The taking, receiving, reserving or charging of a rate of interest greater than allowed by this act [56-8-9, 56-8-12 to 56-8-14 NMSA 1978], when knowingly done, shall be deemed a forfeiture of the entire amount of such interest which the note, bill or other evidence of debt carries with it or which has been agreed to be paid thereon. In case the greater rate of interest has been paid, the person by whom it has been paid, or his legal representatives, may recover back by civil action twice the amount of the interest thus paid from the person, corporation or association taking or receiving the same; provided that such action is commenced within two (2) years from the time the usurious transaction occurred.
History: 1953 Comp., § 50-6-18, enacted by Laws 1957, ch. 209, § 4.
ANNOTATIONSExcess knowingly charged deemed usury. — Where an agreement provides security for the loan at a rate of interest in excess of that allowed for secured indebtedness under this statute, it was therefore usurious since the taking, receiving, reserving or charging of that rate was knowingly done. Hays v. Hudson, 1973-NMSC-086, 85 N.M. 512, 514 P.2d 31, overruled on other grounds by Maulsby v. Magnuson, 1988-NMSC-046, 107 N.M. 223, 755 P.2d 67.
Any excess profit for use of money deemed usury. — Profit greater than the lawful rate of interest intentionally charged for the loan or forbearance of money is a violation of the usury law, though in the form of a bonus or commission. Anderson v. Beadle, 1931-NMSC-040, 35 N.M. 654, 5 P.2d 528, overruled on other grounds by Hays v. Hudson, 1973-NMSC-086, 85 N.M. 512, 514 P.2d 31; Scottish Mortg. & Land Inv. Co. v. McBroom, 1892-NMSC-021, 6 N.M. 573, 30 P. 859, aff'd, 153 U.S. 318, 14 S. Ct. 852, 38 L. Ed. 729 (1894) (decided under former law).
Reduced price sale of stock in addition to maximum interest deemed usurious. — Usury must exist at the inception of an agreement; and where a sale of stock at a reduced price was a condition of the loan and according to the uncontradicted testimony of one of the borrowers, the reduced price was to constitute additional interest of some 7% over and above the approximately 10% provided for in the note, it was held that usury was present in the transactions from the outset. First Nat'l Bank v. Danek, 1976-NMSC-077, 89 N.M. 623, 556 P.2d 31.
Specific intent required. — Knowingly charging an illegal interest rate requires a showing of some usurious intent to exploit. Maulsby v. Magnuson, 1988-NMSC-046, 107 N.M. 223, 755 P.2d 67.
Borrower's obligation complete upon payment of principal. — Where plaintiff-lender was shown to have knowingly charged an illegal rate of interest on certain loans, it was held that the obligation of defendant-borrowers, who had received the benefit of $56,024 from the various transactions, and had made payments of $57,547.22, was completed. First Nat'l Bank v. Danek, 1976-NMSC-077, 89 N.M. 623, 556 P.2d 31.
Applies where application of foreign law shocks court. — Where interest contracted for is greatly in excess of that allowable under New Mexico law, New Mexico courts are relieved of any obligation to consider whether foreign law is applicable as the law of the contract, and/or whether such law would allow interest rates such as those charged. Trinidad Indus. Bank v. Romero, 1970-NMSC-038, 81 N.M. 291, 466 P.2d 568.
Attorney's fees to collect permissible debt allowed. — When the effect thereof is not to render the contract void, but merely to forfeit the interest, usury in a loan will not prevent the recovery of reasonable attorney's fees provided for, where suit is necessary to enforce the obligation to the extent permitted by law. Attorney's fees will not be allowed, however, for attempts to collect the usurious portion of the interest. Hays v. Hudson, 1973-NMSC-086, 85 N.M. 512, 514 P.2d 31, overruled on other grounds by Maulsby v. Magnuson, 1988-NMSC-046, 107 N.M. 223, 755 P.2d 67.
Attorney's fees not allowed for collection of usurious interest. — Where at the time suit was commenced, the lender had no legal cause of action against the defendants since the note was usurious and payment on the net principal had been made, the lender's attorneys were not entitled to attorney's fees, and the order of the trial court allowing attorney's fees was reversed. First Nat'l Bank v. Danek, 1976-NMSC-077, 89 N.M. 623, 556 P.2d 31.
Borrower's performance prerequisite to affirmative recovery. — Absent performance by the borrower, this section serves borrower only as a shield by way of recoupment, so that the affirmative right of borrower to recover over against the lender or in an independent suit accrued only in the event of performance by the borrower. Stiff v. Fogerson, 1954-NMSC-031, 58 N.M. 193, 269 P.2d 743 (decided under former law).
Cause accrues upon payment of amount greater than principal and legal interest. — The limitation of three years, within which borrower may sue for double the amount of usurious interest collected and received from him, does not commence to run, and, therefore, the cause of action does not accrue, until the lender has actually collected or received more than the original debt with legal interest. McBroom v. Scottish Mortg. & Land Inv. Co., 153 U.S. 318, 14 S. Ct. 852, 38 L. Ed. 729 (1894) (decided under former law).
Am. Jur. 2d, A.L.R. and C.J.S. references. — 45 Am. Jur. 2d Interest and Usury §§ 307 to 338.
Accommodation party's rights as against accommodated after payment, as affected by usury, 36 A.L.R. 559, 77 A.L.R. 668.
Compound interest, agreement to pay as usurious, 37 A.L.R. 325, 76 A.L.R. 1484.
Property within contemplation of statute making it criminal offense to loan at usurious rate on security of specified kinds of property, 64 A.L.R. 1071.
Affirmative liability for usurious penalty or excess interest paid under usurious contract in event of assignment or transfer, 78 A.L.R. 408.
Survival of claim for usury against estate of usurer, 78 A.L.R. 451.
Loan or forbearance within usury law, obligations covering deferred payments of purchase money or extension thereof, 91 A.L.R. 1105.
Usury as predicable on agreement by which lender is to receive something other than money for his loan, 95 A.L.R. 1231.
Usury in underwriting an issue of securities at less than par, 165 A.L.R. 626.
Usury as predicable on bonuses in the sale of commercial paper or other choses in action, 165 A.L.R. 677.
Expenses or charges in form of commissions to agents, brokers, or like intermediaries incident to loan of money, 52 A.L.R.2d 703.
Advance in price on credit sale as compared with cash sale, as usury, 14 A.L.R.3d 1065.
Earnings of or income from property, agreement for share in, in lieu of, or in addition to, interest as usurious, 16 A.L.R.3d 475.
Fraud of borrower contributing to execution of usurious contract as affecting right or remedies of parties, 16 A.L.R.3d 510.
Provision for interest after maturity at a rate in excess of legal rate as usurious, 28 A.L.R.3d 449.
Assumption by borrower of responsibility in respect of other debt, usury as affected by, 31 A.L.R.3d 763.
Usury as affected by acceleration clause, 66 A.L.R.3d 650.
91 C.J.S. Usury §§ 142 to 159.