Court Opinion

ID: 7810347
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:12:08.174975+00
Date Added: 2024-06-11T16:30:27.250666
License: Public Domain

McCulloch, C. J. (dissenting). The proper interpretation of the contract is that the makers of the note could not be compelled to pay until ten months after date, and that they should then have the privilege of paying in ten monthly installments. If there is any ambiguity, the doubt should be resolved in favor of the legality of the contract. The contention of counsel for appellants is that the contract is usurious because the principal sum is payable in monthly installments from date, and interest on the whole sum was deducted in advance. This is not sound for the reason already stated, that according to the proper interpretation the monthly payments were not to begin until after the maturity date of the note. But the majority now hold that the reservation of interest for the period of ten months vitiated the contract for the reason that the privilege of payment in installments after the maturity date takes it out of the operation of the statute which authorizes the reservation in advance of the highest rate of interest for a period of not exceeding twelve months on “any commercial paper, mortgages or other securities.” Kirby’s Digest, § 5382. This statute does not confine the authority to commercial paper, but extends it to “mortgages or other securities.” In other words, it is lawful to reserve interest at the highest legal rate for twelve months on all obligations to pay money. It is not the character of the paper which determines the right to reserve interest, but it is the length of time for which interest is reserved, and it is expressly declared to be lawful to reserve interest in advance on all such obligations for a period not exceeding twelve months. But, aside from this particular construction of the statute, the reservation of interest at the highest rate for a period not exceeding- twelve months is not rendered unlawful by a further stipulation in the contract for an extension of time of payment beyond that limit. The thing sought to be prohibited by the statute is the reservation of interest for a period exceeding twelve months, and regardless of the time the obligation is to rnn before maturity, the contract is not rendered unlawful by the taking of interest in advance for a period not exceeding twelve months. Humphreys, J., joins in this dissent.