Court Opinion

ID: 7094419
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:09:26.463688+00
Date Added: 2024-06-11T16:13:12.015877
License: Public Domain

Beck, J.
(dissenting).— Section 1790 of the Bevision is in these words: “ No person shall, directly or indirectly, receive in money, goods or things in action, or in any other manner, any greater sum or value, for the loan of money, or upon contract founded upon any bargain, sale or loan of wares, merchandise, goods, clothing, lands and tenements, than is prescribed by this act.” By the preceding section, the highest rate of interest for which parties may contract is limited to ten per centum per annum. The succeeding section provides that when it is ascertained, in any suit upon a contract, that a greater rate has been contracted for, “either directly or indirectly, in money, property or other valuable thing,” ten per centum per annum upon the amount of such contract is forfeited to the school fund, and judgment is rendered therefor against the defendant, and the plaintiff recovers the amount of the principal sum without interest, “ whether the unlawful interest be incorporated in the principal sum or not.”
The foregoing provisions prohibit usurious interest, not only upon contracts for the loan of money, but also upon all contracts founded upon the sale of property. Callanan v. Shaw, 24 Iowa, 452. They as explicitly and unmistakably prohibit it when paid, or to be paid, in property instead of money. The plain language of the statute permits no escape from this conclusion. If, therefore, usurious interest is reserved to be paid in wheat, wool, or any other thing, it avoids the contract as effectually as though it were stipulated to be paid in money. If the interest reserved is to be paid in a given quantity of wheat or wool, without stipulation as to the price of the property so paid, or to be paid, it then becomes a question, to be determined by evidence, whether the interest so provided for is in fact usurious. Suppose a note for one hundred dollars provides, that, as interest *226thereon, twenty bushels of wheat is to be paid each year. If it be shown that the wheat, at the date of the note, and at the date of different payments thereof as interest on the note, was worth $1.50 per bushel, could any one doubt such interest was usurious, and the note, therefore, tainted with usury ? The only difference between such a note and an ordinary one is, that the interest, being reserved in property, may or may not be usurious — that is, the fact does not appear on the face of the instrument, but is left to be determined by evidence. In the case of an ordinary note, in which interest is reserved, the face of the instrument itself shows that it is or is not usurious. But it is competent to determine the character of a note by evidence of facts not apparent on its face. If the usurious interest be included in the instrument itself, or reserved in another, or paid at the time the contract was made, or is, in any other of the many ways to which the ingenuity of usurers resort, concealed and covered up, the courts will hear evidence to determine the true nature of the transaction. So, when interest is reserved, to be paid in property, the true intent of the parties and the value of the property may be proved to determine the fact of usury. The fact that the value of the property is fluctuating cannot prevent the inquiry. If, at the date of the contract and at the date of payment, it bore such value that its payment would be greater than the legal rate of interest, there can be no doubt that the contract would be usurious. I need not discuss the question as to the effect if, at either of such dates, its value should be equal to, or less than, the legal rate of interest. In the case before as the findings of the jury, the correctness of which the condition of the record will not permit us to question, determine the usurious character of the contract, which is the foundation of the suit. They determine that the payment of the one and one-half pounds *227of wool was for interest, and not a part of the price of the sheep. The value of the wool at the date of the contract and at the date of each payment was greater them the amount of interest on the principal sum at the highest legal rate. Under these findings of facts the contract, in my opinion, must be considered as usurious.
It is argued that, inasmuch as the value of the wool was uncertain, liable to fluctuate, and, at the annual payments, to be of a value less than the highest legal rate of interest, therefore the contract in the very nature of things could not be usurious, for, in fact, it thus would not provide absolutely for the payment of an illegal rate of interest. The argument is ingenious but not sound, and would lead, in its practical application, to the utter defeat of the statutory provision which prohibits contracts for, and the receipt of, property for unlawful interest. The values of all property are fluctuating and, in a measure, uncertain; therefore a contract to pay property as interest could not be usurious. Legal rules must be practical, and framed with a view to their application in the affairs of men. The rule adopted by the majority tends to defeat the statute and open a door through which all usurers may escape.
The opinion of the majority keeps out of view the fact that the wool reserved in the contract to be paid annually was no part of the price of the sheep. Such, however, is the finding of the jury, and we must consider this as a fact not to be contradicted. Tet, as I understand the opinion, it is held that, inasmuch as the payments of the wool annually may have been provided for because the price of the sheep was not paid down, the contract is not therefore usurious. But this hypothesis of fact is directly contradicted by the record.
It is said that, because the jury did not find that the contract was resorted to for the purpose of evading the *228usury law, it cannot, therefore, be considered as usurious. In other words, the contract cannot be considered usurious unless an intent to violate the law was proved. Men’s intentions are best established by their acts. In this case the interest reserved is unlawful, for it is greater than ten per centum per annum. Men are, in law, presumed to intend the consequences of their acts. The act in this case does violate the law, and the parties must be presumed to have intended that result. The contract for and payment of unlawful interest in this case having been found, why must the intent be established by other facts, when it is not required in other cases of usury ? I have heard no satisfactory answer to this question. To my mind, the findings of the jury sufficiently establish the fact that the contract was a device to evade the usury laws. They establish that the annual payments of wool were not a part of the price of the sheep, but were for interest, and that the interest thus provided for is above the legal rate. The contract, therefore, does cover up usury, and is a device for that purpose.
The New York cases cited in the majority opinion were decided under statutes differing from ours, and therefore are not, as I believe, in point in this case.
I am of the opinion that the judgment of the District Court ought to be
Affirmed.