New York Dry Dock Co. v. American Life Insurance & Trust Co.

The Assistant Tice-Chancellor. The contract set forth in the bill may be thus stated : The American Life Insurance and Trust Company agreed to loan to the Dry Dock Bank $250,000, on the following terms; 1. The banking company were to deliver to the Trust Company, their own bills of credit, or bonds for the $250,000, payable to the latter in sterling money, at five dollars to the pound, at a banker’s in London, the interest to be paid half yearly, at six per cent, per annum, and the principal sum in instalments—• £10,000 in July, 1842; £10,000 in July, 1843 ; £10,000 in July, 1844; and £20,000 in July, 1845. But instead of paying those bills of credit in London, the bank was to pay both interest and principal, to the Trust Company, in New York, (the interest at seven per cent.,) and such payments to be made in every instance, at least forty days previous to the time when they would fall due in London. The whole sum of £50,000, with the interest, was to be secured upon the real estate of the bank, worth double the amount. 2. The bank agreed to allow a deduction of one per cent, from the nominal amount of the loan, which, as represented, was to enure to the private benefit of Mr. Duer, the vice president of the — 253 — Trust Company, and to be paid to him on the completion of the agreement. 3. It was agreed that the bank should guaranty to Mr. Duer, that upon the consummation of the contract, he might and could purchase in the market, the stock of the bank to the amount of one thousand shares, at the rate of seventy per cent, of the par value of the same. 4. Instead of loaning to the bank the entire sum of $250,000, it was agreed that the nominal amount should be reduced four per cent.; and instead of money, that the bank should take and accept the Trust Company’s certificates, or obligations for such reduced amount, (being £48,000, or $240,000,) payable in London, with interest at five per cent.—part in 1839, and the residue in 1840. The first inquiry in the case is, whether the complainants have proved the contract, as it is stated in their bill 1 Without adverting here to the point that there ■ was no loan, I may say, that the terms of the agreement, which I have designated as the first and fourth, are not questioned by the defendants. "But their counsel insisted, with great force of argument, that in respect of the others, and especially the third, there was a fatal variance between the bill and the evidence. First. As to the one per cent, agreed to be allowed to Mr. Duer. It is said that this, in the bill, is set forth as being exclusively a price or premium, for forbearance—whereas the proof, in its worst aspect, shows that a part of the amount was to be paid to Mr.-Duer, as a counsel fee for examining the title of the lands conveyed as a security. I think this objection is not well founded. The charge in the .bill is very general, and does not state the one per cent, to have been for forbearance only; it alleges that one per cent, of the amount of the loan was to be paid to Mr. Duer, and that as it was represented, the same was to enure to his benefit. All the testimony on the subject appears to sustain this allegation. Whether, as thus stated, it establishes usury, is another question, which I need not discuss in this place. Second. In respect to the guaranty to Mr. Duer, of the purchase of the stock at seventy per cent., the variance insisted on. — 254 — is two-fold, viz.: that this agreement was not a term or condition of the loan: and if it were, the proof shows an agreement at seventy-five per cent., instead of seventy per cent. . In regard to its being a term or condition of the loan or transaction, the circumstances leave no room for doubt. If there were no testimony further than the cotemporary agreement, the inference would be irresistible that it was a branch of the contract for the $250,000. I do not believe that Mr. Duer in express terms annexed it as a condition, and he certainly did not propose it. But when Mr. Holmes proposed it, it was at once acceded to, and Mr. Stebbins understood distinctly, that the transaction could not be completed without it. Neither banks nor business men are in the habit of offering such bargains without an equivalent. It is no answer to the argument to say, that the committee on the part of the bank did not expect to lose much, because - they then supposed that they controlled the stock. If they had expected no loss, a great profit was certain to ensue on the bank’s resuming specie payments ; and the committee were no more likely to throw this away, than they were voluntarily to incur a loss. No one can imagine, upon the undisputed facts in the case, that the bank would have entered into the engagement relative to the 1000 shares of stock, except in connection with the loan, and to insure its completion. In the case of Clague & al. v. Their Creditors, (2 Martin’s Louis. R. 114,) where there was no direct proof that the usurious advantages obtained by the lender collateral to the loan, were made a condition, the court held that the internal evidence afforded by the nature of the transaction, was sufficient to show who connected those advantages with it. Next, as to the variance in the rate at which the stock was guarantied. The charge in the bill is distinct, that the rate was seventy per cent., and it is not relieved from that precise rate by any subsequent allegation, either in the bill or the schedules annexed. The testimony of Mr. Holmes comes very near sustaining it, because he says the agreement was a little below the market price ; three, four or five per cent, below it; and the market price is shown to have been from seventy-three to seventy-three and — 255 — one-half per cent. Mr. Duer, however, is entirely explicit. He testifies that the price agreed upon was seventy per cent; and in this he is the more positive, because, as he says, when the affair was settled, he consented to pay several per cent, more than the price at which it was offered to him, and did pay more than seventy-five per cent. It is proved by the certificate or obligation given for the difference, that the settlement was made at about seventy-five and one-half per cent. This, with what Mr. Holmes recollects, convinces me that the agreement for the stock was at the rate of seventy per cent.. In this respect, therefore, there is no variance between the allegation and the proof. A further variance was insisted upon at the hearing, (although it is not found in the defendants written points,) in consequence of the charge in the bill, that the loss which the bank sustained in cashing the Trust Company’s certificates, was contemplated by the contracting parties. It is claimed that the bill makes this expected loss one of the terms of the agreement, and that there is no proof that such loss was expected. The charge on this subject is not made in connection with the statement of the contract, but follows the charge that the certificates were issued by the Trust Company in pursuance of the contract previously set forth. It is plain, therefore, that it was not intended to be set forth as one of the terms of that contract. It is true, the bill, in summing up the loss incurred, includes the discount upon the certificates, and alleges that the result thus shown, was certain and well known when the loan was contracted, and was usuriously exacted by the Trust Company, But this general charge of usury, including three exactions which had previously been stated distinctly as being usurious, and as positive terms of the contract, can scarcely be construed into a statement that it was a stipulation in the contract that the bank should sell the certificates at a discount, or that such discount was an exaction for the Trust Company’s benefit. If the sacrifice on the certificates had been seriously argued as constituting usury in this case, it would be a sufficient answer to the argument that the bill does not set it up as forming a part of the agreement between the parties. — 256 — I do not discover any variance between the complainants allegations and their proofs, in regard to the contract in question. The next inquiry is, was the transaction a loan ; or was it a real exchange or mutual sale of securities, as it is denominated by the defendants ? In determining this point, the court must be guided by the nature of the transaction, and the objects of the parties in negotiating it, so far as those objects rvere mutually understood. The words used in such negotiations, do not always signify what the parties really intend. (Barker v. Van Sommer, 1 Bro. Ch. C. 149.) The object of the Dry Dock Bank, was to resume specie payments, and save their valuable corporate franchises from forfeiture. To this end they wanted money, and nothing but money would answer the exigency. Their views and their necessities were fully known to the Trust Company. On the other hand, the Trust Company were strong in their capital and in their credit, and were fully conscious of both. They stood in no need of money, and had no occasion for an exchange of securities. When a merchant, who is in want of money, applies to a capitalist for his note payable at a future day, and offers security by his own note, with an indorser, and the respective notes are executed accordingly, the transaction is a loan. When two merchants, who are both desirous of raising money, exchange their' own notes, to be used for that purpose, with third persons, it constitutes an exchange of securities merely:—its effect is the same as if each had used his. own note with the other’s indorsement. In this case, the Trust Company was the capitalist, and the bank was the merchant needing money, and offering real estate security for its re-payment. From the relative situation of the parties,- as mutually known; the transaction bears the aspect of a loan, and not an exchange of paper. The testimony of the witnesses on both sides establishes the fact, that the application of the bank was for a loan of the credit of the Trust Company, and that there was no proposition for an exchange of credits. The bank solicited a loan, not — 257 — of cash, because it was known that the Trust Company were not then in funds; but of paper credits, which, as the Trust Company pointed out, would produce cash to the bank. The Trust Company were to give no collateral security for their paper; the bank was to give security on real estáte, unquestionably worth more than the loan; and finally, each of the bills of credit which the Trust Company received from the bank, recites that it is a part of a “ loan” of £50,000. Another argument, if any were needed, to show that this can-; not be deemed an exchange of paper, is found in the statute which forbade the bank from making such exchange. While struggling to borrow, in order to avoid a forfeiture, the bank would not deliberately incur one, by violating this statute. Next, as to the argument that the transaction was a sale of the paper of the bank, for that of the Trust Company. This is but another phase of the idea of an exchange of paper, and is open to the same observations. The defect in the argument is, that neither a sale or an exchange, was the subject matter of the contract. The bank applied for and obtained a loan, offering and giving, as borrowers are compelled to do, satisfactory security. The Trust Company assented to the application, and macje the loan. The form which the Trust Company thought it expedient to have the securities assume, when executed by the bank, cannot disguise or alter the nature of the transaction. There was no sale about it. The bank had lands and bills receivable, which were legitimate subjects of sale; but they did not want to sell them. Their own promises to pay, were not proper objects of sale, and were not offered for sale. The Trust Company were known lenders of money, but having none at the moment, they loaned their credit, in the shape of certificates of deposit, payable at short dates. They did not sell their certificates to the bank for the price secured by the deed of trust. A mérchant wanting $1,000 from a bank, goes to the bank with his own note at six months, for $1,035, properly endorsed, and applies for a loan of a post note of the bank at three months, and the bank issues such a post note for $1000, and receives the note of the merchant. Could this with any propriety be called a sale by the bank, of — 258 — its post note to the merchant ? Assuredly not. In this point of view, the expectation of the Trust Company, that they would have to guaranty the bills of credit of the Dry Dock Bank, is not at all material. That expectation had reference solely to the contingency, that in order to meet their own certificates, the Trust Company might have to obtain a loan on those bills of credit or otherwise. It does not affect the nature of the original contract, or alter its obvious character. The capitalist who lends his credit for a short time, is liable to be disappointed in the receipt of funds, and thus be driven to use his credit, to meet the paper which he issued. He may use such credit, either by drawing his own note, or by endorsing the paper which he received on making the loan. Neither the contingency, or the mode of obviating it, has any bearing on the nature of the original loan. It is perfectly clear to my mind, that the transaction between these corporations, was a loan of its credit by the one, on the security of the real estate owned by the other. The question is then presented, was the loan usurious 1 By the law of this state, every contract is void by which there is reserved or agreed to be taken, any greater sum or value than seven dollars on one hundred dollars for a year, (or in that proportion for a different period,) for the loan or forbearance of any money, goods or things in action. (1 Rev. Stat. 771, § 1 to 5 ; Laws of 1837, Ch. 430.) It was contended by the defendants, that a loan of credit is not within the statute; but I cannot assent to the argument. To apply it to this case, the Trust Company loaned to the Dry Dock Bank, their certificates of deposit, payable at a future day. These were things in action, and within the letter of the statute. In effect, it was a loan of money, to be advanced at a future period. Any other construction of the law would nullify it at once, for every lender would refuse to loan money, and substitute a loan of hís notes at short dates. If there be a loan, it is void, provided more than seven per' cent, interest is reserved—whether the loan be made in goods, in credits, or in cash. In Ketchum v. Barber, (4 Hill’s R. 225,) which was cited by the defendants, the transaction was upheld, (although by a bare — 259 — majority of the judges, both in the supreme court, and in the court for the correction of errors,) on the sole ground that there was no loan whatever by Ketchum to the prior parties on the note. The loan was made by the Union Bank, and the majority of the judges in each court, held that Ketchum merely sold his credit by way of guaranty, or indorsement, as a surety. The result of the decisions, in Suydam v. Westfall, (4 Hill's R. 211,) and Suydam v. Bartle, (10 Paige, 94,) as I understand them, is, that an agreement with a commission merchant, who accepts bills to be met with shipments of produce, to pay him two and a half per cent, on advances he may be required to make on the drawer’s failing to send sufficient produce, is not of itself usurious ; but it is to be considered with other facts, upon the question whether the contract is a cover for an usurious premium, or merely provides compensation for services. The ease of Stoveld v. Eade, (4 Bing. 81,) was also cited. The court there held that there was no loan, nor any application for a loan. The report of the decision is not precisely intelligible. I do not perceive what the amount of the commission, or its being under or over five per cent., had to do with determining whether the transaction was a loan or an accommodation exchange. The case of Dunham v. Dey, (13 Johns. 40,) and Dunham v. Gould, (16 ibid. 574,) in our own courts, are entirely decisive, that the loan of credit in this case is within the provisions of the statute against usury. In this connection, 1 may as well consider the point urged, that on a loan of credit, the lender, exclusive of interest may charge a commission not exceeding seven per cent, per annum, and that the interest, which he reserved on the borrower’s securities, is only an equivalent for that which he is to pay on the paper he issues or lends. The case of Dunham v. Dey, above cited, was decided on what I conceive to be the true ground, that a loan, whether of cash or credit, is to be subjected to the same rule. That decision was affirmed in Dunham v. Gould ; and although the chancellor dwelt upon the point, that the commission exceeded the lawful interest, (both sets of notes being payable — 260 — without interest,) it does not appear that the court of errors discarded the principle adopted in the court below. In Fanning v. Dunham, (5 J. C. R. 122,) which was relied upon in this branch of the case, Chancellor Kent did, indeed, hold the securities to be usurious, because the commission exceeded the legal interest for the time the notes had to run, and thus indirectly gave his opinion that they would not have been usurious, if the commission had fallen short of the interest. But he has never decided the latter proposition, so far as I can discover. And in view of the judgment of the supreme court in Dunham v. Dey, (13 Johns. 40,) if the weight of authority is not clearly against it, the point is at least untrammeled by any binding decision. The first suggestion that occurs to me is, that if a charge for commission be tolerated at all, where there is a loan of credit, it must be regulated by a variety of circumstances in different cases, and that there can be no propriety in limiting it to the legal rate of interest. For example—one lends his note for thirty days only, in a time of great commercial embarrassment, when the chance of being disappointed by the borrower, (whp gives his note at the same date,) is very great; and he charges a commission of. one per cent. No merchant would say that this was not a reasonable, indeed, an inadequate commission. Yet, under the rule in Fanning v. Dunham, it would be usury, because it exceeded the interest for thirty days. Now take another illustration : A. lends to B., his notes payable with interest at two years, and B. secures him by a bond and mortgage, payable in three years with interest, and as a commission, A. deducts-twelve per cent, from the amount of B.’s mortgage. This strikes the mind at once as being grossly exorbitant, yet it is less than the lawful interest for the two years, and still less in proportion for the three years. The rate of interest allowed by law, I am confident, cart furnish no criterion for the regulation of a commission; and I think that whenever a commission is charged by the lender, unless it be for some real service, distinct from the loan itself, as was the fact -in Hammett v. Yea, (1 B. & P. 144,) and Cayuga County Bank v. Hunt, (2 Hill’s R. 635,) and then be a moderate and — 261 — reasonable charge, it must infallibly be referred to the use of the money or credit loaned. To test the matter further in loans of credit. Suppose A. applies to B., a lender of money, for a loan of B.’s note of $1000, for one year; obtains such a note, not bearing interest, and gives his own note with sureties, payable at a year, with interest—then A., to effect his object, must sell B.’s note and turn it into money. He will be fortunate if he can find a broker who will discount it at seven per cent. If he procure it to be cashed at that rate, he will receive $930, as his actual loan. At the end of the year, he will pay $1070; or $140 for the use of $930 for a year. This is more than fifteen per cent. Yet on the argument urged by the defendants, it would be legal. Let us see how B., the lender, would come out of such an operation. If A. paid his note when due, B. would take up his own note with the money thus furnished, and receive $70 from A., without advancing a farthing. If A. failed to pay his note, and B. were compelled •to collect it by suit, the collection might occupy six months. In that event, B. would have to advance the $1000 at the end of the year to pay his own note, and he would continue in advance six months. At the end of that time he would receive from A. $1105, which would be $105 for the six months’ advance of $1000. The more probable course in the case put, would be for B. to ■discount his own note, through a friendly broker, with whom he would make a reciprocal arrangement, so that he would in fact advance the $930 at the outset, and thus receive the fifteen per cent, for its use for one year. There are so many modes in which this system might be pursued, and they are so obvious, that it is a waste of time to trace them farther. (See Reed v. Smith, 9 Cowen, 647.) Suffice it to say, that if it be once settled as law, that a man may lend his own notes or his bonds on time, without interest, taking in return securities payable with interest, or may lend his own paper payable with interest, and in return take securities payable witli interest, and include a commission for his risk and trouble, not exceeding seven per cent, per annum; ■ the whole — 262 — business of making loans will be transacted in this mode, and the statute against usury will be made a dead letter. These observations are somewhat in advance of the order in which I proposed to treat this case; but they are so connected with the consideration of loans of credit in respect of the statute, that it was more convenient to dispose of the whole subject at once. I will next consider the facts which the complainants allege in their bill, constituted usury. Their first point is made upon the deduction by the Trust Company of the sum of $10,000 from the loan of $250,000, The complainants gave their bills of credit secured by their real estate, for £50,000, which bills they were to pay in 'New York at the rate of five dollars for every pound sterling. In other words, they were bound to pay to the Trust Company $250,000, with interest half-yearly at seven per cent. The credit which the latter loaned to the bank was the sum of £48,000 in certificates, payable in London, and bearing five per cent, interest. At the same rate of five dollars to the pound, these certificates amounted to $240,000. This deduction of $10,000, or four per cent, on the sum loaned, is defended as being a compensation for the Trust Company’s guaranty of the bills of credit issued to them by the bank, and for the trouble, expenses and extraordinary risks, assumed by the company in twice remitting to London, and paying there the amount of $240,000, or $250,000; and the defendants urge that the understanding of the parties was explicit, that the Trust Company were to use the bills of credit of the bank, in order to raise money in London, and hence the necessity of the guaranty and the double remittance. I am sorry to say, that I cannot give to these positions the force which was claimed for them by the learned and eloquent counsel for the defendants. First, as to the guaranty. The whole point is, that the Trust Company, when their certificates for the £48,000 fell due, might be obliged to borrow the money to meet them, and instead of simply giving their own obligation to the lender, would transfer — 263 — the bills of credit of the Dry Dock Bank, or would sell them outright. The lender or purchaser, it was supposed, would require the added liability of the Trust Company upon the bills of credit.Assuming this to have been the mutual expectation of the parties, I am at a loss to perceive what new risk the Trust Com» pany incurred by the operation< In no event could they - lose the $250,000 more than once, and they were subjected to that risk while they held the bills of credit, precisely as they would be, after they had transferred them with their guaranty. The real estate of the bank was conveyed in trust,- for the express purpose of guarding against the risk, and it was believed to provide for it effectually. The only further consequence, which the Trust Company would incur by stich a guaranty, would be that they might be compelled once to advance the $250,000. Whereas, if the Trust Company had sold the bills of credit to the amount of $240,000, (or borrowed that stim on a pledge of the same,) before their own certificates fell due, and the Dry Dock Bank had punctually paid the bills as stipulated in the deed of trust, the Trust Company never would have advanced a dollar. This was unquestionably the expectation of the Trust Company, if, as it is insisted, the original design was to use the com» plainants* bills of credit in London. The ease differs in no respect from that of a money lender, who, instead of cash, lends-his. note at a year, and takes from the borrower a note at five years, secured by a mortgage ;• and who, at the end of the year, in order to provide funds to meet his own note, finds it necessary or convenient to use the mortgage and note of the borrower, and indorses the latter for that purpose. Suppose that on lending his note, he had avowed his belief that at the end of the year, he would have to indorse the borrower’s note, and transfer his mortgage to take up his own note, and had thereupon required the borrower to pay him four per cent, on the sum loaned, as a compensation for his risk and trouble growing out of such indorsement. No court in this state could uphold such an exaction. I can find no color for reserving the $10,000 on this loan, ira the contemplated guaranty of the bills of credit. — 264 — Then, in regard to the double remittance from New York to London, and its extraordinary hazards. To illustrate the claim made upon this ground, I will follow out the result, which in its various contingencies, might have ensued from this transaction : First. In the event that the Trust Company had paid their certificates in London, by advancing the £48,000, retaining the bills of credit of the Dry Dock Bank. Then there would be no remittance to London on account of the bills of credit. Those would be paid here, as provided in the trust deed, and being held by the Trust Company would thereupon be discharged. The Trust Company would remit £48,000 to London to meet their certificates. For the whole expense of this remittance and payment, they were fully indemnified by the obligation of the Dry Dock Bank to pay to them here $240,000, or five dollars for every pound, sterling—a rate which was doubtless fixed upon as such indemnity. The proof is abundant, that the difference between five dollars to the pound, and $4 86-100ths, the legal value of the sovereign or pound sterling in 1838, would pay all the expenses incident to remittance and payment, either in bills of exchange or in gold coin. This difference sufficed to cover guaranty in a remittance of bills, and insurance, if specie were shipped. The $240,000 would, therefore, make good .the remittance and payment of the £48,000, with its attendant hazard. Thus there is no double remittance in the first contingency which 1 have traced, and no pretence for the charge of $10,000. Next, I will take the mode alleged to have been intended by the parties: The Trust Company would send to London the bills of credit guarantied by them, (either with or without a transfer of the charge on real estate, to which the bills refer,) and would raise £48,000 by a pledge, or a sale of those bills. With this £48,000 raised in London, they would pay their certificates as they matured. The funds being already in London, no remittance from New York, would be requisite'to meet those certificates. If, however, the Dry Dock Bank should fail to pay in New York, the amount of their bills of credit forty days before they — 265 — fell due, so as to put the Trust Company in funds to take up such bills in London when they became due, the Trust Company would necessarily make an advance and a remittance to London for that- purpose. But for this remittance, they would have the five dollars to the pound, or $240,000," which they could collect of the bank in New York, and which covers the whole charge. It may be urged that the Trust Company, on selling the bills of credit in London, should not be compelled to keep the proceeds there unproductive, until their certificates became due ; for this might subject them to a great loss of interest, if they availed themselves of the most favorable time for making a sale. I do not think that any such loss need to have ensued in the event supposed, or could have been contemplated by the parties. The obvious course of the Trust Company would be to sell exchange in New York, drawn against the proceeds of the bills of credit, and when their certificates matured, to buy exchange on London in the same market, and remit to meet them. The profit on the sale, would usually balance the expenses of the purchase. The testimony of the eminent bankers who were examined as witnesses, shows that the fluctuation in the value of exchange on London is not so great, but that five dollars for a pound sterling, furnishes a sufficient margin to cover any supposable difference in price, between the times of such sale and purchase. A suspension of specie payments was adverted to; as to which it suffices to say, it would not suspend the contract, or make it payable in aught but gold and silver. There is no double remittance to be found in this way of carrying out the operation. Lastly. I will suppose that the Trust Company were to make a remittance in the first instance, from their own funds, and thus pay their certificates. This, at five dollars to the pound, would require them to advance $240,000, in New York. Then I will suppose that they subsequently sold in London, and guarantied £48,000 of the Dry Dock Bank bills of credit. The proceeds ■drawn against from New York, would reimburse the expenses of the first remittance. Then, if they were afterwards compelled to advance to take up the bank’s bills of credit, the expenses of that remittance are pro — 266 — vided for in those bills, in the payment of five dollars in New York, for every pound advanced or paid in London. The result is, that although in the case last put, the Trust Company might have to remit the £48,000 to London twice, yet the charges of the first remittance would be reimbursed by the sale or loan effected, upon the bills of credit of the bank, (without which sale or loan the second remittance could never be requisite,) and the charges of the second remittance would be fully covered by the $240,000 payable in New York, for the £48,000 remitted. I have said nothing of the contingency that the Trust Company might be unable to realize in London £48,000, on that amount of the bills of credit of the bank, even with their guaranty. It is not set up as forming any part of the inducement or consideration for the $10,000 reserved; and it would be inconsistent with the ground taken, that the certificates of the Trust Company, bearing interest at five per cent, were worth par in London. Their naked obligations could not be worth more than these bills of credit, fully secured by real estate in the city of New York, and guarantied by the Trust Company. In no point of view, have I been able to discover a reasonable ground for this deduction of $10,000,in the loan in question. It must, therefore, be regarded as a premium or compensation for making the loan, and it being in addition to the reservation of seven per cent, interest, our law declares it to be usurious. It is unnecessary for me, after this conclusion, to examine any of the other facts which are alleged as constituting usury. The defendant Morrison insists, that the securities are not subject to be impeached by the imputation of usury, unless it be shown that they are usurious by the English law; because they were made with the intent to dispose of them in England, and his title arose under such a disposal made in London. I think the law is clearly otherwise, and that the securities must stand or fall by the laws of the state of New York. They were executed and delivered, and the loan was made in this city; here is the real estate by which the debt is secured, and the debt is payable here. The bills of credit, though expressed to be payable in Lon — 267 — don, refer to the charge upon the real estate, and thus gave notice to Mr. Morrison, of the trust deed, and of its requirement that the Dry Dock Bank should make payment in New York. It is, in every sense, a New York contract, and would be so adjudged in the courts at Westminster Hall. The views of the chancellor in Chapman v. Robertson, (6 Paige, 627, 632,) fully sustain this construction of the contract.- My conclusion is, that the bills of credit are usurious, and the trust deed by which they were secured, is void. The complainants are entitled to a decree accordingly. I have made no allusion to the policy of the law which leads to such a severe loss of property, nor to the character of the act by which it is enforced; for neither can be permitted to influence my judgment in the slightest degree. Whether the law be politic and just, or barbarous and oppressive, it is no part of my province to determine. As the law of the land, I am sworn to administer it, and am bound to give effect to it fully. It is not to be treated with disfavor, or evaded by the courts. So as to the character of the proceeding, by which this bank attempts to elude the payment of a very large loan, received at a time of peculiar and extreme necessity. However I may regard its immorality and its flagrant injustice to the extent of the actual loan, it is my duty to grant the complainants a decree, if they have brought themselves within the provisions of the statute against usury. The legislature, in 1837, deemed it expedient to require the court of chancery to take cognizance of these cases, without the preliminary step which the court had always before imposed on the party seeking relief from usury, the payment or offer of the sum actually loaned with the legal interest. When a case is brought plainly within the provisions of the usury laws, and is within the jurisdiction of the court, the contract must be avoided, without any restriction or imposition of terms. Decree accordingly.