Court Opinion

ID: 3930306
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:55:46.631143+00
Date Added: 2024-06-11T13:54:59.399723
License: Public Domain

The facts material to a consideration of the questions presented by this appeal are as follows:
J. A. Hall executed and delivered to the Middlesex Banking Company his note in the sum of $1,800, payable to the order of said company, dated April 27, 1914, due November 1, 1919, bearing interest from date at 6 1/2 per cent. per annum and 10 per cent. upon past due interest and upon the principal from maturity. This note was secured by deed of trust of even date with the note on 238 acres of land as described in the opinion of Justice WALTHALL.
On the same date Hall executed another note, payable to the order of said banking company agreeing to pay $13.80 on November 1, 1914, and an installment of $27 on the 1st day of November in the years 1915, 1916, 1917, 1918, and 1919. This note provided for 10 per cent. from maturity, and provided that if default was made in the payment of any installment when due, then all installments, at the election of the holder, should become due. This note was likewise secured by deed of trust on the 238 acres of land, but was subordinate to the other deed of trust. The aggregate of the installments of this note was $148.80. This note was assigned by the banking company, and, default having been made in the payment of the installment due November 1, 1914, the holder declared all installments due, and caused the land to be sold under the deed of trust which secured its payment.
The appellant is the holder of a lien upon the 238-acre tract of land; its lien being secondary to the deeds of trust above mentioned. This suit was by the appellant to set aside the foreclosure sale upon the theory that the notes in favor of the banking company were usurious, and that the sale was prematurely made before the maturity of the installment note. It is shown by the evidence that the installment note represented interest upon the $1,800 note at the rate of 1 1/2 per cent. per annum from date, and was transferred by the banking company to the broker who negotiated the loan, as his brokerage compensation. It seems to me to be demonstrable that there is no usury in the transaction.
Suppose the entire $148.80 had been deducted from the principal of the $1,800 note at the time the loan was made and retained by the banking company as interest paid in advance. The borrower would thus have received $1,651.20. Interest at the rate of 10 per cent. per annum upon this amount from date of note to its maturity could have been paid at the intervals stated in the $1,800 note, and the transaction would not have been usurious. The total amount which would have been thus paid as interest would be $909.96.
According to the $1,800 note, interest at the rate of 6 1/2 per cent. from its date to maturity upon the principal sum could be charged. This would amount to $644.80. To this add the installment interest note of $148.80, which makes $793.60. Thus the total interest on the note as actually drawn would amount *Page 571 
to $116.36, less ($909.96-$793.60) than what was permissible at 10 per cent. interest. Now if the $148.80 interest might have been paid in advance at the date of the loan without making the transaction usurious, manifestly its enforced payment at a subsequent date did not make it so. The installment note was fully matured at the date of foreclosure because the holder had exercised the option given by the accelerating maturity clause to mature all installments upon default in payment of the installment due November 1, 1914. The parties could lawfully make such an agreement, and, the note having been thus matured, the foreclosure was not premature.
Appellant assumes that the collection of the $148.80 note through the foreclosure constituted payment of interest far in excess of what might lawfully be collected for one year. But it was not payment of interest for only one year, but the payment of the 1 1/2 per cent. interest, evidenced by the installment note from April 27, 1914, to November 1, 1919, on the $1,800 note. It covered that portion of the interest on such $1,800 note from its date to its maturity.
For the reason indicated, the transaction was not usurious, and the foreclosure was not premature. I, therefore, concur in the affirmance.