22. When contract not usurious. An agreement on the part of a purchaser of sheep to pay therefor a stated amount, "and also two pounds of wool per year for each sheep so sold" is not necessarily usurious. First National Bank of Marshalltown v. Owen, 23 Iowa, 186.

23. Part payment. Where money is borrowed at usurious interest, and a part thereof, with the usury, paid, and a note given at a legal rate of interest for the balance, the contract is tainted with usury. Callanan v. Shaw, 24 Iowa, 442.

24. To constitute usury. There must be a contract or intent to take, directly or indirectly, usurious interest. Held, accordingly, that the inclusion into a note for a balance due, of an additional sum as compensation to the payee for his time and expense in waiting for the delivery of the note, after the time agreed upon, was not usury. Jones v. Berryhill, 25 Iowa, 290.

25. Penalty for non-payment. A promissory note which says, that if not paid when due, it shall draw interest at ten per cent from date, is not usurious. Otherwise, if it appeared that interest was included in the amount of the note and a recovery sought for ten per cent thereon as well as on the principal; or if more than legal | interest was reserved as penalty. Fisher v. Anderson & Froth, 25 Iowa, 28. See § 1, t seq.,

ante.

26. Contract to pay on time: in property. One man may lawfully ask and receive, from another to whom he sells property on time, a larger sum than he is willing to take for it in case the price is paid down; and the fact that the increased price, payable at a future day, or in installments, is more than the legal interest on the cash price, would not render the contract usurious. Gilmore & Smith v. Ferguson & Cassell, 28 Iowa, 220.

27. Rule applied. Where one sold to another a lot of sheep on time, under a contract that, until the payment of a certain sum at a future date named, which was found by the jury to be the value of the sheep at the date of the contract, the purchaser should, in addition thereto, Vol. 2. - 137

usurious, though the annual amount of wool reserved greatly exceeded in value the legal rate of interest allowed by the statute, and though the jury found by their special verdict that the wool thus annually reserved was not part of the price, but for interest. Ibid.

II. RIGHTS OF PARTIES TO USURIOUS CONTRACTS.

a. Generally.

28. Equitable relief. Before a debtor can avail himself of the aid of a court of chancery to protect him against usury, he must tender to his creditor the principal and legal interest. Phelps v. Pierson, 1 G. Gr. 121.

29. A bill seeking relief against a mortgage, on the ground of usury, will not be sustained when it does not ask to redeem upon paying the amount actually due, nor allege a tender of that amount. Clemons v. Elder, 9 Iowa, 272.

30. A court of equity will interfere by injunction to restrain the execution of a deed of trust executed to secure a debt tainted with usury, only upon condition that the party asking the injunction tenders to defendant the amount admitted to be due on such indebtedness. Casady et ux. v. Bosler et al., 11 Iowa, 242.

31. The supreme court has never held that the borrower, in a usurious contract, must tender to the lender in addition to the principal remaining due, interest thereon computed at the rate of six per cent before a court of equity will, on his application, enjoin a sale under a deed of trust exe cuted to secure the performance of the usurious contract. Hayward v. Munger et al., 14 Iowa, 517.

32. Usury cannot be recovered back. Usurious interest once paid, cannot be recovered back. Smith, Trogood & Co. v. Coopers & Clarke, 9 Iowa, 376. Nichols v. Skeel, 12 Ibid. 300.

33. Credits. When payments have been made upon a usurious contract, and the creditor brings an action to enforce the collection of the balance, such payments will be applied upon the amount legally due, excluding the usury, from the amount originally contracted to be paid. Ibid.

34. In judgments for usury, the interest should be computed at the rate of ten per cent per annum upon the sum loaned from the date

of the contract to the date of the judgment. Ficklin & Lucas v. Zwart et al., 10 Iowa, 387. 35. In action on contracts in which usury is established, the plaintiff should have judgment against the defendant for the amount of principal due; the school fund against the defendant for the amount of interest due thereon, and the defendant against the plaintiff for the costs of the action. Garth v. Cooper & Smith, 12 Iowa, 364.

36. Usurious sale of land. Where A advances money for the purchase of land and takes the title to himself, under an agreement with B to convey the same to him at the expiration of one year, upon the payment of the sum so advanced and forty per cent thereon, quere, can B. enforce a specific performance of the contract to convey, without first tendering the whole amount which he contracted to pay. Cassaday v. Scallen, 15 Iowa, 93.

37. V. loaned to B. through his agent S., a sum of money at usurious interest, to secure which P. executed a deed of trust on certain land, which deed was foreclosed and the land purchased by V., and, by a subsequent contract, S. offered for V. to convey the land back upon the payment of the whole amount remaining due according to the usurious note with interest thereon at ten per cent, and costs of a foreclosure, and of a suit then pending for the balance due on the note; which offer P. accepted, and received a re-conveyance of said land, and S. the agent, advanced the entire sum to his principal and took the note of P., payable to himself, for a portion of the amount to be paid. it was held: 1. That the usury in the original note did not taint the contract for the re-convey. ance of the land. 2. That S. was not a party to a usurious contract, and that the note executed to him by P. was not tainted by usury. Switz v. Platts et al., 15 Iowa, 298.

38. Application of payment. Where the notes were given in payment of a usurious account, after which one of the notes was paid, it was held, that the payment should be applied upon the amount legally due upon the aggregate account, and not as a payment of the usury in the note thus paid. Burrows & Prettymun v. Cook & Sargent et al., 17 Iowa, 436.

39. A court of equity will not regard an agreement made between the maker of a note and deed of trust and the payees of said note, stipulating that if it shall be found

by the court that the transaction is usurious, the payee shall receive interest at the rate of six per cent on the principal of the debt. The transaction will be purged of usury by a decree of the court, visiting the penalties of the statute upon both the borrower and the lender, by giving to the usurer only his principal, and to the school fund a judgment against the debtor for ten per cent thereon. The rule in equity is the same as at law. Ibid.

40. Duplicate payment. In the trial of an action on a promissory note, it was made to appear that the transaction was usurious, that the defendant had already paid the principal and about twenty per cent interest thereon, and that the note in suit was for additional usurious interest Held, that the court erred in rendering judgment against the defendant for interest on the sum loaned, at the rate of ten per cent per annum, in favor of the school fund. WRIGHT, Ch. J., dissenting. Easley v. Brand et al., 18 Iowa, 132.

41. Agreement of parties as to the lex loci contractus. If a contract be made in one place to be executed in another, the parties may stipu late that it shall be governed by the law of either. Arnold v. Potter, 22 Iowa, 194.

42.

interest. And if the rates of interest differ in the two localities, it is competent for the parties to agree upon the rate of either. Ibid.

43. usury. When the interest expressed is usurious, both by the law of the place where the contract was made and where it is to be executed, the law of the former place will govern as to the consequences of the usury. Ibid. 44.

citizens of different States: interest.

It is competent for citizens of different States, who are parties to a promissory note, to contract in good faith for the rate of interest, and with reference to the law of the State where the maker resides, and where the property mortgaged to secure the note is situated; although the note is in terms payable in a State different from the residence of either, and the interest reserved is greater than the legal rate of the State where the note is made, or where, by its terms, it is payable. Ibid.

45. -form of contract. In such case, the form of the transaction is immaterial, the cardinal inquiry being, did the parties resort to it for the purpose of disguising the usury, in violation of the law of the State where the contract was made or to be executed. Ibid.

46. Application of rule. P., a resident of Iowa, negotiated a loan of A., living in Massachusetts, and executed therefor his promissory note, payable in New York. To secure the note, a deed of trust on real estate in Iowa was executed to a trustee residing there. The deed and note were then delivered by P. to A., in Massachusetts, and the money received there, pursuant to an agreement entered into when the loan was negotiated. Held, that, if P. and A., in good faith, and without intent to evade the usury laws, stipulated for the rate of interest allowable in Iowa, which was greater than the

legal rate of Massachusetts or New York, that the contract should be enforced accordingly.

Ibid.

tion for the conversion of a usurious promissory note. Held, that as defendant collected the full face of the note, usury included, he is liable for the full amount. Allison & Crane v. King, 25 Iowa, 56.

50. Vendor and Vendee. Where a vendee

of real estate subsequently pays the amount agreed upon, with legal interest, and executes his note for usurious interest accrued, he will be held entitled to a deed, and the note given for the usurious interest without consideration. Knight v. Judd et al., 34 Iowa, 483.

b. Who may plead, and against whom. 51. Plea of usury personal right. Where a mortgage was executed to secure a usurious note, and a subsequent purchaser of the mortgaged premises, in the performance of his contract of purchase, discharged said note and mortgage by the execution of his own note for the amount thereof (including the usury), and another mortgage on the same premises, it was held, in a proceeding to foreclose said second mortgage, that the purchaser and mortgagor could not set up as a defense the usury in the note of his grantor. Hollingsworth v. Swickard, 10 Iowa, 385.

52. A defendant in an action to foreclose a mortgage cannot interpose as a defense a plea of usury in a contract to which he was not a party, nor a privy having authority to interpose such plea. Hollingsworth v. Swickard, 10 Jowa, 385, followed; Frost v. Shaw et al., 10 Ibid. 491; Powell v. Hunt, 11 Ibid. 430; Drake v. Lowery, 14 Ibid. 125; Perry v. Karus, 13 Ibid. 174; Carmichael v. Bodfish et al., 32 Ibid. 418; Guthrie v. Alexander et al., 15 Ibid. 471.

53. Payments: rents. While a subsequent secured by a mortgage to which he was not a purchaser merely cannot plead usury in a debt wholly or in part by the mortgagor, or from party, he may show that the debt has been paid rents collected from the estate, and under proper pleadings may hold the mortgagee liable for neglect to collect the rents accruing under leases assigned to him, when, by diligence, the amount thereof could have been made. Huston v. Stringham, admr., et al., 21 Iowa, 36.

54. As against bona fide holder. Usury is available as a defense to an action on a contract tainted with it, in the hands of an indorsee or bona fide holder. Bacon v. Lee & Gray, 4 Iowa, 490; Burrows & Prettyman v. Cook & Sargent, 17 Ibid. 436; Brown v. Wilcox & Sawyer, 15 Ibid. 414.

55. Tender: foreclosure. Usury may be pleaded as a defense in a proceeding to foreclose a mortgage without an allegation of a tender of the amount admitted to be due from defendant to plaintiff. Cox v. Douglas, 12 Iowa, 185.

56. Pleading usury. Usury may be set up in an answer by allegations of facts showing that illegal interest has been contracted for, without being pleaded in express terms. Kurz v. Holbrook et al., 13 Iowa, 562.

57. In equity, when the bill sets out and seeks to enforce a usurious contract, it is not necessary for the defendant to plead the usury in order to prevent a decree for the usurious portions of the contract. Phelps v. Pierson, 1 G. Gr. 121.

58. A creditor, before seeking to obtain a decree upon a bill disclosing usury, should allege therein a willingness to abandon the usurious portion of the contract, otherwise a demurrer to the bill should be sustained. Ibid.

59. Where usury is pleaded as a defense, and the plaintiff is called upon to reply under oath, as to the usury, such sworn replication does not

render the defendant incompetent to testify as to the usury. Bacon v. Lee & Gray, 4 Iowa, 490.

ners.

60. Usury may be pleaded by a partner. In an action against a copartnership upon a note, tainted with usury, either partner may set it up as a defense, without the consent of his copartThe defense may also be pleaded by one copartner who has, for a consideration, assumed the payment of the copartnership debt, and who has, after the dissolution of the copartnership, renewed the note tainted with usury by the execution of a new one in his own name. Aliter, as to a third party, who, for a consideration, has assumed the payment of a note thus tainted. The Machinists' Bank v. Krum, 15 Iowa, 50.

61. Estoppel. A promise made by the maker of a promissory note after indorsement, to the indorsee, to pay the same, does not estop him from setting up usury as a defense to an action thereon by such indorsee. Allison et al. v. Barrett, 16 Iowa, 278.

62. Where the payees of one and the indorsee of another promissory note, both of which were executed by a firm for a consideration tainted with usury, before taking the same, called at the business place of the makers thereof and asked one of the partners if the debt represented by the notes was "all right and would be paid," to which it was replied, that it was, and would be promptly paid," after which they took the debt by assignment (without any knowledge that it was tainted with usury), in payment of a debt due them from the assignors, it was held, 1. That the representations made by one of the makers operated to estop them from interposing a plea of usury as a defense in an action on the notes (WRIGHT, Ch. J., dissenting); 2. That such representations made by one partner bound the firm. French & Davis v. Rowe & Hyde, 15 Iowa, 563.

63. Assignment of usurious note: estoppel. Where the maker of a note represented to plaintiffs' assignees thereof, prior to purchasing it, that there was no usury in it, and plaintiffs took it relying upon such representation, and without knowledge of its being usurious, held, that the maker of the note is estopped from setting up the defense of usury. Callanan v. Shaw, 24

Iowa, 442.

64. Where the defendant, who was president of a corporation, executed his individual note for an indebtedness of the corporation which

embraced usurious interest, for which he was paid the amount of said note by the corporation, held, in an action on the note, that he could not avail himself of the plea of usury. Drake v. Lowry, 14 Iowa, 125.

65. Where a principal deposited money with an agent, to be loaned on terms which would make it net to the principal interest at a usurious rate, it was held, in action, by the principal, to recover a balance remaining in his hands, that the agent was not a party or privy to a usurious contract, and could not interpose the plea of usury. Sternberg v. Callanan & Ingham, 14 Iowa, 251.

66. Indorsee of usurious note. When the first indorsee of a promissory note tainted with usury received it with knowledge of the usury, and delivered it to the maker upon the execu tion of a new note payable to himself, which included the whole usury previously reserved, which note he indorsed, for a full and valuable consideration, to another indorsee who had no knowledge of the usury, it was held, that the remedy of the second indorsee was against his immediate indorser alone, and that he had no right of action against the indorser of the original note. LowE, J., dissenting. Brown v. Wil cox & Sawyer, 15 Iowa, 414.

67. Bona fide holder. The indorsee of a promissory note who takes it with knowledge that it is tainted with usury, is not a bona fide assignee within the meaning of section 1792 of the Revis ion of 1860, and cannot recover the consideration paid for the same less the principal from the indorser. Ibid.

68. Change of firm. Where bankers received a new partner into their firm, and thereupon opened a new set of books to which they transferred a balance due from a customer under a usurious contract, which balance was paid at his request by the new to the old firm, it was held, that the customer could interpose a plea of usury in an action for such balance by the new firm. Burrows & Prettyman v. Cook & Sargent et al., 17 Iowa, 436.

69. Change of law. When a contract to pay interest at the rate of twenty per cent was made in parol, under the provisions relating to interest in the Code of 1851, and such contract was continued and acted upon after the usury law of March 8, 1853, took effect and a note was there. after executed for the principal and interest which had accrued under both laws, the note was