Rice v. Dunlap

LANGDON, J.

This is an appeal by plaintiff from a judgment denying recovery upon a promissory note signed by the defendants. The complaint is the usual one upon a promissory note and sets forth the note, dated Hanford, California, January 30, 1924, payable one year from date, in the sum of $5,550, with interest at the rate of seven per cent per annum and providing for the payment of attorney’s fees in the event legal action became necessary to enforce payment.

In the answer it is alleged that the consideration for said note was only $5,000, but the due execution and delivery of the note and its nonpayment are admitted, but it is asserted that $3,251.75 is due upon the note and no more. This amount is arrived at because of the further allegations of the answer to the effect that the defendants had originally given a note to plaintiff for $5,000, which had become due at the time of the execution of the note involved in this action'; that defendants could not pay the same and that plaintiffs

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exacted an additional $550 as a bonus for the renewal of this note for one year and added such bonus to the face of the renewal note and that interest aggregating $582.75 had been paid upon said renewal note, which interest was usurious because of the inclusion in the principal of the additional $550. The answer prays that treble the amount of said usurious interest so paid by defendants, or the sum of $1,748.25 be allowed as a credit upon the $5,000 note.

The trial court found that the note had been executed by defendants; that the consideration therefor was $5,000 and no more; that the note was unpaid and that no part of the said note or interest thereon remains due, owing or payable. The court concluded that the consideration exacted by plaintiff for the execution of said note was usurious and that plaintiff should recover nothing in the action and that defendants should recover their costs.

The plaintiff demurred to the answer upon numerous grounds, among which are: That the defense is barred by the provisions of subdivision 3 of Act 3757 of the General Laws of California and by subdivision 1 of section 340 of the Code of Civil Procedure. The demurrer was sustained as to the first and second counterclaims seeking to set off treble the amount of interest paid on July 31, 1924, and on January 30, 1925, and overruled as to the counterclaim for treble the amount of interest paid on July 30, 1925. The complaint was filed in March, 1926.