Earll v. Mitchel

Caton, C. J. The question which we shall consider in this case, is whether this was a loan of money or the purchase of bills of exchange. We do not consider it at this time a question open to dispute, that a party may purchase a sight or time bill of exchange on another place, even within the same State, of either the drawer or indorser of the bill, and pay therefor any price, which the parties may agree upon. But such a transaction is always open to inquiry, as to whether the pretended purchase of the bill of exchange was merely colorable and really designed to cover up a usurious loan of money or not. Ánd when such is found to be the case, it is the duty of the courts to strip it of its false coloring and treat it according to its real character, as an usurious transaction. Here the plaintiff claims there was a loaning of money, and a reservation of more than lawful interest, and that the bills of exchange were taken as security for the loans, while the defendants insist, that they purchased the bills of exchange on Chicago in good faith, and that they paid therefor, by passing to the credit of the plaintiff on their books, the face of the bills, less the usual and ordinary exchange on such bills. On its face the transaction was a sale and purchase of the bills, and the proof shows that the rate of exchange charged and discounted, or deducted from the face of the bills, was no more than the usual and ordinary rates for such bills, at the time and place of the transactions. At the trial below, the court admitted all the evidence offered by either party, tending to elucidate the true character of the transaction, and fully instructed the jury as to the difference between a loan of money and a purchase of the bills, and left it to them to determine whether here was an usurious loan of money, covered.up by an appearance of a purchase of bills of exchange, or whether it was a bona fide purchase of the bills, and the jury found the latter to be the true character of the transaction, and we entirely concur with them in this conclusion; and therefore affirm'the judgment without expressing any opinion on the question, whether a party who pays more than the rate of interest allowed to be recovered by the law of 1849, can recover back the excess, in an action for money had and received. The judgment must be affirmed. Judgment affirmed.