Archibald v. Thomas

Curia, per Woodworth, J. This is an application for q pew trial. The plaintiff commenced an action of debt on bond, dated 27th January, 1815, conditioned to pay $3000, with interest, as follows: $500, with interest on the whole sum, from the 1st day of October, 1815, on or before the 1st October, 1816; and $500 more thereof, with interest op the whole sum unpaid, from the 1st day of October, next, op or before the 1st October, 1817. The residue is payable in instalments of $500 yearly in like manner. ¡The case states, that the pleas, alleging the usury, adopted tl/e language of the condition of the bond, to which the plaintiff filed a general replication. The counsel for the defendant contended that the facts pleaded were proven by reading the bond. No other evidence was introduced. The Judge directed the jury to find a verdict for the plaintiff. Several questions were raised on the trial, not necessary to be stated. The question is, whether, on the preceding facts, the plaintiff was entitled to recover. The plea is not set out; but it is presumed to be in due form, averring a corrupt agreement to lend rponey, payable at the times, and with the interest specified in the condition of the bond; and that in pursuance of such corrupt agreement the bond was. executed. The replication .is not before us. It is stated to, be general, and must be considered as putting in issue the. allegation of usury, If, by a sound construction of the bond, it reserves more than legal interest,, then the usury is made out prima facie. For, without further proof, the reservation of unlawful interest will be considered as evidence of a corrupt agreement, which is the foundation of usurious contracts. But it was competent for the plaintiff, at the trial, tq repel the prima facie evidence of a corrupt agreement, arising from the face of the bond, by showing, if in his power, that more than the rate of interest was reserved by mistake, and contrary to the intent of the party. This was done in Nevison v. Whit289 by, (Cro. Car. 501.) So also in Bush v. Buckingham, (2 Ventris, 83,) the agreement was to lend £50; and the scrivener. by mistake, drew a bond for more than legal interest, against the will and without the knowledge of the lender; yet he was held entitled to recover. In such case, it makes no difference whether the scrivener be in an error in fact or of law, as if the security bears a different construction in point of law from what the parties intended. Such mistake will not prejudice the lender, where his intention was incorrupt. (Buckley v. Guildbank, Cro. Jac. 677.) The remaining inquiry, then, is, w'hat is the legal construction of the words used in the condition ? The principal is payable in six yearly instalments of $500 each, from the 1st October, 1815. It is contended that in all the instalments, payable after the first, interest is reserved from the 1st October, 1815. If the words of the bond require this construction, then more than legal interest is reserved. Thus, on the 1st October, 1817, the defendants were bound to pay $500 principal, and interest on $2000, the residue of the principal, for two years, although the interest for one of those years had been paid on the 1st October, 1816. A covenant to pay interest, generally, means the legal standard of interest, which is seven per cent, and consequently, on this construction, more than legal interest was reserved. If the condition is susceptible of a fair construction, not at variance with the statute, it is the duty of the Court so to construe it. They have the exclusive power of deciding whether a written contract be usurious. (Levy v. Gadsby, 3 Cranch, 180.) There is some obscurity in the words used. I think it highly probable the parties merely intended to secure the payment of interest annually qnsuch parts of the principal as remained unpaid at the time each instalment became due. If interest is to be calculated from the 1st October, 1815, the consequence is, that, at the end of the second year, the plaintiff is entitled to interest at the rate of 14 per cent, for one year; at the end of the third year 21 per cent• and thus im creasing annually, until the end of the last year, when, for the last $500,35per cent, interest for one year might be demanded. However oppressive may be this premium for forbear [290] anee, or great the difficulty in assigning a cause for increase ing the rate of interest each successive year, the Court cannot, on this ground, depart from the construction which the words of the condition import. It is a well settled rule, in the interpetration of contracts, that when a clause is capable of two significations, it should be understood in that which will have some operation, rather than in that in which it will have none. (Poth. on Obb. pt. 1, c. 1, s. 1, art. 7. 2 Com. on Con. 532.) If the word “ unpaid” relates only to the principal money, then it is clear that interest is to be calculated at the end of every year from 1st October, 1815. But if; in the expression, “ with interest on the whole sum unpaid,” it has also reference to the interest as well as the principal, no mere than legal interest would be reserved. The meaning of the sentence would, in that case, be, that $500 was payable on the 1st October, 1817, together with the interest that accrued on the balance of principal, subsequent to the Isi October, 1815, and remained unpaid. I think the words will admit, and ought to receive this construction, rather than that urged by the defendants. I have little doubt it is conformable to the intention of the parties. But my opinion is placed on the ground, that where a contract admits of two significations,that ought to be adopted which renders it operative, rather than that which renders it null and void. If this conclusion be correct, the plaintiff was entitled to a verdict; if not, then the verdict ought to be set aside and a new trial granted. I am of opinion that the motion for a new trial he denied, Motion denied,