Dunham v. Dey

Spencer, J., delivered the opinion of the court. If the case was correctly submitted 'to the jury, there is an end of the question; for, certainly, they have considered the transaction- as usurious. The. plaintiff’s counsel complain, that the judge, at first, permitted them to go into .evidence of usage; and then. withdrew it from the cdhsideration of-the jury; arid they now-insist that proof of usage was admissible, to show, that the transaction was not intended as a cover for usury, and that, the-proof-having been given; the jury ought to have been permitted to take -if iri.to consideration, in deliberating oti; their Verdict. 1 They further insist, that the transaction,perse,-is not cither within the letter or the mischiefs of the statute. In Floyer v.Edwards, (Comp. 112.,) Lord Mansfield permitted an inquiry as to the usage of the trade; but he said the,practice and usage would avail nothing, if meant as an .evasion of the statute, for that usage..certainly would not protect usury,, but that it -went a great way to' explain a transaction, and was, in that case, strong evidence to show that there was'.-no intention to cover a loan'of money. These observations were applied to the case of a sale, and, under, the circumstances of that case, it might, have been proper, and probably was so, to inquire into-the usage of that'particular branch of business ; but- it cannot be. admitted, as a'general rule, that, usage may, in all cases, be given -itt evidence, Or that the usage, if proved, shall-determiné whether the' transaction is usurious or riot. ' Every case . must, - in a great degree,-depend on jits' «wn circumstancqs-; and Lord Flarisfibld lays down the rule, in the case already cited, .with-much perspicuity and force : he gays, d it depends, principally, ori the contract being a-'foo»;-ánd. the. statute uses the Words «directly or indirectly’;’ therefore, in all questions, in whatever -respect, repugnant to the statute, we'must get at the nature and substance of the transaction.; the view1 of- the parties must be ascertained, to satisfy .the court that there is a loan and borrowing, arid, that the substance was to borrow, on the orie part, and to lend,, on the other;, and-where the real truth is a loan of .jnbney, the wit of man cannot, find a shift to take if out of the. [45] statute. If the substance is a loan of moneys, nothing will protect the taking more than 5 per cent.; and though the statute mentions only, ‘ for loan of moneys, wares, merchandises, of other com-modifies,’ yet, any other contrivance, if the substance of it be a loan, will come under the word 1 indirectlyIt is impossible to conceive a more just, sound, and lucid exposition of the statute of usury, than the one given by this really great man. . If,Then, the evidence before the jury, independent of the usage, exhibited a transaction, the substance of which was to borrow on the one part, and to: lend on the other, at a greater rate of interest than 7 per cent, per annum, and if this entered into the concoction of the bargain, then, undoubtedly, the transaction was usurious, and the notes were contaminated by it, and void. In this point of view, the usage was properly laid out of the case, because it does not go to show, that the negotiation between the plaintiff and'M. Sr W. Ward was not a loan on the one side, and a borrowing on the other; but its tendency was to prove, admitting it to be so, that there was a usage to lend and borrow at a higher rate of interest than that allowed by the statute. I perfectly concur in the opinion expressed by the judge, at the trial, that the evidence in this case warranted the jury in inferring, that the transaction between the plaintiff and M. $ W. Ward was for the purpose of raising money at a greater rate of interest than 7 per cent., and that that made it, intrinsically, a loan, and, therefore-, the transaction was usurious and void. The testimony clearly shows, that the object of M. <$/■ W. Ward, in the exchange of the notes, was to obtain the plaintiff’s-notes, for the purpose of raising money on them, and that his notes were considered better adapted to that object than the notes which M. fy W. Ward gave in exchange ; and although the witness declares, that the exchange of the notes was separate and distinct from the money M. $• W. Ward owed the plaintiff, yet we find that thé plaintiff^ notes were immediately used by M. <£- W. Ward, to raise money on, and that the plaintiff was immediately paid the 4,000 dollars due to him. This debt, undoubtedly, was distinct .from the exchange of the notes, but we have a right to infer, and cannot but believe, that M. W. Ward entered into the arrangement under the pressure of that debt, and that it was in the contemplation of the parties, that [46] the plaintiff should be forthwith paid, out of the mofteys to' be ra-iseb °n his own notos, by M. 8c W. Ward. ■ The judge, to be sure,, gave his. opinion to the jury .on the evidence; this,.'howeveiV does, not derogate from the-full weight and effect of the finding ;■ the jufy had a- right to draw their own conclusions ffpm the 'evidence, before them, and-it is as-fully their verdict, as if no opinion had been expressed by the judge. In a doubtful case, or where the weight of evidence is against the verdict, I do not mean to be Understood that, on a motion fcir a new trial,, some .stress might not bela-id-on the circumstance that. the judge gave' his -opinion on/the -evidence ; but-, in this case, I clearly thiuk no argument, favourable to'the plaintiff, can be drawn from that consideration. - Why was not this a lending on the one part,; and'ri borrowing on the Other,, indirectly ? We have the high authority of' Lord Mansfield, that any contrivance, if the substancé of it be a loan, will come under the Word “ indirectly.” What is the difference between a man’s lending his notes to raise money upon, taking more than legal interest, and lending his money ? I confess I perceive no other difference than this, that the borrower of the' notes must,' probably, pay more usury to get them converted 'into cash; but the. transaction is, substantially, a lending of money; and b agree with the defendant’s cóünsel,’that, if this device he tolerated,'the-,statute is judicially repealed. This very case has occurred in England, arid been decided by Lord EJlenborough and Justice Le Blanc, (in 1 Camp. 177. and 2 Camp. 599.) In the first-case, which was a suit against1 the maker of a note, for 153/. 15s., payable in ninety days, to Mess. Coates 8r Co., and endorsed to the, plaintiffs, the defence was, that the note, had been given upon a usurious agreement, between the maker-rind .payees ; .and it.was proved, that Coates 8c Co..' agreed to accommodate the -maker with their acceptance .at three months, upon receiving his note for the same sum at ninety-days, together With two rind'a half'per cent.-commission. Lord Ellenborongh held, that there was no colour for a commission, and that the two and a half per cent, must be considered as usurious interest,.¿rid the commission a mere cloak for usury. The defendant had a verdict, and we do not find that, the decision was ever .questioned. , In the other case,, Judge Le Bilanc adopted, the same principle, and although the case was reviewed,.his decision, on that point, was not objected' to.- [47] Here Fmight conclude, but it is fit that notice should be taken of some arguments used by the plaintiff’s counsel, drawn from what they consider analogous cases. It is said that it is the usage for endorsers of bills of exchange, and sureties on custom-house bonds, to take a per céntagefor advancing their responsibilities. I see nothing improper in this; there is no loan of money, directly.or indirectly, in either of these cases; they come neither within the terms or mischiefs of the statute, and they are innocent transactions. The practice of issuing post notes by the banks, is supposed to justify the taking commissions on ad-». vancing.motes, under the circumstances attending this.transaction. That practice is extremely well considered in Hammett v. Yea, (1 Bos. & Pull. 144.,) and Ch, J. Eyre draws the distinction, with great accuracy, between what will, and what will not, render such.a transaction usurious. ■ A person- applies to a banker to have a note discounted; the .banker agrees to discount, and is ready to pa.y the money immediately, after deducting the interest for the time -the note has to run; the applicant then asks for a post'.note, payable at a future day, for his own accommodation,.and this is given him. Ch. J. Eyre held this not to be usurious, and he considered it as two contracts, the one for a loan, • and the other independent of the loan, and for a remittance; but he held that, had the banker imposed this remittance on the borrower, as a term of the discount, it would have been Usury: and in this opinion the other.judges concurred. . This case shows, I apprehend, the practice of the banks to be correct; and it fully shows that this transaction, in this case, is usurious, because, here, the two anda halfper cent, was imposed as a term on M. W. Ward, and was part and parcel of the contract. ■ ■ . ’ The plaintiff, independent of the two. and a half per cent., was to derive considerable advantage from the transaction; the notes he took from M. S' W. Ward -fell due some time before those he gave in exchange; but it is not necessary to inquire, whether that is also usury, the other point being decisive. Motion denied.