By the Court
This case presents rather a new feature under the interest law of the State. The Defendant Nutting had given his note to the Plaintiff for the sum of one thousand dollars, with interest at the rate of two and one-half per cent, per month, and had secured the payment of the same by a mortgage upon real estate executed by himself and his wife. "When the note fell due the Defendant did not wish to pay it, but requested the privilege of retaining the money longer, which was granted by the Plaintiff upon the consideration that he should pay interest upon the same quarterly at the current rates. .The evidence does not disclose that any contract was entered into by which forbearance was granted for any specific time; nor does it appear that the Defendant, at the beginning of the several extensions that were granted, specifically agreed to pay any particular rate of interest, nor that any writings were executed about the same. The parties would meet at the end of each quarter and agree upon the value of money in the market for the past quarter, and the Defendant would pay and the Plaintiff receive such amount in satisfaction for the interest accrued. The same would be then endorsed upon the note as payment of interest up to the date of the endorsement, with the full consent of the Defendant. The Court find, as matter of fact, and we think the evidence fully sustains the finding, that these several payments were made by the Defendant “voluntarily, and in conformity with the mutual agreement and understanding of the parties.’’ And also, that as matter of fact, there was no “ duress or compulsion” used to obtain them.
We do not think that it can influence the validity of these
The counsel for the Plaintiff urges that as the Statute allowing the taking of interest beyond seven per cent, per _ annum, requires the contract for the same to be in writing,- a verbal agreement for such greater rate is contrary to the Statute and void, and money paid under it may be recovered back. There is no doubt that where contracts are made in violation of statutory provisions, or in contravention of public policy, they are as a general rule void, and money paid under them may be recovered back, but this rule is confined in its application to such contracts as involve by their subject matter some substantial violation of the spirit of the law or policy, and not such as stipulate' some matter recognized and permitted by law or policy, but in a manner other than the one prescribed. The Statute concerning interest allows the taking of any rate the parties may agree upon, provided they stipulate for the same in writing. It cannot be said that the taking of interest beyond seven per cent, per annum is contrary to the spirit or policy of the law, when the Statute (expressly authorizes it‘ to be done. It is believed that the design of the act was “to remove all obstacles from the subject of interest and. leave parties free to contract for such rate as they should consider their money worth,” imposing no restraint upon them except as to the manner in which the contract should be made. Mason &
The question mainly urged by Defendant is, that the payments were made under duress and compulsion. As a matter of fact this is found against him by the Judge who tried the cause, and the position can only be sustained upon the ground that the existence of the mortgage containing the power of sale by which the Defendant’s land could have been sold had he refused to pay the increased rates of interest, was in itself a power in the hands of the Plaintiff that in contemplation of law amounted to such duress. I think there are two full answers to this view of the case. In the first place, to bring a case within the rule contended: for by the Defendant, the money exacted and paid must be extortionate — must be
In the second place, I do not think the power which the Plaintiff held in his hands, to wit, the mortgage with a power to sell under the Statute, could, under any circumstances, be considered in itself as a sufficient constraint upon the will or independence of the Defendant to amount to legal duress or compulsion. The utmost the mortgagee could have done, would have been to foreclose his mortgage under the Statute. This would involve a publication for at least six weeks of the notice, and then, after sale, the mortgagor would have a full year in'which to redeem before he either lost his land or his possession of it. The execution of a power of sale, which the counsel claims is so summary and severe a remedy, will be found, on examination, to be more dilatory and less rigorous than the ordinary foreclosure in Chancery. Stone vs. Bassett, 4 Min. R. 298, Opinion of the Chief Justice, and although
If we should admit tbe theory claimed by tbe Defendant, tbe mere bolding of any security by the creditor would subject him to tbe charge of exercising an undue influence over . bis debtor, on tbe ground that he could sue him and seize bis property on execution if be failed to comply with bis demands. Tbe supposed constraint is too remote entirely to be acted upon by Courts as a foundation for annulling contracts Between parties. Tbe relation of mortgagor and mortgagee might in some cases be taken into consideration in determining whether oppressive measures bad been used to make terms-between parties; but alone, tbe fact fails to produce such result.
In either view, therefore, tbe defence fails. First, tbe money paid was neither extortionate nor illegal. Second, tbe element of duress did not enter into tbe transaction either in fact or by construction of law,
I think the case of Bidwell vs. Whitney, 4 Minn. Rep., 76, adopts principles which cover tbe case at bar in tbe view we have taken of it.
Judgment affirmed.