Court Opinion

ID: 7091992
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:07:02.584503+00
Date Added: 2024-06-11T16:13:07.322907
License: Public Domain

BaldwIN, J.
The appellant assigns as error, the action of the District Court in sustaining the demurrer of the plaintiff, and thus allowing plaintiff to recover the sum of $250, the amount of usurious interest in the note of Spray to plaintiff. By an act of the legislature of this State, the rate of interest is fixed at six per cent. The parties to the contract may, however, agree upon a higher rate, not to exceed ten per cent. Session Laws 1853, chapter 37. Section 4 of said act provides, “that no person shall, directly or indirectly, receive in money, goods, or things in action, or in any other manner, any greater sum for the loan of money.” Section 5 of said act provides “that if it should be ascertained in any suit brought on any contract, that a rate of interest has been contracted for, greater than is authorized by this act, either directly or indirectly, the same shall work a forfeiture of ten per cent per annum to the school fund of the county in which such suit was brought, and the plaintiff shall have judgment for the principal sum without either interest or costs.”
This suit is brought upon a contract to which Spray was not a party. In the contract between Spray and defendant, there is no usury. Spray sold to defendant a tract of land, and defendant, in part consideration therefor, agreed to pay Spray’s noto to plaintiff. The defendant did pay off the note of Spray, a part in money and a part by the giving of *387bis own note for tbe balance. In other words, Spray does not seek to avoid tbe usury in bis contract, is willing tbe plaintiff should have tbe interest be agreed to give, and placed money in the hands of defendant for tbe purpose of paying tbe same, but defendant without authority from Spray, sets up tbe usurious contract.
It is urged that section 4 of said act prevents tbe court from allowing the plaintiff to receive more than tbe legal rate of interest, and that tbe District Court by sustaining tbe demurrer thereby permitted tbe plaintiff to have judgment for illegal interest. It must be upon suit brought upon the contract, which of itself brings to the knowledge of the court the usury therein, or upon plea by the borrower, that the. court will take cognizance of such usury. It is the borrower alone who is protected by the law from the excessive interest, and he must be the party to the suit before the court will protect him. Judgment must be rendered against him for the penalty forfeited to the School Fund. We think that when defendant paid off the note of Spray, and the mortgage from Spray to plaintiff was canceled, the privity of contract between plaintiff and Spray ceased to exist; that the contract upon which the present suit was brought was separate and independent of the one between Spray and plaintiff; that the usury in the contract between Spray and plaintiff does not enter into and become a part of the contract between plaintiff and defendant.
The judgment of the District Court is affirmed.