Court Opinion

ID: 6953124
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:34:40.326656+00
Date Added: 2024-06-11T16:08:09.336125
License: Public Domain

Mr. Justice Lawrence delivered the opinion of the Court: This case was before this court at a former term, and is reported in 44 Ill. 405. Since that time a decree has been rendered in the court below, in conformity with the views there expressed. The record is again brought here, and we are asked by the counsel of appellant to reconsider our former opinion, so far as relates to the rate of interest which Lawrence is to be allowed. We have re-examined that question, and will state our conclusions. We agree with the appellant that the case is to be decided, in regard to this point, upon the principles which govern a bill to foreclose, instead of a bill to redeem, a mortgage. N either do we dissent from the rules laid down in the former decisions of this court concerning our usury laws. But the difference betweén those cases and the one at bar is, that this case is governed by the law of February 28th, 1867, referred to in our former opinion, which law had not been enacted when the decisions quoted were made. But it is said this statute is unconstitutional. In this position we can not concur. It takes away no vested right, for the law recognizes no vested right in penalties. This principle is thoroughly well settled, and, as we shall presently show, has been constantly applied by this court to the penalties of usury laws. Heither does the act in question violate the obligation of a contract. It directs that in cases arising upon contracts entered into while the law of 1849 was in force, and before the law of 1857 was passed, the penalty for usury shall be a forfeiture of the excess of interest above what the parties might have lawfully contracted for, and no more. When this contract was made these parties might have lawfully contracted for ten per cent. The borrowers, however, agreed to pay more than that, namely twelve per cent. Can they complain of a law as violating a contract, which merely authorizes a judgment or decree against them for less than they had agreed to pay, and which, when they had agreed to pay more than lawful interest, requires them to pay only so much as was lawful? But it is urged by counsel, citing Ogden v. Saunders, 12 Wheat. 257, that by the obligation of a contract is meant its legal obligation, and that the laws in force when the contract was made enter into it, and show what was its legal obligation. This, as a general expression of the principle, is undoubtedly true, but it has never been understood to mean that parties acquire by their contracts a vested right in existing remedies or existing penalties. Take the case before us. This contract was made in 1856. At that time the penalty of the law of 1845, forfeiting for usury three-fold all the interest reserved, was in force, the law of 1849 not having repealed that penalty in regard to money loaned, as was decided by this court in Kinsey v. Nisley, 23 Ill. 505. Under this law the appellants had the right to pay thirty-six per cent, of this debt by an application of this penalty. Do counsel for appellant contend that this was a right which the legislature could not take away ? On the contrary, they only claim in their argument the right to abate the entire'interest. But why ask only that, if the usury laws in force when the contract was made entered into it to the extent for which they contend ? If their argument is sound, they are entitled to an abatement of three-fold the interest. The law of 1857 has clearly nothing to do with the case, for it was not in existence when the contract was made, and had been superseded by the law of 1867 when the case was tried. If that act had not been passed, it would have been in accordance with previous decisions of this court to hold that, as the law of 1857 expressly took away the threefold penalty of 1845, it was the design of the legislature to substitute in its place, even as to past contracts, the milder penalty of the law of 1857, namely, the loss of the entire interest. But if the remedy upon an usurious contract given by the act of 1845 could be, and was modified by the act of 1857, so it was again modified by the law of 1867. But we suppose the counsel for appellants do not base their claim to an abatement of the entire interest on the act of 1857, but rather upon the ground that the contract for interest was illegal, and that the legislature, though the then existing penalty had been taken away, can not authorize the recovery of any portion of the interest, because the contract as made was an unlawful contract. We may agree with counsel to this extent—that the legislature can not make valid a contract which was unlawful at the time it was made, and hence if this act of 1867 had authorized the recovery of twelve per cent, instead of ten, we might have said that a contract for twelve per cent, interest was then forbidden by law, and the legislature could not authorize it to be enforced. But this they have not attempted. They have simply authorized the enforcement of the contract to the extent to which it was lawful. Ten per cent, was permitted by the law, and they have said ten per cent, may be recovered where parties have contracted to pay so much, even though they have contracted to pay more. It is said this is not enforcing the contract as made, but is making a new contract for the parties. We answer, it is enforcing all of the contract that was legal, and this is a power which the legislature can certainly authorize courts to exercise, where the illegal portion is not of a character to vitiate or affect the residue of the contract. Suppose we were to abate all the interest, as counsel claim we should do. Would not this equally'be the enforcing of a contract which the parties'never made ? The contract for the payment of the money, principal and interest, was all one contract, and if we may render a decree for the principal on the ground that that part of the contract was lawful, without rendering ourselves liable to the charge of making a new contract for the parties, why may we not render a decree for the principal and ten per cent, of the interest, on the same ground % The appellants agreed to pay the appellee a certain sum of money at a certain time. A part of this money was not a lawful debt, and the law, as it then stood, allowed a penalty to be exacted from the appellee for making such a contract. Subsequently, the law-making power interferes and says, this penalty shall not be exacted in cases of this character, and the creditor shall be .permitted to recover so much of his debt as was not incurred in violation of the then existing law. As already remarked, unless we are prepared to hold that parties by their contracts acquire a vested right in the existing law, both as to penalties and remedies, we can see no ground upon which to say this is beyond the power of the legislature. The parties then, when they made this contract, although they made it with full knowledge of what the statute was, also made it with full knowledge that the statute might be repealed or modified. The existing statute entered into the contract, not as an absolute and invariable quantity, but sub modo, and subject to qualification. It was as if they had stipulated in the written contract, that the appellants would have the legal right, if they chose to do so, to insist on an abatement of thirty-six per cent, of the sum borrowed, if the law then in force should remain unrepealed or unmodified, but that it was subject to repeal or modification, and in that event the appellants would pay whatever interest, not exceeding the lawful ten per cerit., the new act of the legislature might authorize to be recovered. " We have remarked, the principle upon which we now insist has already been decided by this court. Thus, in Stockham v. Munson, 28 Ill. 51, it applied the law of 1857 and declared a forfeiture of the entire interest expressly by virtue of that act, although the contract was made before the law was passed. So in Dooley v. Stipp, 26 Ill. 86, and Safford v. Vail, 22 ib. 327, which were all cases arising on contracts made while the penalties of the act of 1845 were in force, but. not tried until that of 1857 was passed, although there was no express decision upon the point, it seems to have been taken for granted both by counsel and court, that the penalty to be applied was that of 1857 and not that of 1845. In Nichols v. Stewart, 21 Ill. 106, and Matthias v. Cook, 31 ib. 87, which were also suits upon contracts of a like character, the court said, in the first case that there was no penalty and the plaintiff could recover legal interest, and in the other that the circuit court erred in giving an instruction to the effect that the jury could not deduct the interest over ten per cent. ; Although the court has several times said that the contract was to be j udged by reference to the laws in force when it was made, yet it has not in a single case, so far as we can discover,- applied the penalties of the act of 1845 in suits that came to trial after those penalties were repealed by the act of 1857. On the contrary, it seems to have been taken for granted, in those cases where a penalty was imposed, that the amount of the penalty was to be regulated by the existing act of 1857. In regard to another class of cases cited by counsel for appellants, like Sutphen v. Cushman, 35 Ill. 186, and Farwell v. Meyer, ib. 40, we need only say, that while we fully concur in them, we do not perceive their applicability to the case at' bar. They were tried before the act. of 1867 was passed, and were cases in which the borrower was seeking relief. The corn!, applying the principle that he who seeks equity mus# equity, Imld that the complainant must pay interest, notj^ithS1' standing the transaction was usurious, and as the court wasxndt proceeding on the ground of enforcing a contract, it adopled-.tV six per cent, as the legal rate. It might have adopted eitheiq a greater or less rate according to its sense of the equity of the case. The position taken by counsel for appellants, that, in the absence of all statutory law in regard to interest, a contract for the payment of interest for money borrowed would not be enforced by the courts, is one in which we do not concur. Whatever might have been thought in regard to the morality Si exacting interest for the use of money before the rise of modern commerce, we imagine no court in this country, in the absence of all statutory regulations, would have any more hesitation in enforcing a special contract for the payment of interest on borrowed money, than it would have in enforcing a contract for the payment of rent for a house or farm. The contract in the present case was wrong only because the statute prohibited more than ten per cent., but it was wrong only to-the extent of the additional two per cent. For that wrong the statute then imposed, as a penalty, the forfeiture of threefold the interest. Since then the legislature has taken away this penalty, and has said the lender may recover to the extent to which it was lawful for the parties to contract fox interest. That the legislature had the power to do this admits of no serious question. But it is said the act in question was an assumption by the legislature of judicial power. We do not perceive in what mode. It merely lays down a general rule to govern all contracts made during a certain period, taking away an existing penalty, and directing that interest shall be allowed to the extent to which it might have been lawfully reserved. Since the foregoing opinion was written we have received from counsel for appellant a manuscript copy of an act passed at the recent session of the legislature, and approved March 27, 1869, by which it is provided that the act of 1867, upon which we have been commenting, shall not be construed to apply to any suit pending at the time of its passage. It is not necessary for us to construe this new act. It was not in existence when the decree in this case was rendered. We are examining this record as an appellate court, to determine whether the court below committed an error in rendering its decree. That-is to he determined with reference to the law as it then stood, and, tried by that standard, we find no error. What effect this law would have had if it had been passed before the cause was heard and the final decree rendered, it is not necessary to determine. Decree affirmed.