Eagleson v. Shotwell

The Chancellor.' It is admited by the answer, that the sale of the shares, at par, was made a condition of the loan of the 2,000 dollars ; and, as the defendant was a director of the insurance company, at the time of the sale, he must have known of the embarrassed circumstances of the company, and that the stock was, at the time, of doubtful credit, and below par. This fact is established by the master’s report; and it was oppressive, and tended to extortion and usury, to make the acceptance of the shares, at par, a condition of the loan. If such contracts are to be supported, the provisions of the statute against usury would be eluded, and become of no avail. Selling stock at 75, to a person applying for a loan of money, when the price of stock, at the time, was only 73, was held,, in Doe v. Barnard, (1 Esp. Rep. 11.,) to be clearly usurious. It is impossible to ascertain what the shares were worth at the time. There were no sales of them; and the few which have since been made, appear not to have been in the usual and ordinary course of business. They show that the stock never had, afterwards, any market price which approaches, in any dergee, near to their nominal value. It is impossible, then, to fix any deter [539] mínate value on them; and the only course to be adopted is, to rescind the sale altogether, as being made in fraud of the statute. This course is recommended equally by policy and justice. I shall, accordingly, decree, that the shares be retransferred by the plaintiff to the defendant, and that the mortgage stand as a security only for the 2,000 dollars, with interest thereon; and that the defendant be at liberty to proceed to the sale of the mortgaged premises, only for the balance of principal and interest due on the sum actually loaned, together with the costs of such proceeding; and that the defendant pay the costs of this suit, except that part of the inquiry before the master, which related to the rents and profits of the mortgaged premises while in the possession of the defendant, and on which inquiry the defendant has not been found in default. Decree accordingly.