Fisher v. Anderson

25 Iowa 28

• Court: Supreme Court of Iowa
• Decided: June 5, 1868
• Status: Published

Opinion

Wright, J.

intkhest : ■ non-paySLt: nsury' It will be seen that there was no evidence that interest to the 1st of January, 1868, was included in the note, and that ten per cent was agreed to be paid on the amount thus computed from the date of the transaction or loan. Upon its face the contract seems to be fair and not unusual. Whether the ten per cent be called a penalty or interest, the note would not be tainted with usury, for by the statute it is competent to contract for and take ten per cent. If defendant was at the date of the note owing $170.10, then, under the law, plaintiff could take his promise to pay ten per cent from that date, having the payment of the interest so reserved, depend upon the prompt payment of the principal at maturity. And upon the face of the note this is all there is of the case.

Cutler v. How (8 Mass. 256), cited by appellants, so far from teaching a contrary rale, plainly upholds this contract. Defendant, by paying the note before or at its maturity, might have avoided the payment of the ten per cent,- and it was as competent for him to undertake to pay this amount for his failure to make prompt payment as to pay six per cent. For when the contract is in writing it is no more usury to reserve ten than six per cent.

So, if “ I loan to one a hundred pounds for two years, to pay for the loan thereof thirty pounds, and if he pay the principal at the year’s end, he shall pay nothing for' interest, this is not usury, for the party hath his election, and may pay it at the first year’s end, and so discharge himself.” Roberts v. Tremayne, Cro. Jac. 507. And says the text (3 Par. on Con. 116), an agreement to pay more than interest for not paying a debt is not usurious, because the debtor may relieve himself by paying the debt, with lawful interest; and even if he incurs the penalty this may be reduced to the actual debt. As the record stands in this case the actual debt was just what is claimed by plaintiff.

In Gambrill v. Doe (8 Blackf. 140) the mortgage reserved ten per cent and provided that the land might be exposed to sale “if such principal and interest be not paid at the time tlje same shall become due, to satisfy said principal, and principal and interest, with five per cent damages and all costs.” It was held, that the ten per cent was the lawful rate of interest, and as to the five per cent damages, it was entirely optional with the mortgagor whether he would pay the same or not — that they were in the nature of a penalty for the want of punctuality in paying the debt when due, and that this saved the contract from the taint of usury. And see this doctrine expressly recognized and fully discussed in Gower v. Carter, 3 Iowa, 244; also Shuck v. Wight, 1 G. Greene, 128; Parvin v. Hoopes, Morris, 294; Wilson v. Dean, 10 Iowa, 432.

Now, if it appeared that interest had been included in the note, and that plaintiff was seeking to recover ten per cent thereon as well as on the principal from its date, we would have the case discussed by defendant’s counsel; and we should be prepared to hold that the parties could not, by thus liquidating the damages for the mere nonpayment of' the money, evade the usury statute. Or, if by this construction of the contract, plaintiff, under the name of penalty or otherwise, was reserving more than the legal rate of interest, defendant’s position might be maintained. Nothing of this kind appears, however, and the judgment below must stand

Afiirmed.