3 W. Va. 86 | W. Va. | 1868
The bill was demurred to on three grounds.
1st. Because the contract or contracts set forth in said bill are upon their face contrary to the statutes of Virginia and New York against taking illegal interest, and are usurious and void under the laws of both States.
2d. Because said bill seeks to enforce in effect the specific execution of alleged personal contracts in regard to personalty.
3d. Because it seeks to recover damages in equity for the alleged breach or breaches of such personalty contracts and for the conversion of personal property for which there is a remedy at law.
In answer to the first ground of demurrer, the contract is not upon its face usurious. The agreement for the advance and loan of money is only part of the contract, and it is a question of fact whether usury was intended or not. Smith vs. Marvin, 27 New York Rep., 137.
In answer to the second and third causes of demurrer the bill is not to enforce the specific execution of a contract for
For these reasons I think the demurrer was not well taken.
The next question is, was the transaction usurious in fact?
The Brakeleys in their answer charge that the substance and effect of the contracts set forth by the complainant, are but to provide for advances or loans of money to them, and devices or contrivances to reserve and secure to the complainant unlawful and usurious interest and profits, and that the said contract or contracts toere for the payment of interest at a greater rate than is allowed by law.
The Code of Virginia, chap. 141, sec. 6, provides that, “ any defendant may plead' in general terms that the contract or assurance on which the action is brought was for the payment of interest at a greater rate than is allowed by law, to which plea the plaintiff shall reply generally, but may give in evidence upon the issue made up thereon, any matter which could be given in evidence under a special replication. Under the plea aforesaid the defendant may give in evidence any fact showing or tending to show that the contract or assurance, or other writing upon which the action was brought, was for an usurious consideration.” The charge of usui-y in the answer is in the precise language of the law, to which the complainant replied generally, thus raising an issue of fact on the question of usury in precise conformity to the law of this State.
This answer would not be sufficient to raise the question in the courts of New York, according to the authority of
The contract in the case was made in New York, and as to its nature, construction and validity, is to be governed by the laws of that State, but the form of the remedy and mode of proceeding must be regulated solely and exclusively by the laws of this State, the place where the suit is brought, to enforce the contract. The issue made, then, by the answer and replication, fully raises the question of fact as to whether the contract was founded on a usurious consideration or not. What the laws of New York are on the subject of usury is a fact agreed in this case. According to those laws all bonds, bills, notes, assurances, conve37ances, all other contracts or securities whatsoever, and all deposits of goods or other things whatsoever, whereupon or wherebj7 there shall be reserved or taken or secured or agreed to be reserved or taken, directly or indirectly, any greater sum or greater value for the loan or forbearance of any money, goods or things in action, than at the rate of seven per cen-tum per annum shall be void.
This is substantially the same as the statute of Virginia, on the same subject, which is the law of this State, except that by the Virginia statute interest is at the rate of six per centum per annum, and both the New York statute and the Virginia statute are in substance the same as the English statute of the 12th of Ann, except that by the statute of the 12th of Ann interest was at the rate of five per centum per annum. The statute of the 12th of Ann only differs from the older English statutes in the rate of interest. I have made this comparison of these statutes because decisions of the English courts, of the courts of New York and of Virginia have been cited in the argument of this case to explain the meaning and construction of the New York statute.
In the case of Cotton vs. Dunham, 2 Paige, 272, a New York case, the chancellor uses the following language: “The English as well as the American reports are filled with cases arising out of the various devices and expedients which have been adopted to evade the provisions of the
In the case of Cleveland vs. Loden & Draper, 7 Paige, 557, a New York case, the chancellor uses this language: “Whenever the lender stipulates even for the chance oí an advantage beyond the legal interest the contract is usurious, if he is entitled by the contract to have the money lent at all events.”
In the case of Flayer vs. Edwards, 1 Cow., 112, an English case, under the statute 12th Ann, Lord Mansfield said: “ This is on the original contract by which the payment of the principal is stipulated, and, therefore, if it is within the statute of usury at all the contract itself is void. It depends
In the case of Powell vs. Waters, 8 Cowen, 696, the court undertakes to state certain principles which are claimed to .be established beyond controversy, and proceeds to state among other things, “that the mere giving and receiving designedly more than at the rate of seven per centum per annum for interest is usury, although there be no corrupt agreement other than that which is manifested by one party allowing and the other receiving the unlawful interest.
The following cases are upon the principles of the four cases above:
Morse vs. Wilson, 4 T. R., 353; Barnard vs. Young, 17 Ves., 44; Dunham vs. Dey, 13 Johns., 44; Gibson vs. Fristoe and others, 1 Call., 73; Dunham vs. Gould, 16 Johns., 367; Watkins vs. Taylor, 2 Munf., 429; Steptoe’s adm’r vs. Harvey’s ex’rs, 7 Leigh, 523; Roberts vs. Trenayne, 3 Croke, 507; Steele vs. Whipple, 21 Wend., 103; The Dry Dock Bank vs. The American Life Insurance Trust Company, &c., 3 Com., 344.
No case has been cited that is not perfectly consistent with all the foregoing cases.
The case of Gilpin vs. Enderberry, 7 Eng. C. L. R., 314, claimed to be inconsistent with them, is in perfect harmony with them. ' In this case there had been a plea of usury which was negatived by the verdict of a jury, and the court merely held that it would not go behind the verdict of the jury-
The cases of Smith vs. Marvin, 27 New York, 137; Trotter vs. Curtis, 19 Johns., 160, and Suydam vs. Niston, 4 Hill, 211,
These contracts are not usurious because the commission is not to be charged unless the makers of the draft fail to meet them, which they may do or not at their option and not at the option of the parties who were to advance the money. The cases are all consistent wdth the principle of the cases first referred to. Even in this class of cases it would be a question of fact whether usury is intended or not.
If the contract in the case under consideration is in substance for a loan of money at a greater premium than at the rate of seven per centum per annum the contract is usurious and void, no matter what its form is.
TJnder the agreement for the purchase of hides, the hides were to be purchased by the Brakeleys or by Tuttle, and for all purchased by the Brakeleys Tuttle was to accept their drafts at three months from the date of the purchase, and Tuttle was to have five per centum commission or advance on the cost of the hides, whether purchased by himself or by the Brakeleys. Tuttle was also to have interest on the cost of the hides from the time of payment, including as part of the cost the said commission. There is a stipulation in the contract that all the hides purchased are to be the property of Tuttle, and when tanned into leather are to be returned to him to be sold by him. It is also agreed that if from mismanagement or otherwise the leather thus returned should fail to realize the cost, charges, &c., as specified, that the Brakeleys will pay over, without any delay, any and all such deficiency, as soon as ascertained, to Tuttle. The hides and
According to the very terms of this contract Tuttle was to receive without any risk whatever on his part, except the risk of the death or insolvency of the Brakeleys, the principal sum advanced by him and a commission of five per cent, on such principal sum, with interest on the aggregate of such principal and commission at the rate of seven per centum per annum. What was the' consideration for this five per cent, commission when viewed in the light of the facts proved in the case ? What services did Tuttle render the Brakeleys for which they should allow it to him ? According to the terms of the contract all of the hides might have been purchased by Tuttle, and if they had been so purchased there might be some reason to say that the five per cent, was to compensate him for buying them; but the facts show that of the 10,154 hides purchased under the contract Tuttle only purchased 801 and the Brakeleys purchased all the others. I have looked in vain into the evidence in this case to find any consideration for the commission except the advance of the money by Tuttle to .the Brakeleys, for which they are charged, in addition to the commission, interest at the rate of seven per centum per annum. From the terms of the contract itself as explained by the facts proved in the case, it is clear beyond a reasonable doubt that the transaction was intended to be for a loan of money on which was reserved a greater sum than at the rate of seven per centum per annum.
The contract is therefore void.
I cannot see that any error was committed by the court in hearing the case before it was formally set for hearing, as no objection was made at the time, when the defendants were present in court and might then have made the objection.
Nor do I think there is any error in failing to make the Cumberland Bank and other parties defendants, because all the interest which they appear to have in the subject matter of the suit was acquired after the suit was instituted.
I think bv the terms of the contract, if not void for usurj’’, the title to the hides and-leather would have been in Tuttle, and that the defendants by mixing their 1,526 hides with those belonging to Tuttle, would have made them the property of Tuttle until and unless they could be separated and distinguished from those belonging to Tuttle, which it appears from the evidence was not and could not be done. There could, therefore,1 be no error in decreeing them to be the property of Tuttle, if the contract had not been void for usury.
IJpon the whole case, however, I am clearly of the opinion that the decree complained of must be reversed, with costs to the appellants, because the contract is usurious, and this court proceeding to render such decree as the court below ought to have rendered, should dissolve the injunction, and as the case was ready for hearing on its merits, dismiss the bill with costs to the defendants below.
Decree reversed.