Court Opinion

ID: 6949003
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:29:01.828406+00
Date Added: 2024-06-11T16:08:01.074702
License: Public Domain

Catón, C. J. This note was executed in 1852, and while the interest law of 1849 was in operation. That law allowed six per cent, interest, and no more, in all cases, except for money loaned, when it allowed ten per cent. That law also provided that, in any action brought upon any note, etc., wherein is reserved a higher rate of interest than six per cent., the defendant might plead that the note, etc., was not given for “ money loaned,” and if the plea was found to be true, the court should “ render judgment for the principal sum in the said promissory note, or writing obligatory, and six per cent, interest thereon.” In 1857 this law was repealed, and ten per cent, allowed in all cases; and the question is, whether this took away the right to file the special plea authorized by the act of 1849, in an action brought on a note executed while that law was in force. If this right to an abatement of all interest above six per cent, reserved on the face.of the note, was in the nature of a penalty, we might then hold that the repeal of the statute imposing the penalty, without any saving clause, took away the penalty itself. But there was nothing like a penalty or forfeiture in that act, of anything to which the party could have a right under any circumstances. The law in effect said, now no matter what amount of interest you may express on the face of the note, above six per cent., you shall be entitled to recover six per cent., and no more — that is the extent of your legal rights and obligations under the note, though you may use language which does not accurately express the extent of this legal right. At the time the note was made, this law entered into and formed a part of it, for both parties are presumed to have had knowledge of it, and to have made the agreement with reference to it. By reading the note in connection with the law, its legal effect is the same as if.an express clause had been inserted in the body of the note, providing, that if the maker should, in any action upon the note, choose to file a plea that the note was not given for money loaned, then six per cent, interest should be due upon it, and no more. Upon its face the interest reserved is statéd at ten per cent., but whether that amount would be really due and collectable, was left by the law, and, consequently, the consent of both parties, to the discretion of the maker of the note, whether he would interpose a particular plea or not. That plea was not strictly a plea of usury, but of a distinct fact, showing what was the consideration of the note, or, rather, what was not the consideration. Although, on the face of the note, the maker nominally promised to pay ten per cent, interest, yet, in legal effect, he promised to pay but six per cent., unless he should, at the time of settlement, choose to pay the ten per cent. The payee agreed to take the six per cent., unless the maker chose to pay the amount expressed on the face of the note, as we see by reference to the law giving to the note that legal effect. By taking the note in that form, under that law, the payee agreed to leave it to the honor of the maker whether he would pay the amount specified, or only six per cent, interest. The absolute agreement was to pay but six per cent. Here was no penalty imposed, and no forfeiture declared of any portion of the principal, or of interest to which the payee could, under any circumstances or by any agreement, have become entitled. It is merely an abatement of the excess of interest over what the party had a right to contract for. The effect of the law is a mere modification of the terms of the agreement as expresed in the note. It curtails or limits no right which the party had a right to acquire by the terms of such an agreement. The statute of 1849 secured to the maker of the note a simple individual, personal, pecuniary right to interpose this plea, which became vested in the maker of the note at the time of its execution, and which was not taken from him by the subsequent repeal of that law. The court erred in sustaining the demurrer to the plea, and its judgment must be reversed and the cause remanded.