Court Opinion

ID: 8508776
Source: CourtListenerOpinion
Date Created: 2022-11-23 08:34:27.004702+00
Date Added: 2024-06-11T16:51:01.133595
License: Public Domain

BURROWS, J.,
concurring.
I desire briefly to give the reasons that have induced me to decide in favor of a reversal of the judgment of the court below. I have been brought to the conclusion that the notes in-suit are not-usurious against my preconceived notions and prejudices. I 'had the impression that a contract wherein- interest in excess of 8 per cent per annum is stipulated for was usurious; especially where such excess was the result of allowing interest upon interest to bear interest. These notes, according to their express terms, contain the stipulation that after maturity interest upon principal and interest shall bear interest at 8 per cent to be paid semiannually.
If these notes do not provide for the compounding of- interest semiannually after maturity it is difficult to conceive what language could be used to accomplish that purpose.
Counsel for plaintiff in error contend that they do not so provide; and contend further, that a contract to pay more than 8 per cent per annum for a loan of money, and for the payment semiannually at the same rate of interest upon accrued interest overdue is not usurious in this state; and in support of their contention they cite Cook v. Court *7right, 40 Ohio St. 248 [48 Am. Rep. 681], and Taylor v. Hiestand, 46 Ohio St. 345 [20 N. E. Rep. 345].
Revised Statute 3179 (Lan. 5095) provides:
“The parties to a bond, bill, promissory note, or other instrument in writing 'for the'fdrÜeáfahce or payment of money at.any future time, may stipulate therejin for the payment of interest upon .the amount thereof at any rate not'.exceeding 8 per centum per annum, payable, an-. nually.”’ ' ' ' , .
In Cook v. Courtright, supra, it is held by the Supreme Court commission that it is not usurious to stipulate in a promissory note, due one year after date, for. the payment of'interest semiannually at the rate of 8 per cent per annum, whereby the holder of the note would He entitled at its maturity to 8 per cent interest on the sum'loaned for twelve months and also 6 per "cent interest for six months on the semiannual installment of interést..
It is .plaip., that the holder pf an 8 per cent promissory note given '“for the. forbearance or payment of money-at, any future time” will receive.more than 8 per cent per annum for the use of his money if .any part of said interest is paid or to be paid prior to the expiration of said "future time,” except, of course, where the interest is made payable annually.’ .. . ' '
It is idle to attempt to .criticize the validity of the reasoning .upon which Cook v. Courtright, supra, is grounded, - as that decision seven years later was’approvéd by, the Supreme Court on the ground that.“It had become a. rule of property.” ..
In the case of Tayolr v. Hiestand, supra, the question, of the validity •of a stipulation to pay* intpresf ,at 8 per cent, semiannually, on a note payable three years after date, with interest at the same rate on install-ménts of interest overdue, was,'fully considered, and, a precise and comprehensive rulé éstablishéd) for, such eases. .
It is theretheld.th,at whaievey. stipulations may legally be. put into a new contract between^ the .parties maple after -any, installment of .interest has been paid .in respect thereof ..may .be made-in • advance and in the original.promissory.note..,,
This rule and the reasopg.. fyr jt .^e giyen at page 348:
.“Take ’another!view.„of the, subject: If. the first. installment, jmd be|n paid, it is ylear thaf h new.,Io,qp; could have been made between the parties qf the money at the rate of 8 per cent per annum.,. If 'it was not paid,( a right of action to recover it would at once accrue to the payee-/'aiid we1 thiiik'it clear the parties would be clothed" with full power, under the statute, to stipulate for its payment at a future day *8with interest at 8 per cent per annum. If this can be done after default in the payment of an installment, no reason is apparent why the parties in the first instance might not anticipate and provide in advance for the contingency of a default. This we think may be done, and is what the parties to the note, in fact, did in the case before us.”
Under this rule no good reason can be given why parties may not stipulate in a promissory note payable at a future time that interest upon interest may be made to bear interest indefinitely with such periodic rests as may be agreed upon, for surely they could so stipulate in a new contract as to such interest, in case the same had been paid. If we understand this rule correctly, the ease we have in hand is easy of solution.
The claims that more than 8 per cent interest per annum was agreed to be paid, and that interest upon interest is to bear interest to be computed with semiannual rests, become immaterial incidents, so long as only an 8 per cent interest rate is applied and reapplied to the interest •upon interest as it periodically falls due.
It is of no importance that we think this rule of decision indefensible and that it virtually ignores the evident intent of Rev. Stat. 3179 (Lan. 5095), which in terms permits an 8 per cent rate of interest per annum to be received and no more on the sum loaned from the date of the loan till the time the loan is paid. Nor is it important that we think that a provision for compounding the interest on a loan was not contemplated by the legislature in passing this or any other statute relating to interest; but we must adopt and apply the interpretation placed upon the statute by the Supreme Court; and this interpretation, as we understand it, leads the majority of the court to hold that the notes in suit are not usurious.
Laubie, J., dissents.