paying the principal debt with legal interest, or whether it was intended that the specified relief should be decreed without that condition of repayment, we find in a section of the same act, preceding that, which we are called upon to construe, a provision which is strongly indicative of the latter intention. At the end of section 3, after making provision for the protection of bona fide purchasers of negotiable paper, it is declared: “In any case, however, where the original holder of a usurious note sells the same to an innocent purchaser, the maker of the note or his representatives shall have the right to recover back from the said original holder the amount of principal and interest paid by him on said note.” By force of this statute, the maker of a note affected with usury, who has paid it in full to an innocent indorsee, may institute an action against the payee in the same court whose jurisdiction is invoked in this case, and recover, not merely the usurious interest, but the whole principal and interest paid. The reason upon which the equity rule above referred to was founded, was the court’s abhorrence of forfeitures. It cannot be considered to have been the intention of the legislature that the unqualified terms of section 6 should be read in subordination to that rule of equity, if it is apparent that the enactment embodied a purpose directly opposed to the very reason upon which alone the rule itself rests. It is not probable that the legislature intended'that the provisions of section 6 should not be so applied in favor of a plaintiff as to operate as a forfeiture of the debt, if it is apparent that t:*e legislative purpose was that the usurious debt should, be forfeited. Such a purpose is expressed, with respect to usurious notes, in the provision above recited, and thus contributes to the conclusion that while, by enforcing the *466jpwmsions of section 6 according to its terms, the court will be enforcing a forfeiture, yet that is in accordance with the purpose of the Uaw. The maker of the notes might defend and defeat an action by ■.the payee to recover upon them, upon the ground that they were void. If they have been transferred to an innocent purchaser, and the maker then pays them, he may, by force of section 3, recover the whole amount from the usurer; and, without payment having been made, a similar result is accomplished under section 6 by a judgment declaring their invalidity, and directing their cancellation, or by injunction, “whenever it satisfactorily appears to a court” that the obligations are usurious and void.
It is true that the provision in section 3, above recited, is not applicable to all usurious instruments, but it is applicable in perhaps the largest class of instruments in which usury is involved; and this provision, in connection with that in the same section declaring all usurious contracts void, affords strong reason for the conclusion that the legislature did not intend that the unqualified terms of section 6 should be impliedly qualified by a rule, the whole reason for which was to prevent forfeitures.
The point made by the respondent, that the plaintiff is equitably estopped from the relief sought, because he suffered the foreclosure sale to take place before invoking this remedy, is answered by the fact that the mortgage was void, and that the defendant had notice that it was so before he foreclosed the mortgage, and purchased the property.
Our former decision herein is overruled, and the judgment appealed from is reversed.