Court Opinion

ID: 8168259
Source: CourtListenerOpinion
Date Created: 2022-09-09 21:05:42.788032+00
Date Added: 2024-06-11T16:39:42.152537
License: Public Domain

CROCKETT, Chief Justice
(dissenting) :
This suit is for a balance of $344 on a $1050 note which had been given by the defendant corporation for salary claimed by the plaintiff, and upon which the defendant had paid $700. When suit was brought defendant attempted to trace back through two antecedent transactions to resurrect a defense of usury, which, if it existed, should have been asserted long before. The positions taken by the parties to this controversy are shown by their respective depositions. The trial court was sufficiently apprised of the facts and I think was patently correct in granting judgment for the plaintiff.
In the original transaction in July 1954 the plaintiff Riggles loaned to the Daineses, a partnership, $10,000 and took a note bearing a lawful rate of interest. It is claimed that a collateral agreement to employ the plaintiff at $1800 per year for five years was in fact a subterfuge to exact a usurious rate of interest. If this be so, it would have been from a different party, the partnership, and in a different transaction, than that involved in this case wherein the plaintiff sues the defendant corporation on the $1050 note which the latter gave in a subsequent transaction. Therefore, accepting the fact that there is an unresolved dispute on the question of usury in the original transaction, its resolution could not affect the determination of the issues in this case.
The first proposition which argues against overturning the decision of the trial court is this: The defense of usury, unless it appears upon the face of the written docu-. ment, is generally held to he a defense; personal to and assertable by the debtor, and not by a third party, as is the defendant corporation here.1 Typical is the statement of the court in Greenberg v.. Manganese Products,2 in which the court -stated:
The rule is that a bonus paid by a stranger to a contract for his own purposes or reasons, to induce the making of such contract by the lender, does not make; the contract usurious. * * * [as between the lender and debtor] : *
It may be conceded that the rulings in the cases just referred to should be con*394fined to their particular fact situations, and that the true test should be whether in given circumstances usury was or was not exacted from the borrower by the lender. Nevertheless, in the instant case, as will be seen from the undisputed facts set out below, there is no basis upon which it can be concluded that the plaintiff Riggles exacted any usurious interest from the defendant Daines Manufacturing Co., Inc., a corporation.
These facts are significant: It was in January 1965, that the partnership ceased to exist and the defendant corporation came into being. The trial court found, and the fact is incontestable, that the plaintiff has not accepted the corporation as (fhe obligor on the $10,000 note. It was six months after the corporation came into existence, and a year after the original loan had been made to the partnership, that the corporation, which was not a party to the original transaction, and which was not under any compulsion to do so, voluntarily executed a contract to hire the plaintiff Riggle to act as a business and engineering consultant for $1800 a year for- four more years. If it was claimed that there was any defense because of usury or other impropriety in the original transaction with the partnership, this was the time to assert it. In any event it seems unmistakably clear that the voluntary execution of that contract by the corporation at that late date could have had nothing to do with persuading the plaintiff to make the original loan and that it could not have exacted any usury from the defendant corporation.
There is yet a further proposition which argues even more persuasively against allowing the defendant corporation to now raise as a defense to the note herein sued on the claim that there was usury in the original transaction with the partnership. After the corporation voluntarily executed the contract above referred to, it proceeded to make payments thereon for a period of two years, until in August of 1957, when it had become seven months delinquent in salary payments, amounting to $1050. Here again, if it had any defense of usury, it should have said so. At that juncture it was agreed between the corporation and the plaintiff that the plaintiff would forego the remaining 35 months of the employment contract, and that the corporation would execute a note for the amount of the delinquency and pay him in monthly installments. But the note was executed and the defendant corporation continued to make payments until the balance was reduced to about $350, which is the subject of this action.
Regardless of what may be thought of the antecedents to this latter transaction, or what the mutual rights and obligations of-the parties were of that date, they should be regarded as being settled and merged by the giving of the note and the cancellation *395of the remainder of the contract, which are certainly adequate consideration for each other. When such a settlement has been arrived at, that should conclude the matter.3 If upon default of one of the parties to a settlement the whole original controversy can be revived, the efficacy of compromise and settlement will be destroyed and the beneficial effects will be lost.
For the foregoing reasons I think the judgment should be affirmed.
CALLISTER, J., concurs in the dissenting opinion of CROCKETT, C. J.

. See Rospigliosi v. Glenallen Mining Co., 69 Utah 41, 48-49, 252 P. 276 (1926); and Martyn v. Leslie, 137 Cal.App.2d 41, 290 P.2d 58, 66 (1955).

. Greenberg v. Manganese Products, 39 Wash.2d 794, 238 P.2d 1194, 1196.

. That execution of a contract merges prior agreements and negotiations on same subject, see Weight v. Miller, 16 Utah 2d 112, 396 P.2d 626; 17A C.J.S. Contracts § 445 et seq.