Court Opinion

ID: 7093189
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:08:06.340583+00
Date Added: 2024-06-11T16:13:09.380924
License: Public Domain

Dillon, J.
1. Usury: statutes. The defendant claims that tbe decree below against him was for too large an amount, and this is tbe onty question which be makes on bis appeal. As tw0 notes of November 1st, 1850, were executed under tbe usury law of 1843, and a greater rate of interest contracted for than was authorized by law, they were usurious. Tbe court below so found, and eliminated tbe usurious excess in ascertaining tbe amount of tbe plaintiff's recovery. So far, tbe defendant does not complain; and we may remark, in passing, that tbe plaintiff’s complaint of the action of tbe court, in this regard, does not seem to be well founded. On tbe 8th day of March, 1852, when tbe note for $300 was executed, and tbe written agreement was made to pay two per cent per month interest on tbe others, in consideration of an extension of time beyond November 1st, 1852, there was no usury law in force in tbe State of Iowa. Tbe law, as contained in tbe Code of 1851, was then in operation. Tbe Legislature, in 1851, repealed all usury laws existing prior to that time, and determining upon a change of policy, with a view, as it was argued, of attracting thither tbe surplus capital of the Bast, most unwisely, as the event proved, substituted no other laws on this subject in the place of those repealed. Tbe theory that men should be allowed perfect freedom to regulate, by their own contracts, tbe rate which tbe borrower should pay and tbe lender receive for tbe use of money, seemed plausible; but it overlooked tbe experience of ages on this subject. Tbe power of tbe one is so controlling, tbe necessities of tbe other are so great, that an enlightened public policy requires, that some reasonable rate, for tbe use of money, should be fixed by legislative enactment. In 1853 this was seen, and tbe legislature then *128enacted the usury law which is, at present, in force. Prior to this time, however, and during the period when there existed no statutory prohibition, and when the legislature intended that none should exist, against taking greater than a specified rate of interest, the contract of the defendant to pay interest at the rate of twenty-four per cent per annum was made.
This high and unreasonable rate of interest, the defendant maintains, should not be allowed to the plaintiff; but should be treated, at least by a court ,of equity, to which the plaintiff has resorted, as a penalty, and he should be allowed only the declared legal rate, in the absence of specific contract — that is, six, or, at most, ten per cent interest. This would entirely accord with our inclination, if we could do so without violating the law which it is our duty to uphold and enforce. The defendant offered no testimony showing that the plaintiff used his position as a creditor, to oppress the defendant, or extort the agreement from him. On the contrary, the evidence shows that it was made at the special and earnest solicitation of the defendant, and after the plaintiff had endeavored to dissuade him from it. The defendant argues that the agreement is intrinsically fraudulent; that, in the language of Lord Hardwicke, in Chesterfield v. Jansen, 2 Ves., 155, it is, upon its face, “ such as no man in his senses, and not under delusion, would make on the one hand, and no honest and fair man would accept on the other.” Where the proof affirmatively shows, as it does in this case, that the plaintiff did not use his position and power to obtain an unjust advantage of the defendant, the case is not one for the application of this rule.
From 1850 to T857, there was not, probably, one loan in twenty made in Iowa, where the rate did not reach or exceed twenty per cent per annum. Money was in great demand; property was rapidly advancing, often doubling *129in value in a single year. Many large fortunes were made, in this State, on a borrowed capital, at these apparently high rates, and many thus made were lost, after the financial revulsion of 1857, when the borrowers were unfortunate enough to remain debtors. In view of the past history of Iowa, in this regard, we would not like to put ourselves in the position of judicially determining that, in 1852, no man, in his senses, would agree to pay, and no honest and fair man agree to receive, interest at the rate of twenty-four per cent per annum. The legislature declared that it was not good policy to have any usury laws'; the defendant’s counsel asks us to reverse this determination, to correct the error, and, judicially, to make a law of this character, to fill up the hiatus between the repeal of the law of 1843 and the enactment of that of 1853. This the courts cannot do ; and in any view of the case which has been presented, the decree of the District Court must be
Affirmed.