Coulter v. Collins

CONREY, P. J.

Appeal from a judgment entered in an action brought to obtain a decree of annulment of a contract made in violation of the usury law, and to recover treble damages.

The act known as the usury law was an initiative measure submitted and approved at the general election of November 5, 1918. (Stats. 1919, p. lxxxiii; Deering’s Gen. Laws, 1923 ed., Act 3757.) This act repealed sections 1917, 1918, 1919, and 1920 of the Civil Code, all relating to interest. The usury law, after prescribing certain limits or rates of interest that can be charged, and particularly limiting contract interest to not exceeding twelve per cent per annum,

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provides in section 2 as follows: “Any agreement or contract of any nature in conflict with the provisions of this section shall be null and void as to any agreement or stipulation therein contained to pay interest and no action at law to recover interest in any sum shall be maintained and the debt cannot be declared due until the full period of time it was contracted for has elapsed.”

Section 3 of the act reads in part as follows: “Rights of person paying illegal interest. Every person, . . . who for any loan or forbearance of money, goods or things in action shall have paid or delivered any greater sum or value than is allowed to be received under the preceding sections, one and two, may either in person or his or its personal representative, recover in an action at law against the person . . . who shall have taken or received the same, . . . , treble the amount of the money so paid or value delivered in violation of said sections, providing such action shall be brought within one year after such payment or delivery.”

The facts of this case as determined by the court in its findings of fact are as follows: On or about March 1, 1921, Marie Tomblin was an incompetent person and by reason of mental disease and unsound mind was incapable of managing her affairs or property or of safeguarding or protecting her business interests or assenting to or making contracts; but was not wholly without understanding. In November, 1921, she was by decree of court judicially determined to be an incompetent person, and the plaintiff Coulter was appointed guardian of her person and estate. On March 1, 1921, said Mrs. Tomblin, being at that time in fínaneiál difficulties, borrowed from J. 0. Mouser and 0. D. Collins the sum of twenty-five thousand dollars. In consideration of said loan the borrower executed to the lenders a sixty-day note for the sum of thirty-five thousand dollars with interest at seven per cent per annum, and to secure the same executed a deed of trust on certain real property owned by her in the city of Los Angeles. Nothing was ever paid on account of said note. Prior to the commencement of this action Mouser transferred to Collins his interest in the note and trust deed. In August, 1921, pursuant to notice of default in payment of the note, and pursuant to other notice given in accordance with the terms of the trust deed, the real property described in said deed was advertised to