Court Opinion

ID: 6677787
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:17:43.027417+00
Date Added: 2024-06-11T09:10:28.077222
License: Public Domain

Mr. Chiee Justice McIver,
dissenting. Being unable to concur in the conclusions reached by Mr. Justice McGowan, I propose to indicate briefly the grounds of my dissent. Usury is the main defence set up by the defendant- in his answer, and to that I shall mainly confine my attention. Now whatever differences of opinion may existas to the propriety and policy of usury laws, and whatever may be the view one might be disposed to take of the conduct of a person who, after obtaining a loan of money from another on certain specified terms, seeks to avoid the performance of his contract by invoking the protection of the usury laws, yet these are not matters proper to be considered by a court, which is bound to disregard all such considerations, and administer the law as they find it written, without questioning its propriety or undertaking to weaken its force by strained construction.
Under the law as it stood at the time the transactions here under consideration took place, it was unlawful for any person to charge, agree upon, or take a greater rate of interest than seven per centum per annum, except where there is a contract in writing whereby the parties by express agreement fix a greater rate, not exceeding ten per centum per annum. So that the practical inquiry here is, did the parties contract in writing for ■the payment of a greater rate of interest than seven, and not exceeding ten per centum, on the contracts here sought to be enforced? First, as to the note upon which the plaintiffs base their first action. While it is quite true that this note does contain an express stipulation for the payment of interest at the rate of ten per cent., yet. this does not conclude the inquiry ; for if that note was given as a substitute for, or in renewal of, a previous contract tainted with usury, it became affected with the same taint. Clark v. Hunter, 2 Speer, 83; Quarles v. Brannon, 5 Strob., 151, besides other cases which might be cited. *597The undisputed fact is that the note in question was given as evidence of the balance due from the previous (1887) year’s transactions, and while the testimony does show that there was a contract in writing whereby the defendant agreed to pay ten per cent, interest on all advances made during the year 1887, yet the accounts offered in evidence also show that the first item charged in the account for 1887 was the balance due from the transactions of the preceding year (1886), as to which I do not find any contract in writing to pay any specified rate of interest, and which, therefore, under the law could only bear interest at the rate of seven per cent., although a greater rate of interest seems to have been charged. To the extent, therefore, of this excess of interest, the balance due on the transactions of 1887, as well as the note which it represents, became tainted with usury.
I cannot accept the inference drawn by the referee and the Circuit Judge from the undisputed facts, that each year’s dealings were separate and distinct transactions; but, on the eon-trary, it seems to me that the irresistible inference is that it was one continuous transaction from beginning to end. The manner in which the plaintiffs kept the account shows this conclusively. There is not a single instance in which the account for any one year was closed even by note; but, ’on the contrary, the balance due at the close of each season’s operation, instead of being entered on the account as closed, or settled by note, is carried forward as a, balance to the next year’s account.—thus inseparably connecting one year’s account with the other. The notes taken at the close of each season's operations were manifestly not designed as payment or settlement, but simply as evidences of the amount, then due—to use the language of one of the plaintiffs in his testimony, “Notes were given to prove balance then due by Mr. Weinberg to us.” The object, doubtless, was to put the balance in such a shape as would make it more easy of proof—so that, instead of being called on to prove the items of the account, the plaintiffs could simply produce the note as evidence of the amount then due.
Now if, as is admitted by the plaintiffs in their reply, usurious interest was charged and received between the 11th of January, *5981883, and the 1st of September, 1886, it follows that such usurious interest, to some extent at least, must have entered into the balances carried from year to year, and must, therefore, have entered into the note which constitutes the basis of plaintiffs’ first cause of action. Indeed, according to the testimony of Rogers, if the usurious interest previously charged were ■eliminated from the account, there would be not only no balance in favor of the plaintiffs, but a balance in favor of the defendant. But the Circuit Judge holds that, even if this note was made up in part 0f qsurious interest, it may be regarded as paid, as the plaintiffs have a right to apply the amounts paid during the year 1888 to the payment of said note, and as such payments would be sufficient, if so applied, to extinguish the note, the note may be regarded as paid. A sufficient answer to this is that the plaintiffs not only do not make any such claim, but, on the contrary, they allege in their complaint, and X>rove by their testimony, that no part of the note has ever been paid.
Next, as to the oxieu account for 1888. It is conceded that interest is charged in that account at a greater rate than seven per centum xier annnm, and unless there was a contract iu writing by which the defendant agreed to x>ay such greater rate, it is clear that the account contains usurious interest. I, therefore, jn’opose to consider next whether there was such a contract in writing. While it is quite true that an agreement in writing to that effect wás prexiared by plaintiffs, though not signed by them, and sent to defendant for his signature, it is •equally true that defendant did not sign the contract as preXiared by plaintiffs, but did sign it after adding thereto the following words: “Guanos not included in this;” and it is equally certain that plaintiffs explicitly refused to assent to the contract as thus added to. It seems to me, that it follows, necessarily, that there never was any “meeting of minds,” never any contract in writing. The plaintiffs proposed and agreed to the contract without the words added by the defendant, aud the defendant refused to sign or assent to the contract unless those words were added. Iu the face of these indisputable facts, I do not see how it is possible to say that there ever *599was any contract in writing for the payment of interest at the rate of ten per centum per annum on the advances made during the season of 1888. The conclusive test of this is, that if the defendant had sued the plaintiffs for some breach of the alleged contract, based upon the words which he had added to the paper'without the assent of the plaintiffs, it is quite certain that he could not recover, for the obvious reason, that the plaintiffs had never assented to the proposed contract with these words added, and were not, therefore, bound by such words.
But, as I understand it, while there is no distinct admission that there was not, in fact, any contract in writing, yet the contention seems to be, that the defendant is estopped from denying that there was such a contract, by his subsequent conduct. I am unable to discover any element of an estoppel in this case. It does not appear that the plaintiffs were induced to change their position or to do any act upon the assumption that there was a contract in writing binding the defendant to pay interest at the rate of ten per centum per annum. It certainly cannot be said that, they were induced to make advances to defendant upon the assumption that there was such a contract, for as early as the 27th of January, 1883, they were informed of the defendant’s view of the agreement, and nearly all of the advances were made after that time—all but two of a comparatively small amount—and even after the proposed contract had been returned to Witte Bros., with the addition made by Weinberg, to which the plaintiffs never assented, they still continued to make advances to defendant to very large amounts. Indeed, in face of the undisputed fact-, that defendant had been doing a similar business with plaintiffs for several years, without any written contract (except for the year 1887), in a very satisfactory manner, as stated by the plaintiffs in their letters to defendant, it is scarcely possible to conceive that the plaintiffs would not have made the advances to the defendant unless they had supposed there was a written contract; especially when to this is added the undisputed fact, that they continued to make advances, after they knew that defendant would not assent to the written agreement as proposed by the plaintiffs. If, then, there was no contract in writing for the payment of *600interest at the rate of ten per cent., it follows, necessarily, that all interest in excess of seven per cent, is usurious.
There is, also, another view which shows usury in the open account, even if there was a contract in writing to pay ten per cent. The account having been made up to the 15th April, including interest to that date at ten per cent., and carrying forward the balance then due as the first item in the account for the remainder of the year, upon which interest is charged ^at the end of the year, will necessarily make the total amount of interest exceed ten per cent, on the amounts actually advanced, as may be seen by a simple calculation. While this mode of making up accounts by factors or commission merchants may be customary, it has not yet, so far as I am informed, been sanctioned by the courts. If an account for advances can be made up with semi-annual rests, no reason is perceived why it may not be made up with quarterly or even monthly rests, whereby the interest actually charged would exceed the rate agreed upon; that is to say, the person to whom the advances are made would, in fact, pay more than ten per cent, per annum (assuming that to be the amount agreed upon) on the money really loaned or advanced to him.
So, also, if there was no contract in writing, it follows that the claim for short shipments of cotton could not be allowed, for I do not find any evidence to support such a claim outside of the alleged agreement of 23d January, 1888, which, according to my view, never became a contract binding upon either party.
Without, therefore, undertaking to discuss the several questions which have been raised in this case, with anything like the fullness which their importance deserves, my object being-more to indicate the grounds of my dissent than to vindicate them, I will proceed to state very briefly the conclusions at -which I have arrived. All of the dealings between these parties, from 1881 to 1888, inclusive, constituted one continuous transaction, the balances due each year being carried forward into the account for the succeeding year, thus inseparably connecting them together; that there never was any settlement of any of these accounts, either by payment or otherwise, the *601notes taken from time to time not being intended either as payment or settlement, but simply as convenient modes of proving the balances carried forward each year as balances and not as notes; and that the present action is really an action to recover the final balance due at the close of the business. Hence, if there was any usurious interest charged in the accounts for the several years (as it is admitted there was in some of the years), such usury permeated the whole account and taints the final balance. Hence, I think the plaintiffs are only entitled to recover the amount of the advances made to the defendant, less the credits to which he is entitled, without interest or costs.
But I do not think that the defendant is entitled to his counter-claim, for the reason that it cannot properly be said that he has paid any usurious interest at all, and the statute provides “that any person * * * who shall receive as interest any greater amount,” &e., shall be liable to the penalty prescribed. Nor do I think that the defendant is entitled to recover any damages for the failure of the plaintiffs to advance to him the full sum of seveu thousand dollars, exclusive of fertilizers, for the reason that such claim rests entirely upon the proposed contract of 23d of January, 1888, which, according to my view, never went into effect.
I desire to add, however, that I have not undertaken to question any of the findings of fact, either by the referee or Circuit Judge!, but only the inferences which they have drawn from such facts. Indeed, most, if not all, of the material facts are undisputed, and the only controversy is as to the inferences which should be drawn from such facts.
I may add, also, that I have not deemed it necessary to consider two of the positions taken by respondents’ counsel in their argument here, upon which much reliance seems to be placed: 1st. That when a party asks the aid of equity in opening a settled account, he must offer to do equity himself. 2d. That a note is a higher security than an open account, and hence, when the notes were taken, they operated as satisfaction or payment of the open account. As I do not consider that there ever was a settlement between these parties, there seems *602to be no reason why the law as to opening a “settled” account should be considered. The second position, that a note is a higher security than an open account, and, therefore, the note operated as an extinguishment of the lower security, rests upon the unfounded assumption that a note, not under seal, is a higher security than an open account. My understanding is, that they are both simple contracts, and are of the same grade, one occupying no higher rank than the other. The only difference is that the note is more easy of proof than the open account.
Judgment affirmed.1

 This completes the cases of November Term, 1891.—Reporter.