Court Opinion

ID: 6543595
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:17:47.438786+00
Date Added: 2024-06-11T15:55:54.187306
License: Public Domain

Opinion on Motion for Rehearing. Delivered November 14, 1896. In the opinion in this case it is said: “According to the evidence, appellant could well have taken the two notes without knowingly and intentionally reserving or securing thereby unlawful interest. If he did so, the notes were not void, except as to the excessive interest, and he was entitled to recover the amount lawfully due.” This was based on the testimony of appellee, in which he said he made two or three annual payments of interest on the note for $450. Upon him devolved the burden of proving usury. He was unable to say that there were more than two annual payments of interest. Assuming there was ho more, no usury was proved as to the note sued on, and the conditions on which it was given were performed. But it is said that the court erred in holding that the taking of unlawful interest by a lender through a mistake of fact would not render the note sued on void, except as to the excessive interest. Appellee contends that when parties undertake to cancel a contract, and purge its consideration of usury, and when so purified make it the basis of a new contract, and for any reason fail to cleanse it of usury, the new contract, like the old, is void. We have carefully examined the authorities cited by him, and fail to see wherein they support this contention. In none of them does it appear that the parties to a usurious contract, in attempting to eliminate the usury, retained in the new contract a part of the excessive interest through a mistake of fact. They hold that the latter contract is void, if what the parties have thereby knowingly or intentionally done or undertaken to do constitutes usury. That is true. But the case is different when the element which constitutes usury is made a part of the new contract by a mistake of fact. In such a case the usurious element was not actually intended to be a part of the contract — was really no part of it — and can and should be eliminated to make the contract speak the truth. The validity of the new contract is subject to the same test as that of other contracts, and usury incorporated in it through a mistake of fact will not taint it, any more than it would had its consideration never been the basis of any other contract. For the same reason, the mistake in the contract should be corrected in both cases. The motion for a rehearing is denied.