7 F. 737 | U.S. Cir. Ct. | 1881
It is well settled that to make a loan usurious there must be an intent on the part of the lender to take more than the legal rate of interest. Tyler on Usury, 103; Condit v. Baldwin, 21 N. Y. 219; Loyd v. Scott, 4 Pet. 205; U. S. Bank v. Waggener, 9 Pet. 309; Jones v. Berryhill, 25 Iowa, 289.
Doubtless, in general, the intent of an agent acting within the scope of his authority may be imputed to the principal. But it is settled beyond question that if any agent in good faith makes a loan for another, and without the knowledge or authority of his principal, and for the agent’s own benefit exacts more than legal interest, the loan is not thereby rendered usurious. In such case the law does not impute the knowledge and the intent of the agent to the principal. This doctrine is supported by numerous authorities both in
I have the greatest confidence in the correctness and stability of this rule from the fact that it rests upon solid foundations of reason and justice. The lender employs an agent to loan his money. He gives the agent no authority to violate the law. He has no knowledge of the fact that usurious interest is extorted. He has no intent to receive, and does not receive, more than the law allows. He derives no benefit from the illegal transaction. But the agent and borrower, without the knowledge, consent, or authority of the lender, enters into an illegal contract for the payment of excessive interest. The borrower and agent are the guilty parties. They knowingly violate the law. They are particeps eriminis, though it may be in unequal degrees. They knowingly put the lender’s money in jeopardy without the least pecuniary advantage to him. It is the lender who is prejudiced and injured by such a transaction. Would it not be most unjust to inflict the pecuniary loss upon the lender, who is without fault and free from any illegal intention, in favor of a party who has knowingly and wilfully participated in the violation of the law? Would it be consistent with sound morality so to do ? What right has the borrower to assume or to believe that the lender’s agent is authorized by his principal to violate the law by the taking of usurious interest ? The lender’s agent is either a special or a general agent. If he is specially empowered to negotiate the particular loan and no other, it is the legal duty of the borrower to look to the special authority, and the principal is not bound beyond the special
It is needless to say that the present case is clearly within this principle. The plaintiff was an innocent purchaser of the original notes for value. lie not only took a new and substituted security, but the new obligation was founded upon additional considerations—the extension of time and the advance of a further sum of money. There was no usury in the second loan which could, as we have shown, affect him. The argument of counsel that the true construction of sections 2079 and 2081 of the Codes is repugnant to the principle that a new and substituted security in the hands of an innocent assignee avoids the usury,—is to my mind plausible, but inconclusive. These provisions have not yet been construed as applicable to such a security, and I think it is quite unnecessary so to construe them. The provision of section 2081 is that nothing in the statute shall be construed—
“ To prevent the proper assignee in good faith and without notice of any usurious contract from recovering against the usurer the full amount of the consideration paid by him for such contract, less the amount of the principal money.”
It seems to me that this provision was merely intended to give the assignee without notice a remedy where he had none before; that is, where he stood upon the original usurious contract without any new security. In most cases we may assume that the debtor would not execute to the innocent assignee a new security for the usurious debt, and in all such cases the innocent holder could recover from the debtor only
As to the words of the section relied upon by counsel to support the construction that “no person shall directly or indirectly receive in money, goods, or things in action, or in any other manner, any greater sum or value for the loan of money” than 10 per cent., they are sufficiently answered by the fact that the innocent assignee does not receive more than 10 per cent, on the sum by him advanced. If he does receive more' his now contract in its turn becomes usurious, and subject to the penalties of the statute. It is my ojdnion that it was not the purpose of the legislature to make our statute of usury apply at all to negotiable bills and notes in the hands of the bona fide holder. It would certainly be a most serious obstruction to the free circulation of commercial paper to subject it to the law of usury. Gan it be that our legislature intended that every one in money transactions before receiving a bill or note under-due, should stop to inquire whether or not it has upon it the taint of usury ? I •think not. It has long been the settled law that where a statute by its terms makes a note or bill absolutely void, the instrument is invalid in the hands of a bona fide holder for value. But where a statute declares a contract illegal, but only voidable, a negotiable note or bill founded upon such voidable contract is good in the hands of a bona fide, holder. This doctrine has been applied by the courts to statutes of usury as well as other penal statutes. Now, our statute does
In strict legal parlance we do not use the term “assignee” when we mean to designate the indorsees of bills and notes. I am therefore inclined to think that the legislature, in using the term “assignee,” did not mean to provide for innocent indorsees of mercantile paper who were already amply protected by the law merchant, but for that large class of assignees who, in the absence of such a provision, would step into tiie shoes of their assignors with just the same rights, remedies, and equities to which their assignors are entitled, and none other.
Judgment for the complainant.