Babcock v. Olhasso

MR. JUSTICE THOMPSON (R. L.) Delivered the Opinion of the Court.

This is an appeal from a judgment for the recovery of usurious interest against the payee of a promissory note:

November 27, 1924, the respondent borrowed $2,000 from the appellant. A bonus of $500 was exacted by the appellant for making the loan. The respondent executed and delivered to the appellant her promissory note for $2,500 at eight per cent interest per annum. The note was payable in monthly installments of $55 until June 2, 1927, at which date the balance became due. ' This note was secured by a .trust deed upon real property belonging to the respondent. Prior to October 26, 1925, twelve installments of $55 each had been paid. These payments were first' applied to the ■interest due, and the balance was credited upon the principal. The sum. of $182.72 was thus applied to the account of interest. The balance of these payments, amounting to $477.28 was credited to the principal. This left a balance of $2,022.72 due upon the principal sum.

On the last-mentioned date the respondent sold to George W. Heekert the real property upon which she had executed the trust deed. The necessary instruments of conveyance were deposited in escrow with the Alhambra branch of the California Bank. On the same day the appellant deposited in escrow with that bank the note and trust deed together with a reconveyance of the property accompanied by instructions to deliver the instruments to the proper parties upon payment of-the balance of principal and interest which was due upon this note. This sum was to be credited to

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the appellant’s account. As a part of the same transaction Heckert forthwith deposited with the hank the amount due upon the note with directions to pay it to the appellant when the purchase was consummated. This sum was subsequently paid to the appellant in satisfaction of the note, and charged against Heckert as a part of the purchase price of the property.

June 15, 1926, the respondent brought suit to recover judgment for treble the amount of interest and bonus paid to the appellant- on the ground that the payments were usurious and void. The answer admits the loan substantially as it was alleged. It acknowledges the receipt of interest in the sum of $207.98. The exacting of $500 bonus is not denied. The record shows that $126.06 was paid on account of interest more than a year before the commencement of the action.