Mitchell v. Lyman

Citations

• 77 Ill. 525

Syllabus

<p>1. Usury—whether legal interest is recoverable upon a note where usurious interest is reserved. Where usury is reserved in a promissory note, given for money loaned, by taking five per cent interest in advance from the principal sum, and making the note given for the whole sum bear ten per cent interest from date, no interest will be recoverable upon the note, and all payments of interest will be applied on the principal.</p> <p>3. Same—interest not forfeited upon note given in renewal of prior note infected with usury. Where a promissory noté is given in renewal of a prior one in which interest at the rate of fifteen per cent per annum was reserved, witli additional parties thereto as securities, the last note bearing a legal rate of interest, it being a new contract, with additional parties, will not be infected with the usury in the first, and the legal rate of interest may be collected on the sum actually due thereon.</p> <p>3. Same—taking interest in advance from the sum loaned is not usurious. If a person borrows $3000 for one year, at ten per cent interest, the taking of interest in advance out of the principal, so that the borrower receives but $3700, and gives his note for $3000, with ten per cent interest after maturity, will not taint the transaction with usury.</p> <p>4. Same—allowed on note given in renenval. Although usurious interest, voluntarily paid, can not be recovered back, yet, so long as any part of the original debt remains unpaid, though evidenced by a new note, with new parties as' securities, the principal debtor may insist that all payments of usurious interest shall be deducted from the principal of the new note.</p> <p>o. Thus, where a person, borrowing $3000, gave his note for that sum, payable in one year, with interest at the rate of ten per cent, while in fact interest at the rate of five per cent was reserved in advance, so that the borrower received only $3850, and, at the end of the year, he gave a new note for §3000, with pers