2. With whom the contract was made, cum quodam ignoto, is insufficient-Van Henbeck's Case, 2 Leo. 39-Nasie's Case, Noy. 143. Where A. was indebted to No. I. c. 9. B. and B. to C., and C. for an usurious consideration agreed to take A. for his debtor 37 H. VIII. instead of B., it was held, that the contract might be stated as a loan from C. to A. Wade, q. t. v. Wilson, 1 East. 195. the contract may be stated for forbearance to A. alone, although B. joins in the security, id. ibid. Á promissory note was given by A. as surety for B., and the defendant, as indorsee of the note, having taken an usurious consideration for forbearing to sue A., the transaction was held to be properly described as a forbearance to A. for money lent to A. by the defendant, and that the transaction was equivalent to a loan of money-Manners, q. t. v. Postan, 3 Bos. & Pul. 343. 3. In Sir Wollaston Dixon's Case, I Leon. 95. it was said by Wanwood, Baron, that the information had not shewn whose money it was, and therefore was not good; but, Query, if this means any thing more than that it must be set forth by whom the loan was made; the course of precedents not being to make any express averment that the money lent was the money of the defendants. 4. The Time of Taking-but this seems to be only form, as the common allegation of time in other pleadings, and the cases in which it is held to be substance scem to arise from confounding it with the next particular. 5. The time for which the forbearance is given, and which must be proved as stated. The declaration stated a contract made on the 21st of December, 1774, for giving payment to the 23d of December, 1776, and the contract proved was on the 23d of December, 1774, for giving two years, which was held to be totally different from the contract stated-Carlisle v. Frears, Cowp. 671. In Harris, q. t. v. Hudson, 4 Esp. 152, it is said to have been ruled, that the day on which the money was advanced upon an usurious contract was material, though laid under a videlicet; but the ground of the decision comme semble is, that the contract is alleged to be for a forbearance from that day. Where the loan was made on the 20th April by a check void for want of a stamp, and which was paid on the 21st, it was ruled, that the check, being a mere nullity, the loan did not take place till the 21st, and that being stated on the 20th, the variance was fatal-Borrodaile, q. t. v. Middleton, 2 Camp. 53. Cash notes are not to be accounted as cash, unless previously agreed to be received as such, and evidence that such notes were sent on the 20th and received on the 21st, the statement for forbearance from the 20th was held a fatal variance....... Brooke, q. t. v. Middleton, 1 Camp. 445. 6. The Place where the usurious Interest was taken---but this seems merely to be venue, although, for the reason already mentioned, the action must be brought in the proper county; but as to whether it be necessary to state where the contract was made, which is only inducement, Query---see Sir Wollaston Dixon's Case, 1 Leon. 95. It was formerly held, that the borrower upon an usurious contract was not a com- Borrower a petent witness to prove the case, but the contrary is fully established by Abrahams competent Wit v. Bunn, 4 Bur. 2255---Smith v. Prager, 7 T. R. 60. ness. No indictment lies on the statutes of usury, Queen v. Dyer, 11 Mod. 174. The Usury under sessions have not any jurisdiction of this offence, Reg. v. Smith, 2 Salk. 680; but in the Statutes Rex. v. Pexley, 2 Barnadiston, 143, it was admitted, that upon the Statute of 2 Eliz. not punishable which prohibits the taking above 101. per cent. the sessions have jurisdiction, though by Indictment, it was insisted that upon the latter statutes they have not. or at the Ses sions. It is a settled principle, that if money is lent upon an usurious contract, such Part IV. Of contract and all the securities for enforcing it are void, and that no shift or contrivthe EFFECT ance can make them of any validity; and at a very early period it was establihsed, of USURY in that if a party, upon an usurious contract, gives a mortgage for securing the principal INVALIDATonly, and a bond for the interest, the mortgage as well as the bond shall be void- ING the SERoberts v. Tremayne, Cro. Jac. 507. And where several bills of exchange were CURITIES. given to secure an advance at legal interest, together with part of a preceding usuri. ous debt, it was ruled, that all such bills were void-Harrison v. Hannel, 5 Taunt. 780, 1 Marshall, 349. As to a judgment, see infra. A bill of exchange given on an usurious consideration is void in the hands of an innocent indorsee, Lowe v. Waller, Doug. 736; and see Young v. Wright, 1 Camp. 141---Ackland v. Pearce, 2 Camp. 599. in which the Bill was ruled to be void, being drawn in consequence of an usurious agreement between the acceptor and a third person, to which the drawer was not privy. But where a previous debt was subsisting for goods sold and delivered, and a void and usurious security was taken for delay of payment, it was ruled, that the fair debt for the goods still subsisted unimpeached by the usurious transaction, and was not a colourable pretence to cover a real loan. Gray v. Fowler, 1 H. B. 462. the No. I. 37 H. VIII. c. 9. Cases in Equity respecting Usury. reporter properly states in the marginal abstract, as the result of the case, the general conclusion, that a bona fide debt is not discharged by being mingled with an usurious contract relating to it; and see Phillips v. Cockayne, 3 Campb. 119---Ferral v. Shaen, 1 Saund. 292. In Daniel v. Cartony, 1 Esp. 274, Lord Kenyon held, that a bill good in its inception was not avoided in the hands of a bona fide indorsee by an intermediate usurious transaction; and where a valid bill was indorsed by A. the payee upon an usurious consideration to B. who indorsed it for a valid consideration to C., who indorsed it to B.'s assignees in payment of a debt, such assignees were held to have a good title to the bill, being clothed with the equity of C.--- Parr v. Eliason, 1 East. 92. Notes were discounted by Plank to the defendant the drawer upon an usurious consideration and paid to the plaintiff a bona fide indorsee. He and the defendant, upon application for payment, gave his bond for the amount---the defendant pleaded that the bond was given for securing money lent upon an usurious contract between Plank and the Defendant, to which the Plaintiff replied, that the bond was given for a just and lawful debt, and not, &c. A verdict was given for the Plaintiff; and the Court were of opinion, that the bond was valid; but it was admitted, that if one security be substituted for another by the parties in order to get rid of the statute, the substituted as well as the original security would be void-Cuthbert v. Haley, 8 T. R. 390; and vide Ellis v. Warnes, Moore 752, Cro. Jac. 32. Yelv. 47. in which Warner, being indebted to Alder in 1001. gave him an usurious bond for 301. per cent. interest; and, by way of discharging the principal, became joint obligee with Alder in a bond for the payment of a debt of 1001. due from Alder to the Plaintiff, and it was held, that the usury did not vitiate that security. And where the acceptor of a bill, drawn in pursuance of an usurious contract, accepted a second bill for the purpose of raising money to take up the former, and the second bill was discounted by a bona fide indorsee at the legal rate of interest, it was ruled by Lord Ellenborough, that the second bill was not affected by the usury which attended the formation of the first-Dagnall v. Wylie, Campb. 33. Where a bond given for the performance of an usurious contract was annulled, a fresh bond taken for the principal and interest, after deducting the payments illegally made on the former contract, were ruled by Lawrence, J. to be valid-Wright v. Wheeler, 1 Campb. 165. n-and in Barnes v. Hedley, 2 Taunt. 184. where an usurious contract was entered into, and securities given for the performance, and several payments made on the footing thereof, and the parties afterwards stated a fair account of principal and interest, and the borrower promised to pay the balance, whereupon the securities were cancelled, the promise was adjudged to create a legal debt. See Dagnall v. Wigley, 11 East. 43. in which accommodation bills were held not to be void in the hands of a fair indorsee, in consequence of an understanding that a broker should have an illegal commission upon discounting them. In assumpsit if it appear either upon the evidence or from the plaintiff's express shewing in his declaration, that the contract was usurious, he cannot recover. But a specialty cannot be avoided by usury appearing in evidence, or on the face of the condition, but it must be pleaded-i Hawk. c. 82. s. 20. and the cases there cited; and see as to the particularity required in such pleading the passage already cited. Although a Court of Equity will not, in general, relieve against an usurious contract, except upon the terms of paying the principal with legal interest, the Master of the Rolls in Barnard v. Young, 17 Vesey 44. (already cited upon other points) sustained a suit by the assignees of a bankrupt for delivering up an assignment of stock founded upon a contract which he held to be usurious, observing, that if the assignment was usurious, the consequence must follow that it is wholly void.—The party in whose favour an usurious contract has been executed, cannot make use of it for any purpose whatsoever. The other party does not seek relief to have that contract cancelled, or other relief directly against it, but only to enforce his own right, contending that it is not to be impeded by having this usurious contract set up to obstruct it. Where securities had been given for legal interest and more was afterwards received by taking advantage of the necessitous circumstances of the borrowers: upon. á suit for redemption, the account was directed to be taken upon the principle of applying the payments beyond legal interest in satisfaction of the principal, and in case the lender was overpaid, that he should refund; Lord Talbot said, he did not determine how it would be if all the securities were delivered up-Bosanquet v Dashwood, Temp. Talb. 37; and as to relief in equity upon payment of principal and legal interest-See Henkle v. Royal Exchange Comp. 1 Ves. 319-Scott v. Nesbitt, 2 Bro. Ch. 641-Benfield v. Solomons, 9 Ves. jun. 84. In Scott v. Nesbitt, the relief was applied in taking an account of debts and assets before the master, the plaintiffs having recovered judgment at law upon an usurious bond. But a Bill in Equity requiring a discovery in usury, is generally demurrable to, as tending to subject the defendant to penalties; as to which see Chauncey v. Tahourden, 2 Atk. 322 -Anon. 2 Eq. Ab. 70, pl. 7—Harrison v. Southcote, 1 Atk. 539. In cases of bankruptcy if usury is made out, the security is cut down altogether, not leaving the party a creditor for that for which it was actually advanced. Per Lord Eldon, Beaufield t. Solomons, 9 Ves. 84. And this may be taken for granted from the case above cited, of Barnes v. Hedley, which was an issue directed by the Lord Chancellor to try whether the bankrupt to whom usurious securities had been given and afterwards destroyed, was indebted to Webb. In ex parte Savener, 3 Vesey and Beames 14, the Lord Chancellor said, "Upon the notion of the equitable jurisdiction in bankruptcy we go much farther than Courts either of Law or Equity: at law you must make out the charge of usury, and in equity you cannot come for relief without offering to pay what is really due, and must either prove the usury by legal evidence, or have the confession of the party; but in bankruptcy it has been considered sufficient to suggest usury in a petition supported by affidavits merely upon information and belief, putting the party to prove against himself, for the purpose not of giving him his real debt, but of cutting him off from all relief. It is, I admit, now too late to alter that." No. I. 37 H. VIII. c. 9. Bankruptcy. In Edmonson v. Popkin, 1 B. and P. 270, the Court of Common Pleas set aside a Of Relief in warrant of attorney and judgment upon an allegation of usury, as they were not to Case of Wardécide the question of usury in a summary way, and in order that the question of rants of Atusury might be tried, which would be shut out if the judgment was allowed to stand torney to re-but the case passed without discussion as to the question of the judgment standing fuse Judgment. as a security for principal and legal interest, and in Hindle v. O'Brien, 1 Taunt. 413, upon a similar application the Court directed the money levied to be paid into Court, and referred it to the prothonotary to take an account of all matters between the parties, and to compute principal and legal interest. Lawrence, J. concurred in this opinion upon the ground of the defendant having paid part of the money, and intimated, that if the defendant had applied upon the first giving the warrant of attorney he would have been entitled to have set it aside, but it is very difficult to discern any reason for this distinction, and the other judges (Heath and Chambre) decided the case upon the general principle, that as the application was to the equitable jurisdiction of the Court, the party applying must do what is equitable, and that if he applies to the equity of the Court he waves their legal jurisdiction. In Fitzroy v. Gwillim, 1 T. R. 153, it was ruled, that the plaintiff could not main- Trover. tain trover for a pledge given to secure an usurious loan without first tendering the principal and legal interest, it being deemed an equitable action. In Tomkins v. Burnet, 1 Salk. 22, at N. P. before C. J. Treby, it was held, that a Money had and party could not maintain an action for money had and received, to recover what had received. been paid upon an usurious contract, and the case is reported as being decided upon the ground of his being particeps criminis and that volenti non fit injuria, but it is evident upon the whole of the report, that the money borrowed had not been repaid.-Lord Mansfield in Clarke v. Shee, Cowp. 200, said that the case of Tomkins v. Burnet has been long exploded, and in Smith v. Bromley, Doug. 697, n. Lord M. said, that so far as principal and interest went, the debtor was bound in natural justice to pay and therefore could not recover it back, but for all above legal interest equity would assist the debtor, or an action would lie to recover back the surplus if the whole had been paid; and he distinguished between a violation of the laws of public policy, and laws calculated for the protection of the subject against oppression and fraud. The case of Astley v. Reynolds, 2 Str. 915, in which a party who had been compelled to pay more than legal interest upon the redemption of a pledge, was allowed to recover it back, is sometimes cited upon this subject, but is not very applicable, as in that case there does not appear to have been any usurious agreement. Contracts for payment of compound interest are not illegal so as to be affected by Of Compound the Statute of Usury, but are relieved against it in equity as being oppressive. Thus Interest. in the case of Sir Thomas Meers, cited by Lord Talbot in Bosanquet v. Dashwood, Rep. Temp. Talbot 37, a covenant was inserted in a mortgage, that if interest was not paid punctually at the day, it should from that time, and so from time to time, be converted into principal, the Lord Chancellor relieved against the covenant as unjust and oppressivé.-So in Broadway's case, Broadway v. Morecraft, Mosely 247 -in Lord Ossulston v. Lord Yarmouth, 2 Salk. 449. Lord Cowper held the clause to be void and of no use, and said to make interest principal, it requisite that interest be first grown due, and then an agreement concerning it may make it principal. Lord Talbot said, that the reason is because all these cases carry somewhat of fraud with them, not such a fraud as is properly deceit, but such proceedings as lay No. I. 37 H. VIII. c. 9. Lease & Loan. Of Interest at a particular burthen or hardship upon any man, it being the business of this Court to relieve against all offences against the law of nature and reason-See 9 Vesey 223, ex parte Bevan, as to settling accounts at the end of six months and carrying on interest, and the observation as to mercantile transactions where there is no agreement to lend, but they stipulate for mutual transactions, each making advances. Lord Eldon says, he admits that cannot be applied to a real security, and you may not when the debt comes to a certain sum take a real security and 51. per cent. I do not conceive that when any debt is ascertained as due for principal and interest, it was his Lordship's intention to lay down, that a valid ag cement could not be entered into for a valid security for the whole with interest thereon. In looking at the cases in which agreements for compound interest are relieved against as oppressive, if the question be asked wherein the oppression consists? the true answer seems to be, in compelling the borrower who has broken his engagement, to place the lender in the same situation as if he had performed it; as the lender may possibly have been obliged to borrow at interest the amount he was entitled to receive, and have incurred the actual expense of paying that compound interest which he has, at least, been wrongfully prevented from acquiring; and it is very familiar in Courts of Equity to order rests in taking an account where there has been any breach of con fidential duty, I conceive in case of fraud. In the late case of Tarleton v. Backhouse, Coop. 231, the contract was for the sale of a partnership interest for 40,000l. to be paid with interest by instalments, the interest at 51. per cent. on such parts thereof as should from year to year remain due to be added to the principal, and the several yearly payments were computed and bonds given for the same accordingly. The case was argued on the ground of the transaction being not a loan but a sale. The Lord Chancellor was of opinion, "that as the defendant might at the end of every year have brought an action and have had judgment for the principal and interest then due on the bonds, in equity the bonds could not be affected with usury, as the sum might be considered as having been called in and the instalments paid." It is obvious that this reasoning which I consider to be perfectly just in principle, would (authority out of the ques→ tion) extend to all contracts for the payment of compound interest on loans. In several cases before Redesdale, as Lord Chancellor of Ireland, relief was given against leases granted by the borrowers to the lenders of money, and which in that country appears to have been a frequent practice, and the subject is familiarly described by the expression of lease and loan. See Browne v. O'Dea, 1 S. and L. 115 -Drew v. Power, ib. 182-Molloy v. Irwin, ib. 310-Gubbins v. Creed, 2 S. and L. 218, though a lease for 999 years be made at the full value.-See also the following cases which are subsequent to Lord Redesdale's resignation, and in which the inclination of the Court is against extending the doctrine in question. Meredith v. Saunders, Dow. P. C. 514-Prior v. Dumphy, 1 Ball. and B. 27-Willen v. Browne, ib. 426-Corbet v. Segrove, 2 B. and B. 98. It does not fall within the object of this note to enter into a discussion of the construction or effect of contracts with respect to interest, but I will take the liberty mon Contracts. of so far transgressing the limits of my proper subject as to advert to the question of allowing interest upon simple contracts without express stipulation. I certainly remember many cases in which juries have been supported in giving interest by way of damages for the detention of the debt, and the case of Holdepp v. Otway, 2 Saund. 102, seems a strong authority upon the subject. In a case of Wrigley v. Seddon, for the salary of a curate, tried before Buller, J. at Lancaster, March Assizes, 1790, I distinctly remember the jury giving a verdict for interest upon the recommendation of the Judge, and in the case of the Huddersfield Canal Company r. Buckley, 7 T. R. 36, where the defendant paid into Court the amount of the call which he was liable to, without interest, and the decision was in his favour upon the principal points in question, so that the question of interest, which only amounted to 10s. became merely what is called a Norfolk groat, and the jury having given interest, the judgment was for the plaintiff for that amount, and Lord Kenyon said,There is no doubt but the jury may give interest, not eo nomine as interest, but as damages for the detention of the debt, for non performance of the contract.-I apprehend, however, that the opposite course of subsequent authorities to the contrary is so strong, that nothing less than the interposition of the legislature can avail, in restoring the power formerly exercised. It is to be lamented, that in establishing these authorities, the case which has been last cited was not sufficiently adverted to. In Trelawney v. Thomas, 1 H. B. 308, upon assumpsit for work and labour and money paid, the Court held that the jury might, in their verdict, calculate interest on the money really advanced, but not on the damages for work and labour. The leading case in support of the modern doctrine is Walker v. Constable, 1 B. and P. 306, in which the Court of Common Pleas upon the supposed authority of Moses v. No. I. c. 9. Mc. Ferlan, 2 Bur. 1005, ruled, that in such action the plaintiff could recover nothing but the net sum received, without interest. It is clear, that Moses v. Mc. Ferlan contains nothing directly applicable to the immediate question, and only bears upon 37 H. VIII. it as being a general exposition of the liberality of the principles upon which that action depends. At a very early period after the decision of Walker v. Constable, I took the opportunity of expressing my sentiments respecting it in an essay in the action for money had and received, p. 121, and see Tappenden v. Randall, 2 B. and P. 467 -Hogan v. Page, 1 B. and P. 337. In Mountford v. Willes, 2 B. and P. 337, the defendant by note in writing, engaged to be answerable for goods furnished to a third person; at the bottom of the note was written" Credit till Christmas," and the Court held the plaintiff entitled to interest from the time mentioned in the note. But in Gordon v. Swan, 12 East. 419, when goods were sold by contract in writing for a price payable at six months, and the jury upon a writ of inquiry declared their willingness to give interest as well as principal, the under sheriff directed them, that in point of law the plaintiff was not entitled to recover interest, and upon an application to set aside the inquisition, Lord Ellenborough thought the contract only meant, that the vendee at all events should not be called upon for payment till the time given, but that it was still a contract for the sale of goods, and he thought the giving of interest should be confined to Bills of Exchange and such like instruments, and to agreements reserving interest, and the rule was refused. And in Calton . Bragg, 15 East. 223, the Court of King's Bench decided, upon very full argument, that interest could not be recovered upon a simple contract for money lent, assuming such to be the established practice. Lord Ellenborough said, that if the rule for allowing interest should be carried further than it had been, it must be done by the legislature; but where goods were sold upon an agreement to pay by bill at a certain date, it was held that as interest would have run upon the bill if given, it might be recovered in an action for the price of the goods brought after the time when the bill would have become due, Minchull v. Porte, 13 East. 98. It is a constant course in a Court of Equity upon giving relief in respect of money improperly obtained, to charge the defendant with interest, and certainly it is a very great hardship that a party who has improperly obtained the money of another, for which the only remedy is at law, should be enabled to deprive the injured person from the fruits of his property for the whole time that he can stave off the recovery of it.-See Jones v. Becker, 2 Camp. 428.-Poole v. Moult, East. According to the ancient law of France, although contracts for interest were generally unlawful as being usurious, interest was allowed by way of damages from the time of commencing judicial proceedings for the recovery of the debt. [ No. II. ] 13 Elizabeth, c. 8.-An Act against Usury. WHEREAS in the Parliament holden the seven and thirtieth year 13 Eliz. c. 8. of the reign of our late Sovereign Lord King HENRY the Eighth, The Statute of of famous memory, there was then made and established one good Act 37 H. 8. c. 9. for the reformation of usury: By which Act the vice of usury was well revived, and the repressed, and specially the corrupt chevisance and bargaining by way Statute of of sale of wares and shifts of interest: And where since that time by 5 & 6 Ed. 6. one other Act made in the fifth and sixth years of the reign of our late c. 20. repealed, Sovereign Lord King EDWARD the Sixth, the said former Act was re- both which pealed, and new provisoes for repressing of usury devised and enacted: were made Which said latter Act hath not done so much good as was hoped it against Usury, should, but rather the said vice of usury and specially by way of sale &c. of wares and shifts of interest, hath much more exceedingly abounded 3 Inst. 151. to the utter undoing of many gentlemen merchants occupiers and others, and to the importable hurt of the commonwealth as well for that in the said later Act there is no provision against such corrupt shifts and sales of wares as also for that there is no difference of pain forfeiture or punishment upon the greater or lesser exactions and oppressions by reason of loans upon usury :' 2 Roll. 240. Dyer 376. II. Be it therefore enacted, That the said later statute made in the The Statute of fifth and sixth years of the reign of King EDWARD the Sixth, and every 5 & 6 Ed. 6. branch and article of the same, from and after the five-and-twentieth day c. 20. repealed, of June next coming shaii be utterly abrogated repealed and made void : and the Statute and that the said late Act made in the said seven and thirtieth year of of 37 H. 8. c. 9. King Henry the Eighth, from and after the said five-and-twentieth day revived. 1 Haw. P. C. 82. |