Court Opinion

ID: 8177547
Source: CourtListenerOpinion
Date Created: 2022-09-09 22:23:10.012111+00
Date Added: 2024-06-11T16:28:17.019971
License: Public Domain

Milder, President,
(dissenting)
I am of opinion not to concur. Concededly the opinion is against the great weight of authority, including the leading-case of Campbell v. Shields, 6 Leigh 517, a case directly in point, and other Virginia eases antedating the separation of the states, and as many times decided binding on us. The decision in Campbell v. Shields, was reached after the question involved had been a long time controverted in Virginia, and so far as I have found it was never thereafter questioned, until Rixey, Trustee v. Pearre Bros. & Co., 89 Va. 113, which makes no reference to the prior Virginia decisions, and refers only to the Michigan case of Bullock v. Taylor, 39 Mich. 337.
Mr. Daniel has apparently with great care, in the last edition of his work on Negotiable Instruments, volume 1, sections .62 and 62a, collated in the notes to these sections all *522the decisions of the different states covering tbe subject, and it is only necessary to refer thereto to learn how overwhelming the decisions of the various states áre against the position taken in the opinion. As a general rule these opinions, are uninfluenced by statute, and like the early Virginia cases are merely declaratory of the general law. . Most of them sustain" not only the validity of such stipulations, but like-” wise the negotiability of the instrument. Many uphold the-validity of the stipulations, while denying the negotiability of the instrument. A few hold the stipulations penal and' void; and one or two cases, including the Ohio case of Shelton v. Gill, 11 Ohio 417, hold them usurious and subject to the statutes against usury. In III Minor’s Inst., part 1, page 311,. this great expounder of the Virginia law, referring among-others to the case of Campbell v. Shields, places contracts or stipulations for collection expenses along with brokerage contracts, and holds such contracts not usurious. He says it is not usury for a creditor who gives indulgence to his debtor to include the commission which he would have to pay an agent for collecting the debt for him.
The reason given in the opinion for going against the Virginia cases binding us, and against this great weight of authority, is that such stipulations tend to usury, oppression, and to-•the encouragement of litigation. I do not see how this is so-in theory or in fact. If such was the fact it seems remarkable that so many of the great commercial states of the country continue to deny the usurious character of such stipulations, and to hold them collateral, and enforceable not necessarily to the full amount stipulated, but only for reasonable attorney’s fees and collection expenses, not exceeding the sum stipulated. Such construction robs them not only of the taint of usury, but also of any danger from oppression or the encouragement of litigation. Campbell v. Shields, and other Virginia cases, would so construe them. A creditor bound to collect his debt by law would not stop short of enforcing his rights by legal action, because of the expense he would incur in the litigation.
In reply to the suggestion that such contracts are usurious Mr. Daniel says: ‘ ‘ Such stipulations do not, we think, render such instruments usurious. The additional amounts are in *523consideration of additional trouble and expense inflicted on the bolder, and not excessive interest for the loan or forbearance of money.” True the more recent Virginia decisions, referred to in the opinion, tend to unsettle the law of that state, but those decisions are not binding on and should not disturb us. While Oglesby Co. v. Bank, (Va.) 77 S. E. 468, the most recent Virginia case, involved a New York contract, and for that reason may not be exactly in point, nevertheless it criticizes Rixey v. Pearre Bros. & Co., and Fields v. Fields, 105 Va. 714, 54 S. E. 888, and approves the earlier Virginia cases, including Campbell v. Shields, and the inference to be drawn from the argument is a purpose to adhere to the principles of the earlier eases. Reference is made in the opinion to Toole v. Stephen, 4 Leigh 581, as being opposed to Campbell v. Shields, but it is not. Quite the contrary. The distinction noted between the two eases is important. In the Toole-Stephen Case the promise was absolute to pay judgments recovered by the creditor with costs and attorney’s fees, as the opinion concedes, already incurred. The promise held usurious was unconditional. There was no way for the debtor to escape payment. This is the exact point of distinction, and the reason why in the one case the promise was held usurious, and in the other not so. Pollard v. Baylors, 6 Munf. 433, Anno., and the cases cited in the note make this distinction very plain. The first point of the syllabus in that ease is-. “A penalty, inserted in a contract, from which the party may deliver himself, does not make such contract usurious.” And in the second point of the syllabus it is said: ‘ ‘ The question whether a contract is usurious, or not, is to be decided with reference to the time when it was entered into; for a contract legal at such time, can not be made usurious by subsequent events.” In Ward v. Cornett, 91 Va. 681, it was decided that, where a debtor by punctual payment of the debt may relieve himself and avoid the payment of the illegal interest stipulated for it is not usury.
I do not see how it can be said that we have any policy in this state against this character of contracts. Prior to the recent Virginia cases I do not think any lawyer would have hesitated, on looking to the Virginia decisions, binding us, and to Mr. Minor’s statement of the law on the subject, and *524seeing the great weight of authority supporting these early Virginia, cases, to advise his client that such contracts were enforceable in Virginia and in this state. One of the strong reasons noted by Mr. Daniel, given or implied in the many cases upholding the validity of such stipulations and the negotiability of the instrument containing them, is, that being an indemnity by the maker against the consequence of his own act or default, they are entirely consonant with public policy because they add to the value of the paper, and tend to lower the rate of interest and discount, and as these decisions say, how can contracts of this character be against public policy when the debtor may avoid their effect by prompt payment or payment before suit? To hold otherwise is to unduly hamper commerce and the freedom of contracts. In this day and age the business of the usurer has become unprofitable. Money, as a general rule, is plentiful and seeking investment at legal rates, and below legal rate in many instances, and the chances for hard bargains are few. A borrower does not have to submit to hard bargains these days. But why should it' be thought a hardship or oppressive for him who has laid by a few dollars for old age, and on'the income off which he depends for his existence, to bargain with the borrower that if he fails to pay the debt and interest, as agreed, he and not the lender shall bear the burden and expense of collection? All loans are not of this character, it is true. But even the banks are engaged in loaning the money of the people entrusted to -them and who depend on their earnings for daily support, and the principle is the same.
The hundred years and more of judicial history in this country, and where these contracts have been 'upheld, has failed to develop the evils portended in the opinion. The uniform negotiable instruments law adopted in this state and in most of the other'states recognizes the validity of such contracts, and specifically provides that they shall not render instruments uncertain or destroy their negotiability. It seems to me these laws are entitled to some consideration in this connection. The reason noted in some of the decisions why instruments bearing such stipulations are not rendered uncertain and nonnegotiable is that they in no way affect the sum certain to be paid at maturity, the obligation of the con*525tract maturing subsequently to tbe date of maturity of tbe instrument.
Tbe opinion I think finds no support in Genin v. Ingersoll, 11 W. Va. 459, Hurst, Admr. v. Hite, 20 W. Va. 183, and Boggess v. Goff, 47 W. Va. 139. Those cases as I interpret them do no more than declare the rules applicable to partial payments with respect to the question of compounding interest. The Boggess-Goff Case would justify a new contract to pay interest on interest after interest has become due without such new contract being affected by usury.
But it is unnecessary in a dissenting opinion already too extended to further elaborate the questions discussed. I would affirm the judgment, and Judge Williams, I am authorized to say, concurs with me in this dissent.