Court Opinion

ID: 6408211
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:50:36.589343+00
Date Added: 2024-06-11T15:51:16.995628
License: Public Domain

Wilde, J.
This case depends on the construction to be given to the 4th section of the 35th chapter of the revised statutes. The question is, whether by that section the plaintiff ought to have been admitted as a competent witness to prove the payment of unlawful interest, as alleged in the declaration By that section, it is provided that “ in the trial of any action, wherein it shall appear, by the pleadings, that the fact of unlawful interest having been taken or reserved is put in issue, it shall be lawful for the debtor (the creditor being living) to become a witness, and he shall be admitted as such ; and the creditor, if he shall offer his testimony, shall also be admitted as a witness, together with any other legal evidence that may be introduced by either party.” The question turns on the meaning of the words “ taken or reserved.” To render the witness competent under the statute, it must appear that the fact of unlawful interest having been “ taken or reserved ” was put in issue on the trial. By the 2d section it is provided that “ no contract or assurance for the payment of money, with interest at a greater rate than is allowed ” by law, “ shall be thereby rendered void; but whenever, in any action brought on such contract or assurance, it shall appear that a greater rate of interest has been directly or indirectly reserved, taken, or received, than is allowed by law, the defendant shall recover his full costs, and the plaintiff shall forfeit three fold the amount of the whole interest reserved or taken.” The meaning of the words “ reserved or taken,” in this section, is manifest. They refer to a usurious contract for the loan of money, whereby there had been reserved or taken a greater, rate of interest than is allowed by law, at the inception of the contract; and not to the payment of unlawful and usurious interest on a lawful contract. The same words are used in the same sense in the English St. 12 Anne, c. 16, and in the provincial St. 5 Wm. & Mary, c. 1, (Anc. Chart. 257,) and in the St. of 1783, c. 55.
In St. 1825, c. 143, § 2, was this provision: “In the trial *295of any action, wherein it shall appear by the pleadings that the fact of usury shall be put in issue, it shall be lawful for the debtor (the creditor being alive) to become a witness, and his testimony shall be received as evidence, unless the creditor shall offer his testimony, in which case that shall be received, together with any other legal evidence that may be introduced by either party.” That provision did not apply to actions to recover back unlawful interest paid, for every such action was by § 1 of that statute expressly prohibited. By St. 1826, c. 27, § 6, this prohibitory clause was repealed, and it was provided, by § 5, that in the trial of any action, wherein it should appear by the pleadings, that the fact of usury was in issue, it should be lawful for both the debtor and the creditor to become witnesses. The language of this section is not followed in the Rev. Sts. c. 35, § 4; but the parties are not to be admitted as witnesses, unless the fact of unlawful interest having been taken or reserved shall be put in issue. And we are of opinion that the language of the 2d and 4th sections, as to the taking or reserving of unlawful interest, being the same, is to receive the same construction, and consequently that the parties are not competent witnesses, unless in cases where unlawful interest has been taken or reserved at the inception of the contract.
Now, on looking into the declaration in this case, we find that the only contract set forth was a lawful contract; it being a promissory note of hand for the sum of $350, payable on demand, with lawful interest. No unlawful interest was ever taken or reserved by this contract. It is then averred, that on the 1st of November 1839, the plaintiff paid on this note the sum of $ 100, and that afterwards, on the 24th of August 1840, he paid the note in full, including the sum of $37*45 as interest on the balance due on said note from the 1st day of November 1839 to said 24th day of August 1840; which sum, paid as interest, it is averred, was at a greater rate of interest than at the rate of $6 on $100 for one year. But there is no averment that any unlawful interest was ever reserved or taken in or by any contract or agreement between the parties ; and consequently that fact was not put in issue at the trial. It is true *296that the plaintiff testified that the interest was paid in pursuance of an agreement made on the 22d of November 1839, by which the plaintiff promised to pay two per cent, a month, for six months, on the balance then due on the said note. But this part of the evidence must be rejected as inadmissible; there being no such agreement alleged in the declaration. And it is very clear that such an agreement does not make the note usurious. We are therefore of opinion that the declaration does not put in issue the fact of unlawful interest having been taken or reserved on any contract, and consequently, that the plaintiff is not a competent witness.
The action is founded on § 3 of c. 35 of the Rev. Sts., which provides that “ whenever a greater rate of interest than is allowed by law shall have been paid, the party paying the same may recover back three fold the amount of the whole interest paid, either by an action of debt or by a bill in chancery.” The plaintiff, by a bill in chancery, might have compelled the defendant to answer interrogatories under oath, as to the payment of the unlawful interest; but in an action at law the parties are not competent witnesses. The 4th section does not extend to voluntary payments of unlawful interest, not made in pursuance of any previous contract. Why the distinction was made between the taking or reserving of unlawful interest by contract, and a voluntary payment, not made in pursuance of any contract, we have no means of ascertaining. But probably it was supposed that a bill in chancery would be an adequate remedy for a party paying unlawful interest volun tarily, and which he was not Bound to pay By any previous-agreement. Whether such a voluntary payment is within the true meaning of the 3d section, we are not called upon to decide; but however that may be, we are satisfied that the plaintiff was not a competent witness to prove the supposed payment in the present case.

New trial granted.