13 Conn. 249 | Conn. | 1839
Lead Opinion
The first question presented is, can the plaintiffs recover upon this note ? To this two objections are made : that it is usurious; and that it is discounted contrary to the charter.
There is no dispute but that the note is usurious: is it therefore void ? As it was made in Pennsylvania, and the parties all reside there, except one, who was sometimes there, and sometimes in this state, the contract must receive its construction from the laws of Pennsylvania. Smith v. Mead, 3 Conn. Rep. 253. Medbury v. Hopkins, Id. 472. And by the uniform construction of their statute, a note or contract embracing an usurious consideration, is not void; and the plaintiff may recover the principal and legal interest. Wycoff v. Longhead, 2 Dal. 82. Turner v. Calvert, 12 Serg. & Rawle, 46.
It is said, however, that although this is the general law of that state, as it regards the contracts of individuals ; yet, as the act of incorporation under which the plaintiffs derive all their power, forbids the taking of usury, this contract must be void. Upon this point, we regret that we have no direct decision of the courts of Pennsylvania. We must conform our decision to the opinions of those courts in similar cases; and when we consider, that there is a well settled construction given to their statute of usury, by which it is made in effect to read, that if usury is taken or reserved in a contract, it shall not violate the contract itself, but there shall be no recovery for the usurious part; it would seem that when usury was prohibited in this act, and no special declaration as to its effect, it must have been intended to place this company on the same footing as to usurious contracts as other citizens were ; and that the same results would follow as in other cases of usurious contracts.
If it be asked, if this was all that was intended, why was
But it was also claimed, that upon principles now well settled, no contract made in violation of an existing law, can be enforced in a court of justice; but the parties will be left to their own course. This, as a general principle, has been often recognised. The United States Bank v. Owens & al. 2 Pet. 527. Bartle v. Nutt, admr. 4 Pet. 184. Terry v. Olcott, 4 Conn. Rep. 442, But where from the law itself it is apparent, that the legislature intended its violation should be attended only with certain consequences, the court will, as in all other cases, carry into effect that intent; as in statutes against gaming, — where the legislature, in one section, makes the security only void, and in another, the contract, as well as the security. The court, by this marked difference of expression, have supposed, that the legislature intended a milder punishment in the one case than in the other. Robinson v. Bland, 2 Burr. 1080. So in construing the statute of 1723 regarding usury, the courts of Pennsylvania have relied upon the different phraseology of that statute and the statute of Anne, from which they have inferred, that a less penalty was intended, and that the unlawful interest was to be deducted. Turner v. Calvert, 12 Serg. & Rawle 46. Now, if in such cases, the general principle above alluded to were to be applied, the consequence would be, that the court would, in this way, adopt all the rigours of the statute of Anne, which the courts of Pennsylvania have declared was intended to be avoided, by the terms of their statute. This would be to make their statute and the decisions under it,felo de se. Such a course can
It was also claimed, that this note was void, because given in violation of that part of the charter prohibiting this company from discounting notes. Th eclause alluded to, is, that nothing in this act contained shall be construed to authorize said company to discount notes, or exercise any banking privileges whatever. On this part of the case, the facts are ; that on the 1st day of December, 1836, a note was taken for the same sum as the note in suit; that it had been renewed several times, and in each case, the interest was paid or secured ; and that the note in suit was the last of these renewal notes. The is, was this a discounting of notes? It was formerly held, that the reception or reservation of interest in advance, was usury. Barnes v. Worlick, Cro. Jac. 25. Yelv. 31. 1 Bulstr. 17. Noy 41. This rule has been relaxed in modern times, as it respects bills of exchange and banking transactions. Lloyd, q. t. v. Williams, 2 W. Bla. 793. Floyer v. Edwards, Cowp. 112. The Manhattan Company v. Osgood, 15 Johns. Rep. 168. And although the discounting of notes or bills, in its most comprehensive sense, may mean lending money and taking notes in payment, as is said in 2 Cow-en 699.; yet it is believed, that in its more ordinary sense, the discounting of notes or bills, means advancing a consideration for a bill or note, deducting or discounting the interest which will acrue for the time the note has to run. The taking of interest in advance is called discount; as where Lord Alvan-ley says : “If discount be taken upon an advance of money without the negotiation of a bill of exchange, it will amount to usury(3 Bos. & Pul. 158.) or as where Lord Kenyon says : “ The defendant did not receive all the money which was due, upon the note — the discount was deducted (6 Term Rep. 699.) and in the case before cited .of Fleckner v. The Bank of the United States, the supreme court say : “ Nothing can be clearer than that, by the language of the commercial world
But as under the charge of the court, the plaintiffs could have recovered no more than the moneys advanced, with lawful interest, deducting illegal interest received, we see no reason for a new trial, provided the plaintiffs could recover upon the money counts. To a recovery upon these counts, it was objected, that the plaintiffs are only authorized, by their charter, to loan money upon pledges ; and as a corporation can act only in the mode pointed out in their charter, called the law of their being, this company are not authorized to loan except upon pledges, and to recover through or by means of these pledges ; and the case of the New York Firemen Insurance Company v Ely & al. 5 Conn Rep. 560. is cited. The first answer to this objection, is, that it was not made in the court below. Pledges were taken. It was upon the subject of damages, objected, that these pledges were not legally taken ; but no question of this kind was made below.
But if it had been, we think it could not have availed the defendants. It is not like the case cited. There, the court held, that the corporation could not loan money. It was not
It was also objected, that there was no evidence of a loan of money, but that which is derived from the loan itself. But the account upon which the defendants rely for their evidence of usury, proves this part of the case. The amount of loans is stated; and it was not claimed, that the advances which the plaintiffs then claimed, were not made as stated ; except that it is now claimed before this court, that some of the charges of money in the plaintiffs’ account were made before this company was incorporated. After the defendants have recognised this account as a valid debt to this company, by giving their notes therefor, every presumption would be made that these sums had been properly charged in this account. But we do not feel bound to examine this objection, as it does not appear to have been made in the court below.
Again, we are met with the objection that the plaintiffs, having done an unauthorized and illegal act, in discounting the note, every thing connected with it is illegal; and the court will no more aid the plaintiffs to recover upon the general counts than upon the note itself. The general rule, it is truly said, applies not only to contracts immoral in themselves, but to such as are contrary to the policy of the law as against the requirements of a statute or its prohibitions. Ribbans v. Crickett & al. 1 Bos. & Pul. 264. 266. Law v. Hodson, 11 East 300. Langton & al. v. Hughes & al. 1 Mau. & Selw.
If then the contract to loan was authorized by the charter, we are unable to see how a note, which, as the defendants claim, is toid, as contrary to the provisions of the charter, can have the effect of extinguishing the original cause of action, or in any manner contaminating it. In this case, it appears from the account exhibited, that the loans were all made on or before the 5th of November, and no note was discounted until the 1st of December. This objection, therefore, cannot prevail.
The defendants also claimed a set-off of goods sold and delivered, and money had and received. The goods, they say, they deposited with the plaintiffs, to secure loans made to them ; but they were not legally pledged, as no appraisal was made or certificate delivered, according to the provisions of the act of incorporation ; nor have they been sold agreeably thereto, but for less than their real value. The court below held, that the plaintiffs were not accountable as for goods sold and delivered, without some other evidence of a sale. That in some cases where goods have been illegally taken from the owner and sold, he may waive the tort and bring assumpsit, is now well settled. Lamine v. Dorrell, 2 Ld. Raym. 1216. Hambly v. Trott, Cowp. 371. 374. & seq. So where one had seduced an apprentice from his master, it has been held, that his master may sustain assumpsit, because it approached very near the last class of cases. Lightly v. Houston, 1 Taun. 112. Foster v. Stewart, 3 Mau. & Selw. 191. 196. In both these cases, however, the Ch. J. seemed to regret, that the law had not been suf-ered to take its course. The practice seems to have been introduced with some hesitation, to prevent injustice, particularly in those cases where the action died with the party, and yet his estate reaped the benefit of it; and seems to have been confined to those cases where the remedy might be beneficial to the plaintiff, and not injurious to the defendant. Lindon v. Hooper, Cowp. 414. Weston v. Downes, Doug. 23. In such cases, says Lord Ellenborough, the plaintiff does no more than waive any complaint, with a view to damages, of the tortious act, by which
So where goods were sold on credit, to one who fraudulently intended, at the time, not to pay for them ; it was held, that this action did not lie, before the term of credit expired, there being an express contract, though trespass might have been brought. Furgerson &. al. v. Carrington, 9 Barn. & Cres. 59. And where goods were sold, to be paid for, by a bill of exchange, to be indorsed by the purchaser without recourse ; it was held, that he was not liable in an action for goods sold and delivered, although at the time he knew the bill was worthless. Read v. Hutchinson, 3 Camp. 351.
In this case, it is admitted, that the goods were delivered as security for money loaned. It became, then, the duty of the plaintiffs, to appropriate them for the purposes for which they were received. If they expressly agreed to do this, no contract would be implied. If there was no express contract, the law would imply that the plaintiffs would hold and appropriate them to this purpose. If they failed to do this, trover might lie, or perhaps a suit founded upon the contract which the law raised thereon. But we do not discover any principle upon which the law would imply that the goods were sold to the plaintiffs, contrary to all the facts in the case. Had the defen
We think, then, that the judge was clearly right, in the direction which he gave upon this point; and upon a view of
Concurrence Opinion
I concur in the opinion, that the statute of usury in the state of Pennsylvania, upon its admitted construction, presents no objection to the verdict. But there are considerations in the case, upon which, after much hesitation, I am compelled to dissent from my brethren.
The plaintiffs are an artificial person, and have no natural capacities. A natural person, of competent understanding-, may make any contract, which is not forbidden by moral or municipal law. An artificial person has no power, except what is given by its charter, to make any contract whatsoever. These principles have been unanimously recognized by this court, and are established by the highest authorities. I therefore consider the original contract for the loan of this money as void, on the ground that the plaintiffs were unable to make such an agreement. See The New York Firemen Insurance Company v. Ely, 5 Conn. Rep. 564. 567. The same v. The same, 2 Cowen, 678. The same v. Sturges, Id. 664. Head & Amory v. The Providence Insurance Company, 2 Crunch, 127. 166. 168. 169. The People v. The Utica Insurance Company, 15 Johns. Rep. 383. Beaty v. The Lessee of Knowler, 4 Pet. 168.
The powers of this corporation must be sought in the charter. They are what the legislature meant to confer, and nothing more. Was it intended to authorize, by the charter, a contract, which it expressly forbids ? Unless we can answer in the affirmative, we must admit, that the power to make the contract stated, upon the loan in question, was never conferred upon this company. It was for interest at the rate of eighteen per cent, per annum. The charter prohibits charging more than six.
If the original contract, on which the loan was made, was void, will the law raise an implied promise to refund the sums lent ? If not, there is no ground on which the plaintiffs can recover.
When an infant has made an agreement, for which he is
The United States have no general law regulating the rate of interest; but the charter of the late national bank had this provision : “ The bank shall not be at liberty to purchase any public debt whatever, nor shall it take more than six per cent, per annum for or upon its loans or discounts.” The charter nowhere declares the contract void. It is simply prohibitory, like that in question. But in the case of The Bank of the United States v. Owens & al. 2 Pet. 527. 538., upon the second question submitted for determination, the supreme court of the United States decided, that irrespective of any usury laws whatever, a violation of the charter, by agreeing to take more on a loan than the prescribed rate of interest, rendered the contract wholly void ; and that the plaintiffs could recover nothing. Independently, therefore, of the usury laws of Pennsylvania, the very conditions of the plaintiffs’ charter preclude a recovery in this action.
This is not one of that class of cases, in which, by a legislative act, the security only is made void. Such are those within the statute 9 Ann. ch. 14. regarding securities for money won at play. Robinson v. Bland, 2 Burr 1077. Barjeau v. Walmsley, 2 Stra. 1249. Such, also, are the cases contem
My opinion is, that the verdict ought to be set aside, and a new trial granted.
New trial not to be granted.