Holmes v. Gerry

55 Me. 299

• Court: Supreme Judicial Court of Maine
• Decided: July 1, 1867
• Status: Published

Opinion

Kent, J.

The only exception to the rulings of the Judge is that he allowed an amendment of the eleventh count. The rule on the subject of amendments is now very broad, and gives great discretion to the Judge presiding. Where the proposed amendment clearly describes and introduces a new cause of action, exceptions will lie to the allowance of such amendments.

The original eleventh count sets forth a claim to recover back money paid as usurious interest to the amount of twenty-five hundred dollars. The amendment does not enlarge this claim or change its nature, or the cause of action. The original count sets out that, before a certain day named, the defendant had, at different times, loaned to the plaintiff large sums of money, amounting in all to three thousand one hundred dollars, and on that day did take and receive the excessive interest. The amendment sets forth in detail and specifically the various loans and their dates, but does not enlarge the claim for excessive usury. It does set out a large number of loans, — but most of them as renewals of former loans. . The amount of the actual loans paid in money does not appear to exceed the sum stated in the count. And if it did, it would not apparently change the real claim set out in the count, which does not depend so much upon the sum loaned, as on the rate of interest. The gist of the count, as originally drawn, was that the defendant had received of plaintiff twenty-five hundred dollars as excessive interest, on loans. The amendment sets forth the several loans, and the interest paid on each, but reduces, by its specific declaration, the whole sum claimed as usury, paid to the defendant.

We think the amendment was properly allowed.

The defendant filed a motion to set aside the verdict as against evidence and the law as given to the jury, — and urges upon us several grounds for the maintenance of his motion.

The verdict, as it stands, is confessedly wrong. It is for more than is claimed in the declaration, and the plaintiff’s counsel admits that it is so, —to the amount of something over one hundred and sixty dollars. He suggests that he is willing to remit that sum. This js often done, where it is clear that an unintentional mistake has been made by the jury, and that the party is entitled to a verdict in his favor, and the amount is a matter of mere calculation, and not seriously in dispute. But it does not follow, as a settled rule, that in every case where a jury gives all that is demanded and something beyond, that the verdict may be amended by a remission of the excess. This must depend upon the facts in the case, and the judgment of the. Court in view of the whole evidence.

An error like this, if not fatal to the verdict, yet suggests that there must have been some mistake, misapprehension, or carelessness on the part of the jury, — or possibly some bias or prejudice, inclining them to swell the verdict, even beyond the claim of the plaintiff. At least it, to some extent, weakens its force as a veredictum. The defendant contends, if he is liable at all, that he is not liable to the full extent of the claim, and he contends that it would not be just to assume that, although the verdict is confessedly erroneous, because for too much, yet it should be taken as certainly correct up to the amount claimed.

But the defendant further claims that the verdict for any amount against him, is unsupported by the evidence and the law. He says that this plaintiff cannot recover back money paid, even if any one else could, because, he says, he was never a debtor of the defendant, and never stood in that relation to him.

The evidence in the case is very voluminous, but the points on which it turns are few. It is clear that, in order to sustain the action, the proof must establish the last allegation in the eleventh count, after the amendment was inserted. That allegation is that the defendant, on the 5th of July, 1864, in a certain contract then made between the plaintiff and defendant, in substitution and renewal of a former contract of loan, and for money advanced by the defendant to the plaintiff, did take and reserve, and receive in money of the plaintiff, — to wit, the sum of six thousand dollars, on the said previous contract, (of 1861,) a rate of interest exceeding that allowed by law by the sum of $375,98. In the preceding allegations in this count, a large number of contracts is set forth, on which it is declared the defendant had taken and reserved usurious interest. But all these were more than one year before this suit was commenced, and thei’efore apparently barred by the statute. But the plaintiff avers that all this excessive interest was-actually paid on the 5th of July, 1864, in and by the $6000, and that was within the year. There is no question that the plaintiff did pay the defendant that sum on that day. The Court very properly instructed the jury that the cause of action accrues when the excessive interest is paid. Furlong v. Pearce, 51 Maine, 299. The question then was whether the plaintiff paid the defendant excessive interest on that day.

The Court instructed the jury, (and his rulings on this point seem to have met the approval of both parties,) that the plaintiff must set out and prove a loan to him, or contract between the plaintiff and defendant, and that, on that loan or contract, so proved, excessive interest was retained or received by the plaintiff; that it must be a loan made by the defendant to the plaintiff, and the excessive interest must be received from Mm on that loan, and that it must be a loan on which the plaintiff was legally liable to the defendant. This is clearly correct according to the authorities.

It is to be observed that this action is to recover back money paid as illegal interest. It is not a case, where the lender attempts to recover on the promise or contract, in which usury has been reserved or received. Formerly such usury rendered the whole contract voidable or void. And there are many cases, under this provision of the law, where questions arose as to the rights of parties to the instrument sued to set up this defence, although the actual borrower, who made the agreement to pay usury, was not himself on the note. But those actions were based on the agreement, and the defendants were bound on the notes declared on. But it has never been decided,- so far as we have examined the cases, that any one, not a party bound to pay, Avho pays voluntarily a note or debt, which is wholly or partly for excessive interest, can recover it back in an action in his own name. The following cases, more or less directly sustain the rulings of the Court. Boardman v. Roe, 13 Mass., 105; Gray v. Bennett, 3 Met., 529; Stanley v. Kempton, 30 Maine, 119; Brickett v. Minot, 7 Met., 291; Stevens v. Lincoln, 7 Met., 525; Billington v. Wagoner, 33 New York Rep., 31.

In examining the evidence as reported, it is clear, and not -disputed, that the plaintiff was at no time a party on any one of the notes or the renewals. He was neither maker, indorser or guarantor. He was never the legal debtor of the defendant, unless lie was so outside of the notes and written contracts. He never made any written contract, signed by himself, by which he bound himself to pay any of the notes. Paper A does not bind him to pay, except at his option.

"What was his relation to the defendant, on the 5th of July, 1864, when he paid him the $6000?

Was he under any legal obligation to pay the defendant anything? Could the defendant have maintained any action against him for money befóte loaned, on that day?

It is clear that the defendant could not maintain any action against Holmes, the plaintiff, on any of the notes, for he was no party to them. Nor could he maintain any such action on the agreement of the 18th of Aug., 1861. (Paper A.) That was an agreement to give a deed of certain property and to deliver up certain notes and papers, on condition that the plaintiff paid him a certain sum in six months. This he did not do, and therefore no action could be sustained on that paper. That paper contained no promise to pay.

The substance of the allegations in the count relied upon, as well as we can gather them, is that, before the 18th of August, 1861, the defendant had loaned the plaintiff certain sums of money, on certain notes of Myers and Dow, which had been renewed from time to time, and each including excessive interest; that the loan was to the plaintiff and tho notes were but security.

He then alleges that, on the said 18th of August, in and by a certain contract made and entered into by plaintiff and defendant, (A,) defendant did take and receive excessive interest of plaintiff, to the amount of $625,53.

But this was more than one year before suit. To bring the actual receipt of the money for such illegal interest within the year, he finally alleges that, on the 5th of July, 1864, in another contract between plaintiff and defendant, in substitution and renewal of and to carry out the last named contract, and for money advanced, he did then and there take, reserve and receive, in money, of the plaintiff, in the sum of six thousand dollars, a rate of interest exceeding that established by law, by the sum of $375,98, in addition to the sums of unlawful interest before named, making in all $1574,90 usurious interest, at the times named; and the plaintiff alleges that he in fact paid the said sum of money ($1574,90) in the $6000 paid that day.

As to the original loan: — Was this plaintiff the debtor or liable to the defendant? It is certainly remarkable, if he was, that he should not have been a party to any of the notes, from the beginning to the end. If he was the debtor, and these notes but collateral security for his indebtedness, it would seem singular, at least, that no note, bond, obligation or writing of any kind from him should have been given or taken. There can be no doubt that the plaintiff was active and interested in the negotiations for obtaining money for the use of Myers. But was he legally bound to pay the defendant ? Is it shown that the defendant loaned money to him, and looked to him as his debtor? Whatever arrangements might exist between the plaintiff and Dow and Myers, the plaintiff could only become the debtor of the defendant by his assent or agreement.' The defendant testifies that he never lent any money to Holmes on these transactions.

Myers, whose deposition was taken by the plaintiff, although used by the defendant, testifies that he received all the money and that plaintiff did not, that Holmes negotiated for him. There was evidently considerable looseness and indefiniteness in the transactions. But it is to be remembered that the point here is, whether the plaintiff was a party to any of the contracts in which excessive interest was reserved or taken, so that the defendant could call upon him for payment and, if refused, enforce it by suit. We confess that, after a careful examination of the evidence, we think that there is a failure to establish the proposition by a preponderance of testimony. It was ruled by the Judge that, if the contract was for indorsement by plaintiff only, the action based on illegal interest could not be sustained. The evidence as to the first note, if not as to the others, seems to look as if that was the contract.

However this may be, there seems to be wanting that amount of evidence which, in the absence of any connection of the plaintiff’s name with the notes, would establish "any loan on which the plaintiff was legally liable to the defendant.”

Again, the only payment made was the sum of six thous- and dollars, on the 5th of July, 1864. What was that for? Was any part of it in fact paid and received as excessive interest on prior loans. The defendant says that it was not, and that, even if it had been paid by Dow or Myers, who were on the notes, yet that it could not have been recovered back as illegal interest received on a contract or loan. He also contends that, if a party to the loan or notes could have recovered it, yet that this plaintiff could not, even if it was a payment of the notes, which included illegal interest.

It seems to be well settled that, if a third party, not bound himself to pay, voluntarily pays a note given for usurious interest and takes the note up, he cannot recover it back, unless he pays it as agent for the promisor, or under an agreement with the promisor to pay it for him. As where a mortgage is assigned and the assignee agrees to pay the balance due on the note secured by mortgage, which is usurious. Cunningham v. Hall, 7 Gray, 559; Stanley v. Kempton, 30 Maine, 119.

Now, if the notes of Dow and Myers were outstanding on the 5th of July, 1864, and the plaintiff, not being held on them, paid them voluntarily, he cannot recover back the part which was usurious.

But, were they in fact outstanding and due and in legal force on that day, against any one? It seems very clear, on the whole testimony, that the notes were virtually paid and cancelled when the absolute deed was given in July, 1857. This is the testimony of all the parties, and it does not seem to be controverted that, on the 5th of July, when the $6000 were paid, there were no existing valid notes to be paid or enforced. But the defendant had taken a quit-claim deed of the land from Dow, to whom Holmes had conveyed it, in lieu of the mortgage before given. The defendant says this was in full payment of all his claims, and that thenceforward he was the absolute owner of the estate, and the other parties were released from their indebtedness to him. The plaintiff, however, insists that this was a mere change of security, and that the land was substituted as security for the original loan to plaintiff, instead of the notes. That is, following the idea, that the loan was to the plaintiff and he was the debtor, and the notes only security or pledge for that debt, — that, under the new arrangement, land was substituted as security and the notes given up. We have before spoken of the unusual mode of transacting business, if the plaintiff was the original debtor.

But this would seem to be still more remarkable. The defendant had a mortgage to secure these notes, of the same real estate, conveyed to him by Mr. Dow. He had then the notes and the security by mortgage. The assumption is, that he gave up the notes, and changed the form of the security only, by taking an absolute deed in lieu of the mortgage, but regarding it only as security and to be in effect a mortgage. Why should he do this ? And more especially why should he give up all the written evidence of indebtedness and release his debtors, and not take any note or bond or written contract from the plaintiff? Why leave all his debt against any one to rest, at best, on verbal testimony, relating to the mixed matters between all the parties. Do men usually take a mortgage to secure a loan without taking a note? Would a man be likely to change a mortgage, which clearly defined the notes secured, and give up those notes and take an absolute deed as security only, leaving it to parol testimony to show for what it was security.

The paper A does not refer to his holding as for security only. In its form and apparent purpose it is such an agreement as one holding the absolute and unconditional title to real estate would .give to one who desired to purchase. It does not provide that, upoi! payment of the sum due on certain notes held, as in force, but, upon payment of a certain sum named and interest from date, within six months, and all taxes and insurance hereafter, the defendant agrees to release all his interest in the real estate. It does not say that Holmes owed the defendant that sum and upon payment of his debt a release should be executed, as in case of a mortgage. It is left entirely optional with Holmes to pay the price fixed or not. If he did not, the title-to the property would remain as before, in the defendant. See, as.bearing somewhat on this point, Fales v. Reynolds, 14 Maine, 89.

It may be that, in fixing the price or sum to be paid, the defendant had more or less reference to the amount which would have been due on the notes, if they had remained in force. But that would not establish the fact that this plaintiff or any one was still his debtor. It is not unusual for a person who has taken real estate in payment for his debt, to fix the price for which he will sell it or reconvey to its former owner, by reference to the sum and accruing interest, which it represents and stands in lieu of, in his calculations. And if, in making that mental calculation, he includes extra interest, which was reckoned in the notes paid and discharged by the real estate, and the new purchaser pays him his price, thus.fixed, it could hardly be seriously contended that any part of the price paid could be recovered back by any one, as excessive interest received.

The condition in this paper A, in reference to rent to be paid by plaintiff, in case he did not choose to pay the price fixed, corroborates the idea that both parties regarded the absolute title, free from any subsequent claims, as in the defendant. '

It is not questioned that, if the real estate was given and received in payment of the notes, which included illegal interest, and that, if any action could have been maintained to recover back such interest, where the payment had been made in real estate, yet that such claim in this case was barred by the limitation of one year in the statute.

In fact, this absolute deed was given in 1857. There does not appear to have been any attempt to enforce those notes by suit. There were no renewals after the deed was given. It was evident that, for a time, the defendant preferred that his loan and interest should be paid, rather than hold the real estate in payment. But we fail to see any evidence that either party really claimed that the notes were in force and not discharged. The conduct of the parties was inconsistent with the idea that the last notes, on seven months from July 18, 1857, were in force. If they were, why were they not renewed or sued ?

The allegation in the writ is • that the last agreement, when the $6000 was paid, was in substitution and renewal of, and to carry out the contract of Aug. 18, 1861. (Paper A.) If so, we are met by the same objections, which have been stated, that there was no actual debt due, or which the plaintiff was bound to pay to the defendant. This was the only money paid. As before shown, it could not make the transaction usurious, if the defendant, in fixing the sum for which he would release his title to the real estate, chose to have reference in his calculations to former transactions, unless there was a payment of the loan by a party bound to pay it.

We will add but a single further suggestion. If Holmes was the debtor of the defendant, he became so, either at the commencement of the transaction, or when the absolute deed was given, and the notes (which he now claims were mere securities) were paid by the real estate.

In either case, the claim against him would have been barred by the general statute of limitation of six years, at the time he paid the $6000. It is true, a man may properly pay a debt thus barred, and may recover back usurious interest so paid. But it is certainly a remarkable fact, if he was in truth the debtor of Gerry to the whole amount, that he should never have been called on to give hi§ note or any ■written evidence of indebtedness, or to renew Ms promise, or to pay accruing interest from time to time, and that his creditor should have allowed six years to elapse without any attempt to enforce his claim.

On the whole, we think that this verdict, under the evidence before us, ought to be set aside.

Motion sustained, — Verdict set aside, and new trial granted.

Exceptions overruled.

Appleton, C. J., Walton, Barrows and Danforth, JJ., concurred.