2020 Georgia Code
Title 7 - Banking and Finance
Chapter 4 - Interest and Usury
Article 1 - In General
§ 7-4-11. Usury Is Personal Defense; No Collection From Insolvent to Prejudice of Others
Usury is a personal defense; but a creditor may not collect usurious interest from an insolvent debtor to the prejudice of other creditors.
(Civil Code 1895, § 2878; Civil Code 1910, § 3428; Code 1933, § 57-103.)
Law reviews.- For note discussing whether a holder in due course takes free of claims of violations of the usury laws, see 12 Ga. L. Rev. 814 (1978).
JUDICIAL DECISIONS
Defense of usury is personal to debtor, and may not be urged save by borrower or borrower's privies. Clark v. Kaiser Agric. Chems., 156 Ga. App. 251, 274 S.E.2d 648 (1980); Plowden v. Peoples Fin. Corp. (In re Pair), 14 Bankr. 732 (Bankr. N.D. Ga. 1981).
Plea of usury is personal and because the usury laws protect the debtor, not the debt, the parties' various rights concerning the debt belongs to them only so long as they remain within a lender-borrower relationship. Lindenberg v. First Fed. Sav. & Loan Ass'n, 528 F. Supp. 440 (N.D. Ga. 1981), aff'd, 691 F.2d 974 (11th Cir. 1982).
Counterclaim or separate suit unnecessary.
- Usury is a defense and need not be asserted as a counterclaim or in separate suit. Williams v. First Bank & Trust Co., 154 Ga. App. 879, 269 S.E.2d 923 (1980).
Before defense raised, obligation to pay indebtedness prima facie valid.
- Defense of usury is a matter personal to the debtor and, before the debtor has made such defense, the debtor's obligation to pay the indebtedness infected with usury is prima facie valid. Napier v. Jordan, 52 Ga. App. 585, 183 S.E. 854 (1936).
Borrower cannot use usury statute to take advantage of own wrong. Eiberger v. West, 247 Ga. 767, 281 S.E.2d 148 (1981).
Estoppel can lie to bar defense of usury. Eiberger v. West, 247 Ga. 767, 281 S.E.2d 148 (1981).
Failure to plead usury results in an estoppel to rely upon it as a defense. Clark v. Kaiser Agric. Chems., 156 Ga. App. 251, 274 S.E.2d 648 (1980).
One failing to set up defense of usury is concluded by judgment. Clark v. Kaiser Agric. Chems., 156 Ga. App. 251, 274 S.E.2d 648 (1980).
Failure to raise defense of usury precludes attack levy of execution.
- Debtor who has had the debtor's day in court will not be heard to attack levy of execution on ground that the debt was infected with usury. Wilkinson v. Holton, 119 Ga. 557, 46 S.E. 620 (1904); Clark v. Kaiser Agric. Chems., 156 Ga. App. 251, 274 S.E.2d 648 (1980).
Advertisement of collateral not tortious when defense not raised.
- Fact that after creditor has advertised property for sale for payment of a usurious debt, the debtor, in a bill in equity to enjoin sale, sets up usury and shows that the debtor has paid all that the debtor was legally liable for, and obtains a judgment against the creditor for an amount which debtor overpaid, does not so relate as to give any tortious character to the creditor's original act in advertising property for sale. Napier v. Jordan, 52 Ga. App. 585, 183 S.E. 854 (1936).
Creditor of insolvent may attack claim of another creditor as usurious.
- While plea of usury is a personal one which can be set up by a debtor only, when the debtor is insolvent and there is a fund in court to be distributed, equity will allow one creditor to suggest usury as to claim of another, and compel usurious creditor to write off usury and receive only principal and legal interest. Stone v. Georgia Loan & Trust Co., 107 Ga. 524, 33 S.E. 861 (1899).
Under former Civil Code 1895, § 2878 petitioning creditors in bankruptcy may attack validity of deed by which alleged bankrupt has conveyed to another creditor a valuable part of the bankrupt's estate on the ground that it was usurious, and the court of bankruptcy has power to enjoin the sale of property by the grantee pending adjudication of the question. In re Miller, 118 F. 360 (E.D. Ga. 1902).
Assignee of bond for title can attack conveyance to usurer.
- Assignee of bond for title can attack in equity a conveyance to one who had advanced money to complete purchase for usury. First Nat'l Bank v. Rambo, 143 Ga. 665, 85 S.E. 840 (1915).
Creditor of a party who makes a conveyance tainted with usury is a privy. Stone v. Georgia Loan & Trust Co., 107 Ga. 524, 33 S.E. 861 (1899).
Cited in Western Union Tel. Co. v. Ryan, 126 Ga. 191, 55 S.E. 21 (1906); Broach v. Mullis, 228 F. 551 (S.D. Ga. 1915); Peoples Bank v. Fidelity Loan & Trust Co., 155 Ga. 619, 117 S.E. 747 (1923); Newcomb v. Niskey's Lake, Inc., 63 Ga. App. 811, 12 S.E.2d 160 (1940); Clark v. Associate Disct. Corp., 92 Ga. App. 583, 89 S.E.2d 208 (1955); Stein Steel & Supply Co. v. Briggs Mfg. Co., 219 Ga. 779, 135 S.E.2d 862 (1962); Gazaway v. Israel, 107 Ga. App. 389, 130 S.E.2d 269 (1963); Rahal v. Titus, 107 Ga. App. 844, 131 S.E.2d 659 (1963); Thompson v. Hurt, 159 Ga. App. 656, 284 S.E.2d 671 (1981); McCarthy v. Ashment, 353 Ga. App. 270, 835 S.E.2d 745 (2019).
RESEARCH REFERENCES
Am. Jur. 2d.
- 44B Am. Jur. 2d, Interest and Usury, § 183.
C.J.S.- 47 C.J.S., Interest and Usury; Consumer Credit, § 351.
ALR.
- Right of junior mortgagee to attack senior mortgage for usury, 59 A.L.R. 342; 121 A.L.R. 879.
Right of surety or guarantor to avail himself of defense of usury, 70 A.L.R. 359.
Survival of claim for usury against estate of usurer, 78 A.L.R. 451.
Who other than borrower may avail himself to latter's right to recover back usurious payments or penalties therefor, 82 A.L.R. 1008; 134 A.L.R. 1335.
Validity, construction, and effect of express agreement releasing cause of action or defense based on exaction of usury, 99 A.L.R. 600.
Estoppel to assert usury against innocent purchaser of usurious instrument, 110 A.L.R. 451.
Statute denying defense of usury to corporation, 63 A.L.R.2d 924.
Right of attachment or judgment creditor, or officer standing in his shoes, to attack older lien or security interest for usury, 70 A.L.R.2d 1409.
