Lindsay v. United States Savings & Loan Co.

HARALSON, J.,

dissenting. — On a former appeal in this case, following the former decision of Falls v. U. S. Savings, Loan & Building Co., 97 Ala. 417,— identical in its legal aspects as to the transaction here involved, — it was held that the contract was usurious, a. rate of interest exceeding 8 per cent, having been received. — Lindsay v. U. S. Savings & Loan Asso., 120 Ala. 156. The chancellor in his opinion on the trial below says: “It is alleged and shown, that the contract contained in the mortgage, or the loan, is usurious,” and this is not denied by the defendant. He also says: “The sole question now 'for determination is, ‘Does the present Code, by section 2630,. abrogate the long established rule of courts of equity, which requires a borrower, coming into such court to have a usurious •contract purged of illegal interest, to pay the amount borrowed with legal interest?’” That section reads: “All contracts for the payment of interest upon a loan •or forbearance of goods, money, things in action, or upon any contract whatever, at a higher rate than is prescribed in this chapter are usurious, and cannot be enforced either at law or in equity, except as to the principal.” In the former statutes, the words “either at law or in equity” did not appeal', and were added when the Code of 3896 was adopted. On the 19th December, 1898, the complainant amended her bill, by setting up this amendment of said section, as relieving her from liability to account in the cause for anything more *373than a payment of the residue of the principal unpaid, and to have all the payments she had made deducted from the principal. Before this amendment, as appears, the statute simply provided, that no usurious contract could be enforced except as to the principal; and this provision against usury was not limited as to its enforcement to courts of law, but applied also to courts of equity on a bill filed to enforce the usurious contract. A bill filed to enforce the contract, was necessarily prosecuted by the lender. It was further held, that where one borrowed money at a usurious rate of interest, and gave a mortgage to secure it, and after-wards resorted do a count of equity for relief against the usury, lie was denied relief, except on the condition of paying the principal and legal interest; but where the payee or mortgagee became the actor in a court of equity, he was required to offer to abate the whole interest, since the principal was all he was entitled to recover, and without such abatement, his presence in a court of equity, as held, was without clean hands. Hawkins v. Pearson, 96 Ala. 371; Dawson v. Burrus, 73 Ala. 111; Uhlf elder v. Carter, 64 Ala. 527; McGehee v. George, 38 Ala. 323; Hunt v. Acree, 28 Ala. 580. This rule'of denying a borrower relief in equity against usury in a mortgage to secure the debt, was not by virtue of any statute on the subject, but originated with courts of equity as a condition prescribed by them, on which they would exercise their discretion.in granting relief to the mortgagor or borrower. It was an invention of their own, and within their discretion as conceived, in the interest of equity. — 1 Story’s Eq. Jur. (12th ed.), § 301; M. K. & T. Trust Co. v. Krumseig, 172 U. S. 357. Judge Story states the distinction observed by a court of equity between the lender and the borrower thus: “The ground of this distinction is, that a court of equity is not positively bound to interfere in such cases by an active exercise of its powers; but it has a discretion on the subject, and may prescribe the terms of its interference, and he .who” seeks equity at its hands may well be required to do equity.” 1 Story Eq. Juris., § 301. The Supreme Court of the *374United States answering the question, Can a borrower of money upon usurious interest successfully seek the aid of a court of equity in collecting the debt, rendered void by statute, without making an offer to repay the loan with lawful interest, say: “Undoubtedly the general rule is that courts of equity have a discretion on this subject, and have prescribed the terms on which their powers can be brought into activity. They will give no relief to the borrower if the contract be executory, except on the condition that he 'pay to the lender the money lent with legal interest. Nor if the contract be executed, will they enable him to recover any more than the excess he had paid, over the legal interest.” Missouri, K. Trust Co. v. Krumseig, 172 U. S. 351. Speaking further in the same case upon the exercise of this discretion, the court said: “It would seem that no argument is necessary to establish the proposition that when substantial rights, resting upon a statute which is clearly within the legislative power, come in conflict vith mere forms and modes of procedure in the courts, the latter must give way, and adapt themselves to the forms necessary to give effect to such lights. The flexibility of chancery methods, by which it moulds its decrees so as to give appropriate relief in all cases- within its jurisdiction, enables it to do this without violence to principle. If one or the other must give way, good sense unhesitatingly requires that justice and positive l-ights, founded both on valid statutes and valid contracts, should not be sacrificed to mere questions of mode and form;” citing Holland v. Challen, 110 U. S. 15.

The chancellor construed the statute as amended, as having made no change in respect to this principle of equity procedure, and required the plaintiff to pay S per cent, on the loan. This construction proceeds on the ground, that the 'Statute is directed against him who seeks to enforce the usurious contract; and inasmuch as a mortgagor or other debtor against whom a bill is filed to enforce the collection of a debt, is not one seeking to enforce its collection, he is not' included within the technical provision of the statute, and stands *375where lie did before its amendment, with no rights thereunder to avoid paying the legal interest, which he may, in any cast1, as is urged, be required in a court of equity to pay, on a subsisting though usurious contract. If this were true, the amendment means nothing, and the legislature is put in the category of doing a useless thing. Amendments of statutes ordinarily suggest, and are prima facie evidence of a legislative intent to cure some defect in the statute amended. The supposed defect in this statute consisted in the fact, that under it, according to the ■construction placed on it by the courts, a borrower of 'money seeking, whether as plaintiff, or defendant, by the form of his pleading, in a court of equity, to avoid his usurious contract as to the interest, could not do so, and might be required to pay legal interest in addition to the principal. Without violent construction of the intention of the legislature, we may fairly assume that this was the defect they intended to reach by the amendment, and to make all usurious contracts voidable as to the interest, when properly pleaded by the debtor whether in a court of equity or law; for at last, a debtor by such defense is doing no more 'than preventing the enforcement of such a contract against him. What is the difference in principle between not allowing such a contract enforced at the instance of the lender, and in forbidding its enforcement at the instance of the borrower? It always did rest for enforcement, at law or in equity,— when the lender was proceeding, — upon the borrower, whether he objected or not; and but for this ancient rule in equity, the principle would have been as applicable in chancery to the'one as to the other. To destroy that inequality of the parties in equity as was supposed, the statute was framed making the non-enforcement of usury apply in all courts, when invoked by the borrower, as well as by the lender. Not to so construe it, would seem to be a technical rather than a substantial ruling, — a petitio prineipii. The construction of the 'statute gives some field of operation to the amendment. A statute is to be so construed as that it may have effect agreeably to the intention of the *376legislature. As Ivas been well said, “Judges, in construing laws, are to inform themselves of the previous state of the law, and the mischief to be remedied, and make such construction as will advance the remedy and suppress the mischief. * * * The intention of the law is to be gathered from the cause of necessity of enacting it.” — Dubose v. Dubose, 38 Ala. 241. It is, again, a familiar rule, that “a construction which leaves a sentence or clause of a statute no field of operation, should be avoided, if any other reasonable construction of the language can be given.” — Lehman v. Robinson, 59 Ala. 235; The sole object of the amendment was to suppress usury, and leave no one to be victimized by it, when he seeks to avoid it, — passed in the interest of public policy, and for the prevention of extortion by the favored xmt of those not so fortunate as they.