Lilly v. DeLaperiere

Blandford, Justice.

The note sued on and contract of which it is the evidence were made in November, 1879, after the passage of the act of 14th October, 1879, to regulate and restrict the rate of interest in this State. Acts of 1879, 184. The first section allows eight per centum to be contracted for, and by section two any violation of section one forfeits all interest and excess of interest. The third section fixes seven per cent, as the legal rate of interest, where the rate per cent, is not named in the contract. By the fourth section it enacted, when an action is brought upon a contract which shows that a greater rate of interest than seven per cent, is claimed, that the plaintiff must show affirmatively that no greater or higher rate of interest than that specified in the contract has been taken.

The note sued on in this case shows upon its face that eight per cent, was contracted to be paid. If this statute is of force, and particularly the fourth section thereof, it was incumbent on the plaintiff to show affirmatively (as a greater rate of interest than seven per cent, was contracted to be paid) that no higher rate was taken by him than that specified in the contract.

But suppose the plaintiff should fail to show what rate has been taken, what consequences would follow? He could only collect the principal sum loaned, under section second of the act. When a greater rate than eight per cent, is contracted for, then no interest can be collected under this act; that is, the contract does not bear interest, and' all payments made by the borrower to the lender go *352to extinguish the principal. A plea of payment to a suit brought on such a contract will lie, although the amount or sum paid was paid more than a year before the filing of the plea. The principal alone can be recovered; the payments made do not go in extinguishment of the interest, because the debt, being usurious, bears no interest. So that we think that, as the plaintiff in error filed a plea of payment in this case, he had a right to show that the contract sued on contained more than eight per cent, interest to be paid, and tha't thereby the. sum loaned bore no interest. He was entitled to have the amounts paid credited' upon the original sum loaned, even though the fourth section of the act of 1879 is repealed, and his plea in this case is not such a plea as is contemplated by the act of 1875, which is required to be filed within twelve months By that act. Code, §2057 (e). It may be questioned if this provision of the act of 1875, as contained in the section of the Code, is not repealed by the act of 1879 before quoted; but whether it is or not, it does not apply to this case. The court below having held contrary to the views here expressed, his judgmént, founded thereon, must be reversed.

Judgment reversed.