Strauss v. Bruce

THE COURT. Walter C. Hartman, one of the defendants above named, in the year 1928 executed to Louis S. Strauss and Edgar L. Strauss, copartners doing business as Strauss Brothers, six promissory notes. Five of the notes contained a provision for the payment of the principal “with interest payable monthly at the rate of one (1) per cent per month from date until paid . . . should the interest not be paid when due it shall thereafter bear like interest as the principal, and at the option of the holder of this note the whole sum of principal and interest shall become immediately due and payable”. The sixth provided for such payment “with interest at the rate- of twelve per cent per annum from date until paid, interest payable . . . , and if not so paid, to bear the same rate of interest as the principal.” Hartman paid interest thereon until January, 1929, when he was adjudicated a bankrupt, and Arthur S. Bruce was appointed trustee of his estate. The trustee also paid certain interest on the notes, the [64]total amount paid by the maker and his trustee being the sum of $7,591.80. The trustee then brought suit to recover this amount and the further amounts as provided by section 3 of the Usury Act, on the ground that the payments of interest under the provisions of the notes as quoted above were usurious. Strauss Brothers answered, and therewith filed their cross-complaint, asking that the notes be reformed by striking therefrom the above provisions upon the same grounds as set forth in their complaint filed in a separate action, wherein they sought the same relief. As grounds for relief they alleged that the notes were copied by a scrivener from a printed form in general use, and that by a mistake the above provisions were included in the notes executed by Hartman, that the same did not express the intention of the parties, they not having agreed that the interest payments provided therein should bear interest in case of default, and that the provisions were inserted by mutual mistake.

The actions were tried together. The trial court found in accordance with the above allegations, and a decree was entered in each suit that the notes be reformed as prayed. Bruce as trustee has appealed from these judgments.

According to the testimony of all the parties to the instruments' and the attorney who drafted the same the provisions in question were inserted by mistake and did not truly express the agreement previously made. This evidence was amply sufficient to support the finding of the trial court.