Hayes vs. Goodwin. HUNT & BECK, for appellant, cited 3 Bibb, 49; 3 Chitty Pleading, 1159; 69 Eng. C. L. R., 1046. ROBINSON & JOHNSON, for appellee, cited Civil Code, secs. 126, 128. R. H. PREWITT, on same side, cited Civil Code, secs. 126, 401, 128; 3 Met., 322-3. JUDGE BULLITT DELIVERED THE OPINION OF THE COURT: Goodwin, having lent money to Hayes at an usurious rate of interes,t and the money being due, told Hayes that "if he wished to keep the money he must pay the debt ;" and Hayes accordingly handed to Goodwin the amount of the debt and interest, including the usury, and Goodwin, on the same day, handed the money ($2,065.40,) back to Goodwin, and took his note therefor, dated January 31, 1857. In October, 1858, Hayes paid the interest on that note, at the rate of 10 per cent.. per annum, and part of the principal, and gave a new note for the residue of $1,932; and in March, 1860, he paid the interest at the like rate on the last named note, and part of the principal, and for the residue, amounting to $1,900, gave a new note, dated March 3d, 1860, and payable one day after. Hayes paid a considerable amount of usurious interest to Goodwin prior to January, 1857. On the 18th January, 1862, Goodwin sued Hayes on the last named note. On the 25th of February, 1862, Hayes filed an answer stating the facts, and contending: 1. That the acts above mentioned as having been done in January, 1857, were done in evasion of the statute against usury, and were not a payment of the debt, and that he is entitled to a credit upon the note sued on for all the usury paid to Goodwin, amounting, as alleged, to at least $850.00. 2. That if said acts amounted to a payment, he is entitled to recover the usury, alleged to be $327.81, embraced in the $2,065.40 handed to Goodwin and re-borrowed, and he pleaded it as a set-off. To the set off the plaintiff replied, relying on the statute of limitations, and on the settlement made in January, 1857. The circuit judge, to whom the law and facts were submitted, gave judgment against Hayes for $1,632 Hayes vs. Goodwin. 40, with interest from March 3, 1860, from which he appealed. 1. The first question is whether or not there was a payment of the debt and interest on the 31st January, 1857. There was evidently an implied, if not expressed agreement, that Goodwin would re-lend and that Hayes would reborrow the money. But, notwithstanding that agreement, and conceding that either party might have recovered damages for a breach of it by the other, yet Goodwin could have kept the money and have refused to re-lend it, or Hayes could have refused to re-borrow it; and it seems clear that, in either cas e Hayes could have recovered the usury, and equally clear, that his right of recovery must have arisen, not from the fact that he had refused to re-borrow the money, or that Goodwin had refused to re-lend it, but from the fact that the usury had been paid. It necessarily follows that, at the moment when Hayes handed the money to Goodwin, a right of action for the usury accrued to him, and that he did not lose that right of action by afterward borrowing the moc ey in accordance with the previous agreement. We are of the opinion that if Hayes had brought such an action in 1857, Goodwin could not have defeated it by showing that he had received the money under an agreement to re-lend it, and that he had re-lent it accordingly. It is contended, however, that the transaction was a device to evade the statute against usury, and should, therefore, be treated as a nullity. But we do not perceive upon what ground it can be so regarded. The rights of the parties with reference to the usury were the same after that transaction as before, conceding that it was a payment. Unless the statute of limitations interferes, Hayes' right to recover the usury paid is as perfect as was his right to refuse payment. Goodwin's object probably was to give Hayes a right of action for the usury, so that the limitation might commence. But we perceive no process of reasoning by which that effort to take advantage of the statute of limitations, can be construed into an attempt to evade the statute against usury, or can otherwise be pronounced unlawful. Hayes vs. Goodwin. 2. The next question is, whether the limitation ceased at the commencement of the suit by Goodwin, or continued to run until the filing of Hayes' answer claiming the usury as a set-off. With reference to this question, the provisions of the statute of 29 Geo. I, chap. 22, of the Kentucky statute of 1796, (2 S. L. 1448,) and of the Code of Practice, (secs. 125, 128, and 401,) are substantially the same. Under the two former statutes it was settled that, to authorize a set-off, there must be mutual subsisting demands, constituting causes of action, at the commencement of the suit. (Babington on Set-off, 68; Hawthorn vs. Roberts, Hardin, 70; Williams vs. Gilchrist, 3 Bibb, 49; McConnell vs. Morrison, 1 Litt., 206.) And, under the English statute, it has been expressly decided that limitation ceases against a set-off at the commencement of the suit. (Walker vs. Clements, 69 Eng. Com. L. R., 1046.) In that case the principle upon which that rule is founded was thus stated: "The set-off is substituted for a cross-action. When are we to suppose that cross-action brought? Clearly at the time of the commencement of the plaintiff's action, since a set off not then existing cannot be insisted upon." This reasoning furnishes an answer to the arguments of Goodwin's counsel, based upon the changes of the law in requiring suits to be commenced by petition instead of by writ, in authorizing answers to be filed in vacation, and in authorizing the defendant to proceed upon his set-off, though the plaintiff may have dismissed his action. Evidently, none of those provisions affect the principle upon which the rule under consideration was founded. . Our opinion, therefore, is, that Hayes' claim for the usury paid on the 31st January, 1857, is not barred by limitation. His allegation that said usury amounted to $327.81 was not denied in the reply. Upon the pleadings and evidence the court below should have allowed him that sum as a set-off, with legal interest thereon from January 31, 1857, to March 3, 1860; and should also have allowed him $140.68, (being interest at the rate of 4 per cent. per annum from January 31, 1857, to October 13, 1858,) with legal interest thereon from October 13, 1858, to March 3, 1860; and $107.33, being inter Maraman's Administrator vs. Maraman. est at the rate of 4 per cent. per annum, from October 13, 1858, to March 3, 1860. These credits would have reduced the judgment below the sum for which it was given, and it must, therefore, be reversed. But, as Goodwin is entitled to a new trial, and may present new facts, we cannot direct, as suggested by Hayes' counsel, that a judgment conforming to our opinion shall be entered on the return of the cause. The judgment is reversed, and the cause remanded for a new trial and other proceedings, not inconsistent with this opinion. 4me 85 89 316 4me 84 94 62 4me 84 95 531 4me 84 98 631 4me 84 114 876 4me 84 f134 452 CASE 8-PETITION EQUITY-DECEMBER 12. Maraman's Administrator vs. Maraman. APPEAL FROM BULLITT CIRCUIT COURT. 1. Antenuptial executory contracts between husband and wife, to be performed during marriage, have been frequently enforced in equity, although void at law. 2. Conveyances from husband to wife, without a trustee, have been frequently supported in equity, although at law, as a general rule, executed as well as executory contracts between them, without a trustee, are void. 3. At law the husband is entitled to a note given to his wife by a stranger. Yet, where the purchaser of land executed a note payable to the vendor's wife, in pursuance of an agreement between the husband and wife, and in consideration of her releasing dower, her right to the Dote was sustained in equity. 4. A husband is legally entitled to his wife's earnings, but his agreement to give them to her has been held valid in equity. 5. Executory contracts between husband and wife, without the intervention of a trustee, have been held to be valid in equity. As a general rule, wherever a contract would be good at law, when made with trustees for the wife, that contract will be sustained in equity when made by husband and wife with each other without the intervention of trustees, if it does not affect the rights of third persons. 6. If, in consideration of a married waman conveying her land and slaves for her husband's benefit, he agrees to pay the value of her interest to a trustee for her separate use, the contract will be valid at law. If there is no trustee, her equitable right to the money will not be defeated, because whenever a separate use is created for a married woman, whether by her husband or by a stranger, whether by an exeouted or executory contract, equity will if necessary make her husband ber trustee. Maraman's Administrator vs. Maraman. 7. Nor is it necessary, in order to give her a right to the money for her separate use, that the notes of the husband to her should be so expressed. Though a stranger's conveyance of property or covenant to pay money to a married woman, or to a trustee for her, in order to give her a separate use, must contain words indicating such intention, such words are unnecessary in a husband's conveyance or covenant. 8. Section 2, article 2, of chapter 47 of the Revised Statutes, which provides that husband and wife may sell and convey her chattel real, or slave, in the same mode as the land of the wife may be sold and conveyed, and that "the proceeds shall be bis, unless otherwise expressly provided in the conveyance or the obligation of the purchaser" does not apply, nor is there any similar provision applying, to a wife's real estate. But where the wife joins with the husband in selling her slaves in order to give him the proceeds, and for that consideration he gave her his note, such a provision is not necessary in order to give her an equitable claim on the husband for the value of the slaves in accordance with his agreement. 9 That the husband was dealt with and obtained credit upon the faith that the proceeds of land and slaves of the wife belonged to him, does not, so far as he and his representatives are concerned, constitute a defense against a recovery by her upon a note executed by him to her in consideration of her conveyance of the property for his benefit. 10. Nor does the fact that part of the proceeds of the property was used by the husband in paying store accounts contracted by her, and in purchasing a carriage for her and by her direction, constitute a defense against such recovery. 11. But, though a married woman is equitably entitled to have notes, which were executed by her husband to her in consideration of her conveyance of her land and slaves for his benefit, paid out of his estate, yet where her claim is a mere equity, and there is no legal demand to which she can be substituted, it cannot be enforced to the prejudice of her husband's creditors in a settlement of his insolvent estate. 12. Such a claim is not embraced by the statute which requires that in the settlement of the estates of insolvent decedents, all debts and liabilities shall be of equal dignity and be paid ratably. In such case it does not stand upon the footing of even a simple contract debt. W. R. THOMPSON, for appellant, cited B. Mon., 298; 14 Ib., 260; Rev. Stat., 388; 1 Ch. Rep., 33; Clancy on Husband and Wife, 393; 11 Vesey, 526; 5 J. J. Mar., 230; 12 B. Mon., 329; 3 Mon., 34; 4 Dana, 141; 9 B. Mon., 544; 2 Story's Eq., sec. 1367; 16 B. Mon., 376. WM. WILSON, for appellee, cited 1 Blackstone, note, page 442; 2 Verm., 347, 659; 1 Bro. P. C., 1; 1 P. Wms., 264; 2 Atk., 334; 1 Fonðlanque Eq., 102-3; 2 Story's Eq., page 1377; 8 B. Mon., 320 JAMES HARLAN, on same side, cited 2 Story's Equity, secs. 1368, 1367, 1370, 1372, 1373; lb. note 3, on page 808; Roper, chap. 4, pages 143–162; 16 Vesey 201; Clancy on Rights of Married Women, chap. 12, page 589; 2 Kent 342. |