Esposti v. Rivers Bros.

This appeal is from a judgment of the superior court of the state of - California, in and for the city and county of San Francisco, in favor of the defendants and against the plaintiff, rendered and entered after the court had sustained a general demurrer to the plaintiff’s amended complaint without leave to amend. The action was commenced to recover treble the amount of certain interest paid upon a promissory note, secured by a trust deed, under the provisions of section 3 of the act relating to usury (Stats. 1919, p. lxxxiii). The facts upon which the plaintiff relied for his recovery as set forth in his complaint, and repeated in his amended complaint, may be briefly stated as follows: On March 9, 1926, Joseph Varsi and wife exe

There are two points presented by the appellant upon this appeal. The first is that the transaction between the defendants and the original makers of the promissory note and trust deed being usurious, the plaintiff as the transferee of the property affected thereby and which he took by the foregoing several transfers, subject to said indebtedness, is entitled to recover the trebled amount of interest paid by himself and his assignor Huelter upon said obligation. The second point urged by the appellant is that the right of action to recover and to treble the amounts of interest thus paid by his predecessor in interest Huelter was properly assignable and was duly assigned to him. In presenting the first of these propositions the appellant relies upon the recent decisions of this court upholding the view that the transaction which is set forth in his pleadings is a usurious one, and chiefly upon our decision in the ease of Haines v. Commercial Mortgage Co., 200 Cal. 609 [ 53 A. L. R. 725 , 254 Pac. 956 , 255 Pac. 805 ]. In so doing, however, the appellant entirely overlooks the proposition of law upon which the trial court apparently relied in its order sustaining the defendants’ demurrer without leave to amend. That proposition of law, broadly stated, is that a grantee of property taken subject to a usurious loan, the amount of which is deducted from the purchase price, will not be permitted to complain of usury in the inception of the loan. The respondents, on the other hand, present an amplitude of authority upholding this proposition and showing it to be in this as well as in most other jurisdictions in this country well settled law. The following are some of the leading eases upon which the respondents thus rely: Matthews v. Ormerd, 140 Cal. 578 [ 74 Pac. 136 ]; Trusdale v. Dowdle, 47 N. J. Eq. 396 [ 20 Atl. 972 ]; Terminal Bank v. Dulroff, 66 Misc. Rep. 100 [ 120 N. Y. Supp. 609 ]; Brown v. Jones, 89 Misc. Rep. 536 [ 152 N. Y. Supp. 571 ]; Stein v. Indianapolis Building etc. Assn., 18 Ind. 237 [ 81 Am. Dec. 353 ] ; Essley v. Sloan (Ill.), 6 N. E. 449 ; Key West Wharf & Coal Co. v. Porter, 63 Fla. 448 [Ann. Cas. 1914A, 173, 188, 58 South. 599 ], and cases cited. The appellant has furnished us no reply to the point thus presented, nor to the foregoing list of persuasive authorities, and we are satisfied that none could be made, and hence

As to the second proposition urged by the appellant to the effect that he is also suing as the assignee of Huelter for the recovery of the usurious interest which the latter had paid prior to his transfer of the property, there are two sufficient answers, the first of which is that Huelter as a transferee of the property from the Varsis, subject to said mortgage and trust deed, was not himself entitled under the foregoing principle of law to recover any usurious interest which he may have paid, and therefore had nothing which was assignable to the plaintiff. The second answer is that the right which the original maker of a usurious note and mortgage is given under section 3 of the Usury Act to recover such interest and to treble the same is in the nature of a statutory penalty, and, under the authorities from other jurisdictions, which we hereby approve, is not assignable. In the case of Pardoe v. Iowa State Bank, 106 Iowa, 345 [ 76 N. W. 800 ], a statute containing the same language as that” of the usury law of this state was so construed with a quite abundant reference to authorities. A similar ruling was made by the Supreme Court of Kansas upon the terms of a similar statute in the case of Lloyd v. First Nat. Bank, 5 Kan. App. 512 [ 47 Pac. 575 ]. (See, also, Robinson v. St. Maries Lumber Co., 34 Idaho, 707 [ 204 Pac. 671 ] ; 21 R. C. L., p. 211, sec. 6; Ann. Cas. 1916D, 886, 893, and notes; Allen v. Petty, 58 S. C. 240 [ 36 S. E. 586 ] ; First State Bank etc. v. Bank of Jefferson, 112 Okl. 177 [ 240 Pac. 311 ].) In opposition to these authorities the appellant presents a few cases which are inconclusive for the reason that they relate in the main to conditions unlike those presented in the instant case, the only authority directly supporting the appellant’s position being that of Taylor v. Sturgis, 29 Tex. Civ. App. 270 [ 68 S. W. 538 ], which is commented upon in Ann. Cas. 1916D, at page 893, as being the “Texas rule” and as being opposed to the overwhelming weight of authority from other jurisdictions. However, we are of the opinion that there is no merit in this, the appellant’s second contention, for the reason first above stated.

The judgment is affirmed.

Preston, J., Curtis, J., Langdon, J., Seawell, J., and Waste, C. J., concurred.