Morrison v. Miller

46 Iowa 84

• Court: Supreme Court of Iowa
• Decided: June 6, 1877
• Status: Published

Opinion

Rothrock, J.

1. pleading: amendment. I. A question is made as to the right of the defendants to amend the demurrer. The Code, Sec. 2645, classes a demurrer as a pleading in an action, and Sec. 2689 permits amendments to any pleadings or proceedings. There was no error in allowing the amendment to be made.

2. usdbv: ten-est. . II. It is urged in support of the demurrer that the plaintiff should have tendered six per cent per annum interest in addition to the principal sum, in order to entitle him to invoke the aid of a court of equity. Such

seems to be the rule in New York. Fanning v. Dunham, 5 John. Chan., 122. The statute of New York, however, provides that no recovery whatever can be had upon a usurious loan —the whole debt, principal and interest, is forfeited. There is reason for holding that a party who seeks the aid of a court of equity to relieve him from the consequences of a usurious contract should not be allowed to retain all that he has received upon the contract. Our statute forfeits only the interest contracted to be paid, but requires the court to render a judgment against the borrower for ten per cent per annum interest in favor of the school fund. Code, Sec. 2080. If the borrower should be required to pay, in addition to this, six per cent per annum interest, he would pay sixteen per cent. We do not think that equity requires the payment of this sum, but rather that it would be a practical, nullification of the usury law to require it. Equity should follow the law, and we see no reason why a party should be required to pay more or less, depending upon the forum, or form of action in which he seeks relief from the enforcement of the illegal contract.

We are cited to the case of Phelps v. Pierson, 1 Greene, 121, as sustaining the position that the tender should include interest. What is there stated as favorable to that view must be considered as the judgment of the writer of the opinion only, as the question now under consideration was not made, and the doctrine contended for was in no sense necessary to a determination of the case.

It may further be observed that the law then in force forbid the taking of more than twenty per cent interest, and created a forfeiture of the usury and twenty-five per cent interest on the amount due. Laws of 1838, p. 276, Secs. 2 and 3. It did not, like the present law, require the borrower to pay ten per cent per anuum to the school fund in addition to the principal. In Hayward v. Munger, 14 Iowa, 516, the correctness of such a rule is questioned, and the court says: “ We are not aware of any case decided by this court which recognizes the right to such interest.” It is evident, therefore, that the case of Phelps v. Pierson. supra, was not regarded as having determined the question.

2. ——: ioi-m practioe.' III. It is next urged that under Sec. 2080 of the Code usury can only be taken advantage of by a defense to an action, and cannot be set up as a basis for original affirmative relief. We do not believe that the statute should receive any such narrow construction as to hold that the usé of the words plaintiff and defendant, as designating the lender and borrower, should preclude all investigation into the character of the contract of loan, only in cases where parties appear before the court in a particular attitude. And the same may be said as to the duty of the court to render the judgment in favor of the school fund without regard to the form of action.

IT. The petition distinctly avers the usury, and the tender and offer to pay all that the law required plaintiff should pay. It avers that notice was given to Eluent not to make further payments. It is further averred that the defendants combined together, and, disregarding the notice, pretended to discharge the whole amount, with interest, and entered satisfaction of the mortgage. Admitting these averments to be true, we think the Circuit Court erroneously sustained the demurrer.

Reversed.