13 Md. 202 | Md. | 1859
delivered the opinion of this court.
This was an* action instituted in the Court of Common Pleas of Baltimore city, by Isaac, the holder, against Bandel, the drawer, of a promissory note, to recover its amount.
At the trial below there was full and unquestioned proof of the making and endorsement of the note. Under the plea of non assumpsit the defence relied upon was that of usury, and none other. To that objection we address ourselves, and, as • this is a matter which concerns the daily transactions and dealings of men, we will be as plain and brief as the nature of the inquiry will allow.
If the defence in this case be at all available, it must be because of the language of the Constitution. In the 49th section of the 3rd article of the Constitution is the following:
“The rate of interest in this State shall not exceed six peícent. peí' annum, and no higher rate shall be taken or demanded, and the Legislature shall provide, by law, all necessary forfeitures and penalties against usury.”
Were it not for an opinion pronounced by the judges of the Circuit Court of the United States, for the district of Maryland, in the case of Dill vs. Ellicott, we would experience but little,
The theory, on which rests the decision to which we have adverted, is simply this: that the taking of more than six per cent, interest, for the use of money, is usury, and therefore prohibited by law, and, as a consequence, any contract which reserves or authorizes the taking of more than six per cent, is wholly void, and, on grounds of public policy, incapable of being enforced by our courts. To this general proposition, to our minds, there are substantial and unanswerable objections. The effect of the decision of that court is, that a contract providing for the payment of more than six per cent, is not simply void as to the excess, but void entirely. The only authority adduced in support of this view is, the case of the Bank of the United States vs. Owens, 2 Peters, 527. In that case, by a bare majority of the court, it was held, that under the charter of the bank a contract, by which more than six per cent, was to be paid, could not be enforced, and that although such contracts were not, in ivords, by the charter, pronounced void, yet the policy of the law made them so in fact, and worked a forfeiture of the money loaned. In that case it was also held, that ‘‘reserving’” was the-equivalent to “taking.” When the same case again appeared before the same court, this was declared to be error, and the distinction between the two clearly pointed out in the opinion of Justice Story. The “reservation,” says he, “of usurious interest makes the contract utterly void; but if usurious interest be not stipulated for, but only taken afterwards, then the contract is not void, but the party is only liable to the penalty for the excess.” 9 Peters, 399. This decision also established, that the transaction which
The thing forbidden by the Constitution, is the taking or demanding a higher rate of interest than six per cent.; it is not forbidden to take or demand that or a lesser rate. The thing forbidden is the excess and nothing else, and that is what is illegal and void, and it is within the province of the Legislature to punish this illegality by forfeitures and penalties. Whilst the Constitution makes it competent to the Legislature, “by law,” to forfeit the whole, or any part, of the money loaned, and, in addition, to impose a penalty, yet, until it does exercise this office, all that is “avoided” by the Constitution is the excess beyond the six per cent. Prior to the present Constitution, the legal rate of interest depended upon the legislative pleasure, to be changed whenever it seemed expedient. The framers of the Constitution thought it best to deprive the Legislature of this discretion, and therefore fixed the rate in the Constitution, but continued to the Legislature the power of determining the forfeitures and penalties.
By the act of 1704, ch. 69, see. 1, it was provided, that no person or persons, whatsoever, should “exact or take, directly, for loan of any moneys,” &c., at a higher than a certain rate specified in the section. This language is certainly as strong as that of the Constitution, and yet the Legislature that passed that act did not suppose that if a higher rate was exacted or taken, the contract was therefore avoided because of this declaration, and accordingly, therefore, went on, by the second section of the act, to make all such usurious contracts void.
In construing a Constitution, we must take into consideration the circumstances which attended its adoption, and what appears to have been the understanding of those who endorsed it with their approbation, keeping always in view the proper office of a Constitution, which is, to declare general rules and principles, and to leave to the Legislature the duty of preserving or enforcing them by appropriate regulations, penalties, &c.; and, also, that the words in such an instrument ought to be taken in their ordinary and common acceptation, because they are presumed to have been so understood by the framers, and by the people who adopted it. State vs. Mace, 5 Md. Rep., 351. Manly vs. The State, 7 Md. Rep., 147. Groves vs. Slaughter, 15 Peters, 449.
Now if the people of Maryland had been accustomed, and their courts had regarded the statutes on the subject of usury as importing a certain thing, whenever the same or equivalent words are employed in a subsequent Constitution or statute, the presumption of law is, that they are used in the same sense. Duramus vs. Harrison & Whitman, 26 Ala., 326; Ruckmaboye vs. Mottichund, 32 Eng. Law & Eq. Rep., 84. And, as was correctly said by Justice McLean, in McLean, Assignee, vs. The Lafayette Bank, et al., 3 McLean, 613, if it be “admitted, that where a contract is made in violation of a statute, or of the policy of the law, it is void. And that a usurious contract in Ohio is not only against the statute, but in violation of the policy of the law. But the law seems to be well settled in this State, that usury constitutes an exception from the general principle; so that the contract is only void for the excess of interest. Other States have construed their laws against usury in tire same way. Now, whethe,.
We might, if we deemed the occasion to require it, multiply authorities to almost any extent in affirmation of the views we' have stated, but we think we have referred to a sufficient number, and shall, therefore, content ourselves with a brief recapitulation of the points of this decision.
1st. We hold, that the 49th section of the 3rd article of the Constitution does not, of itself, make void, in whole, a contract demanding or exacting more than sir per cent, interest. It merely fixes the legal rate of interest.
2nd. That it is for the Legislature, by forfeitures and penalties, to make the contract void, either in whole or in part, as to it may seem best, and by penalties, punish the party or parties making such a contract.
3rd. That until the Legislature shall, “by law,” provide the necessary forfeitures and penalties, the act of 1845, ch. 352, remains in force.
Wo hold the act of 1845, with the exception of its 5th &, 6th sections, to be nothing more than an act relating to the remedy, that is to say, it prescribes the mode in which the party seeking to avoid any part of a contract, on the ground of usury, shall bring such defence to the notice of the court. Until he does bring such defence to the notice of the court, in. legal contemplation, it has no existence. If, however, it should be deemed expedient to adopt any other mode, it is for the Legislature to provide it.
From these it follows, that the judgment of the Court of Common' Pléas must be affirmed, each and all the prayers offered by the defendant being in conflict with the view we have taken, and were, therefore, properly refused. Until the Legislature shall otherwise order, an action may be maintained on a contract on which was demanded or taken more than six per cent, interest; and if the defendant desires to rid himself of liability for the excess beyond the six per cent., he must specially plead and set out what is actually and fairly due on the contract; unless he does so, he will be responsible to the extent of the face of his contract.
In further support of this opinion, we refer to the following cases: Groves, and other, vs. Slaughter, 15 Peters, 449. Bank of Chillicothe vs. Swayne, and others, 8 Ohio, 280, 281. Hynes vs. Cobb, et al., 2 Louisiana Annual Rep., 363. 2 Dallas, 92.
Judgment affirmed.