Opinion
24975, 24976.
ARGUED DECEMBER 10, 1968.
DECIDED JANUARY 9, 1969.
Cancellation. Fulton Superior Court. Before Judge Horne, Emeritus.
Archer, Patrick Sidener, James H. Archer, Jr., R. William Hamner, for appellants.
Long Siefferman, Floyd E. Siefferman, Jr., for appellee.
1. The gravamen of the offense of usury is not the promise of the borrower to pay usury but the extraction of usurious interest by the lender.
2. The instruments in the present cases are deeds to secure debt and notes and cannot be construed as evidencing a "joint venture" by the plaintiff and the defendants.
3. The undisputed pleadings in the present cases show a scheme and device to extract usury.
ARGUED DECEMBER 10, 1968 — DECIDED JANUARY 9, 1969.
Because of alleged usury Curtis H. Young filed two separate actions seeking to have deeds to secure debt canceled and the notes executed in connection therewith marked paid, as well as injunctions against foreclosure of the deeds. In case No. 24975 the plaintiff also sought to recover an amount of money paid in excess of the principal allegedly loaned by the defendants to the plaintiff. In case No. 24976 the full principal had not been repaid and the petition alleged a tender of the balance of the principal due and an unqualified refusal by the defendant to accept it. In each case the defendants admitted all the material allegations of the plaintiff's petitions, denying only those allegations which had the effect of admitting an intent to extract usury. As a further answer the defendants alleged that the plaintiff was not entitled to equitable relief because he did not come into the court with clean hands in that the defendants were a police officer and a housewife who had no knowledge of the laws of usury, had no or little business experience and did not know what interest rates constituted usury, while the plaintiff, a real estate developer, etc., had such knowledge, that the plaintiff approached the defendants and asked them to invest with him in an apartment project located on the premises covered by the deeds to secure debt, that unknown to the defendants the plaintiff was in financial difficulty and needed substantial amounts of cash for his real estate investments, that the plaintiff knew the defendants owned a house and lot free of encumbrances upon which a substantial amount of money could be borrowed, that the plaintiff procured a loan for the defendants on such property from a savings and loan association and pursuant to the "joint venture" agreement with the plaintiff they gave him from the proceeds of such loan the amount of money alleged in the petition as being borrowed (in the answer to the other action the funds were merely advanced), that the exhibits attached to the plaintiff's petitions (the notes and deeds to secure debt), were furnished by the plaintiff and "at no time did the defendants ask the plaintiff to vary the terms and conditions which he proposed and incorporated in the instrument" and that the entire transaction was a scheme and device perpetrated by the plaintiff to defraud the defendants "as the plaintiff well knew that if said transaction was considered a loan, the same was usurious and that all interest would be forfeited."
Thereafter, the plaintiff filed motions under Section 12 (c) of the Civil Practice Act ( Code Ann. § 81A-112 (c)) asking for a judgment on the pleadings which motions were granted and it is from such judgments adverse to them that the defendants appeal and enumerate the same as error.
The gravamen of the wrong prohibited by the usury laws is not the agreement to pay usurious interest but the "reserving and taking, or contracting to reserve and take ... a greater sum for the use of money than the lawful interest." Code § 57-102.
"`Under the codified, long recognized maxim that "he who would have equity must do equity, and give effect to all equitable rights in the other party respecting the subject-matter of the suit" ( Code § 37-104), a borrower who has executed a deed to secure debt is not entitled to an injunction against a sale of the property under a power in the deed, unless he first pays or tenders to the creditor the amount admittedly due.' Oliver v. Slack, 192 Ga. 7 ( 14 S.E.2d 593)." Crockett v. Oliver, 218 Ga. 620 (1) ( 129 S.E.2d 806). Thus, in the present cases, where the allegations of the plaintiff's petitions show that he has met the above requirements, and such allegations were admitted in the defendant's answers, it was not error to sustain the plaintiff's motion for a judgment on the pleadings as against the contention that the plaintiff had not come into court with clean hands.
2. The allegations of the answers which allege that the transaction was a "joint venture" and not a loan are without merit. Such defense is based on the ultimate allegation that "said instruments constitute a joint venture between the plaintiff and the defendant rather than a loan, and the laws of usury do not apply." The instruments referred to are promissory notes and deeds to secure debt and nothing more.
3. The defendants admitted the material allegation of the plaintiff's petitions denying only the allegations which had the effect of alleging an intent on the part of the defendants to extract usury.
"To constitute usury it is essential that there be, at the time the contract is executed, an intent on the part of the lender to take or charge for the use of money a higher rate of interest than that allowed by law. Bellerby v. Goodwyn, 112 Ga. 306 ( 37 S.E. 376). If the intent be to take only legal interest, a slight and trifling excess, due to mistake or inadvertence, will not taint the transaction with usury. Rushing v. Willingham, 105 Ga. 166 ( 31 S.E. 154)." Loganville Banking Co. v. Forrester, 143 Ga. 302, 305 ( 84 S.E. 961, LRA 1915D 1195).
The admitted allegations of the plaintiff's petition show an intent to take the amount of interest alleged to have been charged for the use of the money loaned. Such allegations do not show a trifling excess due to mistake or inadvertence but an intent to take interest in one case of fifteen percent and in the other of twenty percent.
It has long been the rule that where the facts show without dispute a device to extract more than the legal rate of interest for the use of money such question need not be submitted to the jury. See Atlanta Savings Bank v. Spencer, 107 Ga. 629, 633 ( 33 S.E. 878).
Accordingly, where as in the present case the undisputed pleadings show such a scheme, it was not error for the trial court to grant the plaintiff's motion for a judgment on the pleadings under the provisions of § 12 (c) of the Civil Practice Act, supra.
Judgment affirmed. All the Justices concur.