May, 1905] Opinion of the Court-CORSON, P. J. computation. Q. They were divided in this particular form at whose request? A. At the request of Mr. Wallace. Q. Was the purpose of dividing it into forty notes made known to you? A. Yes; he wanted to do that, and thought he could pay it in $40 payments, and have his home clear. The agreement as to the rate of interest to be charged was 12 per cent. per annum, and no more." On cross examination the witness further testified: "I left the matter of the computation to Mr. Wallace I figured in round numbers that the interest would amount to about $600, at 12 per cent.; and I had great confidence in him; and our agreement was that he was to pay 12 per cent. interest, and no more; and he made out the papers. These papers represent our agreement, if they are made like that; and, if not, they do not. Our agreement was 12 per cent. interest at maturity. These notes here are supposed to represent the amount loaned, with 12 per cent. per annum added to them. I talked with Mr. Wallace. I did not have any talk with Mrs. Wallace. The total amount of payments on the notes prior to January, 1896, was $1,582.90 on the notes, and $234.98 on the interest after maturity. * * This item of interest after maturity was computed, as stated in the notes, at 12 per cent. The amount of interest in the first note for $40, dated September 28, 1892, was one month's interest at 12 per cent. on net $1.800. * The amount of interest in the first note is one month's interest on $1,800, or $18, and there would be $22 of principal." It is certainly clear from the evidence of Mr. Price, who was acting for the respondent, that it was not his intention to contract for any interest in excess of 12 per cent. per annum; and we can hardly presume that it was the intention of the defendant Wallace, as his agreement was to pay 12 per cent. per * Opinion of the Court-CORSON, P. J. [19 S. D. annum upon the loan, to include interest in excess of that sum. His evidence was not taken in the case, and hence the testimony of Mr. Price, as before stated, stands uncontradicted; and there is no evidence that the plaintiff was there present, or had any knowledge as to the form of the notes, or the manner in which the interest was computed. If there was a mistake, therefore, in the drawing of the notes by Mr. Wallace, merely, and there was no intention on the part of either to include in the notes any illegal interest, but the excess of interest, if there was any, was the result of a mistake of both parties, this court would not be inclined to hold the contract usurious. The author of the article on "Usury" in 29 Am. & Eng. Ency. Law, on page 463, says: "There is no usury where, through inadvertence or mistake of fact, more than the legal rate of interest is taken or reserved, as where the excessive interest taken or reserved is by mistake in the computation, or where a clerical mistake is made in drawing the obligation evidencing the loan. It is usually a question for the jury whether a sum in excess of the lawful interest was taken through mistake or corruptly." And in support of these propositions the author cites a very large number of cases from the various states of the Union in which this doctrine seems to be maintained. The law as here announced meets with our approval. It would certainly be unjust and inequitable to punish a person who has loaned money, by forfeiting all of his or her interest, where there has been no corrupt or intentional agreement to evade the statute. Assuming, therefore, for the purpose of this decision, that there may have been embraced in these notes the illegal interest contended for by the appellant, it is clear that it was not intended by the plaintiff, and we cannot May, 1905] Opinion of the Court-CORSON, P. J. presume that it was intended by the appellants, to violate the statute upon the subject of interest. As stated in the law as quoted above, the question as to whether or not a sum in excess of lawful interest was taken through honest mistake or a currupt agreement is a question for the jury or for the court sitting in the trial of the case; and, as the court in the case at bar has found in favor of the plaintiff upon this issue, its findings will not be disturbed in the absence of a preponderance of evidence against them. It is further contended by the appellant that the provision allowing interest on the note after maturity was in effect allowing interest to be compounded. This contention is untenable. The provision in contracts for the payment of a simple interest upon accrued interest on notes and obligations does not in this state constitute usury. This question was decided by the late territorial Supreme Court in Hovey v. Edmison, 3 Dak. 449, 22 N. W. 594. In that case it was held by the court that a promissory note providing for the payment of interest annually, and stipulating that each annual installment of interest not paid when due should bear interest at a specified rate from the time it fell due until paid, was valid and legal. This has since been the law in this territory and state, and we see no reason for overruling that decision, and hence it may be regarded as the settled law of this state. We fully recognize the law contended for by the counsel for appellants -that, when a scheme is intentionally devised by the lender of money to extort from the borrower a larger amount of interest than the law permits to be reserved or taken, it is the duty of the court to declare the interest forfeited; but where, as in this case, there was clearly no such intention, and the illegal Opinion of the Court-CORSON, P. J. [19 S. D. interest, if any, was reserved by mistake, simply, and not with any intention of evading the statute, it would be manifestly unjust and inequitable, and this court would be very reluctant, to declare the interest forfeited in such a case. It clearly appears from the testimony of the defendant Mrs. Wallace that her husband, Mr. Wallace, acted as her agent in the transaction. In her testimony she says: "I had no talk with Mr. Price except when the notes became due and he came in to collect them. That was after they had been executed. I never talked to Mrs. Goodale at all, in any shape, until a year ago this winter. Mr. Price acted for her.” She further says in regard to her husband: "He acted for me in arranging with Mr. Price for the loan, and he delivered the notes after they were signed by me to Mr. Price." It is further contended by the appellants that as there was a stipulation in the mortgage that if the mortgagors should fail to pay any portion of the above-mentioned sum, either principal or interest, promptly at the times they should become due, the whole sum-both principal or interest, -should at once become due and collectible, therefore the contract was clearly usurious, as the whole amount of the principal of the notes would become due and payable upon default in the payment of the first note; but this contention is untenable, for the reason that such stipula tion is in the nature of a penalty from which the mortgagors could relieve themselves by a prompt payment of the notes when due. Webb on Usury, § 120; 2 Am. & Eng. Ency. Law, p. 486. The author, in speaking of this class of cases, says: "So, if the provision for the payment of excessive interest is dependent on contingency which the borrower may avoid by May, 1905] Opinion of the Court-CORSON, P. J. paying the debt, with legal interest, the loan will not be deemed usurious." State v. Elliott, 61 Kan. 518, 59 Pac. 1047; Tholen v. Duffy, 7 Kan. 405. A similar clause is frequently inserted in mortgages, but the stipulation has never been held as constituting a contract for the payment of usurious interest, so far as our researches extend. It is further contended by the appellant that there is compound interest in these notes, and therefore the case comes within the principle of the case of Drury v. Wolfe et ux., 134 Ill. 294, 25 N. E. 626, but in our view the case at bar is not analogous to that case. There it is clear, as stated by the court, that the effect of the computation was to charge compound interest, and that the amount of those several notes could only be reached by compounding the interest. In the case at bar, however, no compound interest seems to be included in the notes; but the effect of the transaction would seem to be simply providing for the payment of the interest monthly as it should become due, and providing for the payment of such interest monthly would not be an evasion of the usury law, as it is perfectly competent to provide for the payment of interest annually, quarterly, or monthly. See Am. & Eng. Ency. Law, p. 492, vol. 29; also Meyer 7. City of Muscatine, 1 Wall. 384; Hatch v. Douglas, 48 Conn. 116; Briggs v. Iowa Sav. & Loan Ass'n, 114 Iowa 232, 86 N. W. 320; Hawley v. Howell, 60 Iowa 79, 14 N. W. 199; Ragan v. Day, 46 Iowa 239. We have not deemed it necessary to cite authorities, as the law governing this class of cases seems to be well settled that, where there is an intention on the part of the contracting parties to reserve or receive interest in excess of the sum allowed by statute, the interest, under our law, is forfeited, but where 19 S. D.-27 |