12 N.C. 100 | N.C. | 1826
Lead Opinion
We are satisfied with the decision of the Court, in the Bank of Newborn against Pugh; we therefore decline entering into an examination of the question, whether the Court mistook its duty in refusing a new' trial. It is a mistake to suppose that this Court, since the repeal of the act declaring tiiat it possessed appellate powers upon questions of fact, ever has awarded .a new trial, because-the Judge below refused one. The new trials which have been awarded here, were in cases where there was some error, which infected the verdict; such as the admission or rejection of evidence, which ought to have been received or rejected, or some misdirection of the Judge to the Jury, on questions of law7, arising on the trial, or the like. Since the statute of Westminster the 2, (31 Ed. l) such matters may be assigned for error, and provision is made by the statute for getting them on the record, when brought into the Court of Errors. Our statements accompanying tiie re
But it is said, that we ought to grant a new trial, because the Plaintiif, by remitting what is called “the excess of interest,” has admitted that the contract was usurious. This affords ground for a judgment for the Defendant, if it affords foundation for any act of this Court, for it is an admission of record, that the contract was usurious; why then send it to a Jury to try that fact ? But there is no admission of such fact. It is quite probable that it was admitted as usurious interest, under the charge of the Judge; but the Court acts upon facts, not upon probabilities, and this admission is nothing but evidence of a fact; it is possible the Plaintiff may have remitted from other causes. He might for some reasons, unknown to us, wish to retain his verdict. He may have feared that he would not be able to obtain so large a one at another, time; he may have feared that delay would produce the loss of the debt, through insolvency; or he may have had an immediate demand for the
If there is any error examinable by this Court, it arises from those parts of the charge which were in favor of the Plaintiffs, for these are understood as excepted to by the Defendant. These are, that taking interest in advance on this bond, was not usurious; and that taking interest for ninety-two days on this bond, it being given for renewal, is not usurious, for so I must understand this charge, notwithstanding the qualification that if the Defendants had the use of the Plaintiffs money, they ought to pay interest on it.
That the statute of usury is violated by taking the interest in advance, on the whole sum lent, is almost too evident to require argument. If the sum, say one hundred dollars, agreed to be loaned for one year, at six per cent, per annum, is counted down, and the lender immediately withdraws six dollars, by way of discount or interest, the sum actually forborne, which is the matrix of interest, is only ninety-four dollars, which at that rate of interest, together with itself, produces at the end of the year, ninety-nine dollars and sixty-six cents — less, by thirty-four cents, than the sum to be paid at the end of the year. As therefore, taking the interest in advance,
But an exposition, legislative, judicial and popular, has been given to this statute and to usury laws, similar to it, which I am bound to respect. When the charter of this Bank was granted, there had been in operation for some years, two Banks chartered by the State, whose operations were extensive, and whose practice of taking interest in advance, on the whole sum loaned, must have been known to the Legislature : The old Bank of the United States had been in operation for twenty years, which discounted in tlie same manner : Banks in adjoining states, and others,, with which we had great intercourse, were also in operation, governing themselves by the same rules. With this information before them, this charter was worded in substance, in the same manlier as to the point we are now considering, and I believe in the same words, as that of the Bank of the United States. The "State was a stockholder in each of our local Banks, and many shares were retained for the State in this Bank. These are strong legislative expositions.
In the Courts in Nevv-York, Pennsylvania, Massachusetts and Connecticut, this practice has been declared not within their statutes of usury, which are similar to our own, and it has been sanctioned by the supreme judicial tribunal of the Union, and in England, even in the case of private bankers $ but I shall be told, it has been sanctioned only in case of negotiable bills and notes, and not in the case of bonds. The principle has been applied there to negotiable securities, and bonds there not being negotiable, could not be discounted: — they there applied the remedy as far as the evil extended. The same principle
I am inclined to think, that taking interest for ninety-two days, on the note for eighty-eight days, is not usurious. It is clearly not so for charging interest for the days of grace, although they are not demandable on a bond ; for if the contract was made with an understanding that they were to be allowed, the making of a writing, whereby they were excluded, would not be usurious ; for it is the usurious contract which vitiates the security. There cannot be any usurious security, if the contract is not usurious. II an authority is wanting to prove a pc-
I am almost induced to believe that upon the principle that a mistake in point of fact, exempts a person from the penalties of usury, the Plaintiffs are exempted in this case ; for I think it cannot well be believed, that they knew that they were violating the law, and ignorance of law, could it be believed, forms as good an excuse as ignorance of fact — they are based on the same principles, the only difference being, that in ordinary cases, the one is not to be Believed, but the other is.— Upon tiie whole, I am of opinion that the judgment should be affirmed.
Concurrence Opinion
I concur in the opinion delivered in this case by Judge Henderson, who has gone into a more full examination of it, than I propose doing.
By an act of the Legislature, passed in the year 1821, (eft. 12 sec .2,) it is declared that the Supreme Court shall possess the same power to grant new' trials, as well upon matters of fact as matters of law', as the Superior Courts of Law' now have, except in criminal cases. If the present question had occured during the existence of that law, it would not only be proper, but incumbent upon us, to examine the evidence in the present case, and if upon such examination, we should ascertain that the verdict was against evidence, to grant a new trial. But this act was repealed by an act passed in the succeeding year, (eft. 32.) This Court then possesses the power only of deciding such questions of law as shall be presented to it. It is therefore to the points of law decided by the Judge, and not to the facts submitted to and passed upon by the Jury, that our attention is to be directed ; it follows of course, that if in this case the Jury found a verdict contrary to the law given them in charge by the Judge, the Judge only, and not this Court, can grant a new trial on thap account. But if the Judge gives a charge to the Jury as to the law of the case, and they find a verdict accordingly, the person against whom that charge is given, has a right to have its correctness examined in this Court. _ It is therefore our province to enquire, whether the Judge charged in favor of the Plaintiffs against the law of the case, when ho ought to have charged in favor of the Defendant.
As to the point respecting the ninety-two days, the Judge instructed the Jury, that as to the days of grace, if the Defendants had the use of the money for ninety-two days, and if the Bank only calculated legal interest for that time, it was not usurious. I am not prepared to say that the charge is wrong in this respect, because although, if a quarter of a year’s interest was charged
It is alleged again, the bond for renewal was dated and carried interest on the day the last note became due, and that the latter note carried interest on that day, which amounted to more than legal interest. This at first view seems plausible, but it requires examination. If the contract with the borrower was that renewals should take place at stated times, and it was his right to renew, the conclusion would be correct that it was usury, but this does not appear to be the case ; the Bank might renew or not at its pleasure. The contract of lending, imposed no obligation upon it to renew, it might sue upon the bond discounted, when it became due. Viewing then the bond for renewal as a distinct contract, the matter stands thus: a person owes the Bank a debt— on the dáy it comes due he pays it, and takes up his bond; on the same day he borrows another sum of the Bank, for which he gives his bond, this is no more usury than if a stranger had borrowed the latter sum, although the bond taken up and the bond given, both boro interest on the same day. It is possible however, that this might be converted into a contrivance to elude the statute of usury. When it shall be so understood, it may have a very different construction given to it.
But it is alleged, that the Judge erred when lie instructed the Jui’y, that deducting the interest at the time of discounting the note, was not usurious. This is a question of momentous concern to the State, and one which deeply involves in its solution, the interest of its citizens. Was it a question of the first impression, I would say that the charge of the Court was erroneous, or was it a case between one.citizen and another, or a cale between the Bank and a citizen, contrived to evade the statute of usury, I would still say the charge was erro-
jn England, the statutes against usury are very rigid, and much like our own act,- they all prohibit taking more than a certain sum per cent, for the forbearing or giving day of payment for one year for any given sum. In England, in all their Banks and Banking institutions, the universal rule has.been, and now is, to take interest in advance. In the old and new Bank of the United States, the same rule has prevailed — the same may bo said of the local Banks in the different states j the legality of the rule has been established in the Supreme Court of the United States, and in all the state Courts, (as I understand) which have undertaken to decide the question ; the practice has continued for a series of years in full-view of the National and State Legislatures, ami has acquired not only a judicial, but a legislative sanction. To the weight of such high authority, I feel myself bound to submit, especially, when I reflect upon the ruinous consequences, which would follow a contrary decision. It has been argued that in the Banks alluded to, bills of exchange and promissory notes only, were so discounted, but that this is the case of a bond ; my answer is, that bonds with us are made negotiable, and placed upon the same footing with promissory notes, and in principle, I think there is no difference between them as far as they relate to the subject under discussion. In conclusion, the remark may pass for what it is worth, the Defendants have paid no more than what they owed, and the Plaintiffs have received no more than what was legally due them. I think the rule for a new trial should be discharged.
Judgment aeeirmeb.
Lead Opinion
On the trial the cashier of the bank proved that the bond was offered by Henry Hunter and discounted for his benefit fourteen days after its date; that it was the universal practice of the bank, on discounting bonds, to take interest in advance on the whole amount; that when a bond was made payable at 88 days after its date and was discounted on the day of (101) its date, interest for 92 days was deducted, and that the interest was calculated at the rate of 1 per cent for sixty days, according to Rowlett's tables, which were formed upon the supposition that the year consisted of only 360 days; that interest was calculated on the bond in question, according to the above principles, for 78 days. He stated that before the discount of this bond he was aware that the principles upon which the tables were formed gave a greater rate of interest than 6 per centum per annum, but as the book had been long used in the bank, before his appointment, he adhered to its use, believing the mode of calculation to be lawful; that the tables were used for the sake of accuracy and dispatch, and from no other motive.
This witness also proved that the bond had been offered by Hunter in renewal of one for the same amount, dated 22 June, 1819, and payable 88 days thereafter; the last in renewal of a *74 former one, dated 16 February, 1819, also payable at 88 days, and so on in a course of renewals; that all these were discounted on the days of their dates, in the manner and upon the principles above mentioned; that frequently Hunter on renewing did not pay in cash the difference between the net proceeds of the new bond and the amount of the old one, and as the bank never received partial payments, the settlement was sometimes postponed for days, weeks, and even months, and when made, interest was taken on the old bond from its maturity, without regarding the discount of the new one.
The witness also proved that in discounting bonds the directors of the bank discriminated between those offered for renewal and new ones, but whenever a discount was made, the proceeds of the bond were credited to the person for whose benefit (102) it was offered, and were not applied to the old note, or to any other purpose, without his check; that Hunter often complained of the mode adopted in settling the old bonds as injurious and oppressive; that these complaints were represented to the directors, who ordered the witness to persist in it. He stated that the bank allowed three days of grace on every bond; that the reason of taking discount for ninety-two days was to make the renewals take place on the same day of the week; that the board met every Monday night, the bonds offered were usually dated as of the next day, and the proceeds of those discounted were passed to the credit of the offerer, on the morning of Tuesday, and were subject to his order on that day; and that although the proceeds of bonds offered for renewal passed to the credit of the offerer, yet they could only be applied to the payment of the old bond.
A witness was examined, who had formerly been cashier, who agreed with the other witness as to the custom of the bank in discounting, and the manner of calculating; but he stated the reason why 92 days interest was taken was this, that the time the bond had to run was estimated as 88 days, exclusive of the day of its date, and as the borrower had the use of the money on that day, the time of the loan was 89 days, besides the days of grace.
His Honor, Judge Paxton, instructed the jury that deducting the interest at the time of making the discount, supposing the interest was calculated on proper principles, was not usurious; that it was usurious to calculate the interest according to Rowlett's tables, the officers being aware of the principle of calculation adopted in those tables, and that their supposition that this mode was lawful made no difference; that a corrupt agreement *75 means any agreement which violates the statute, and that although a mistake in fact, as a miscalculation upon a right principle, is not usurious, yet a calculation upon a wrong principle, however innocently made, is usurious; and that in this case, if it was the intent to take interest at a (103) rate greater than that allowed by law, through ignorance, it was a corrupt intent within the statute; that receiving interest on the old note up to the time of settlement, if the new note carried interest only from that time, was not usurious; but if interest was calculated on the old note to the time of settlement from its maturity, and interest was also reserved out of the new note for the same time, it was usurious.
That as to the days of grace, if the defendants had the use of money for 92 days, and legal interest only was calculated for that time, it was not usurious.
The jury returned a verdict for the plaintiff, and assessed the damages to $1,615.72. A rule for a new trial was obtained by the defendants upon the grounds that the verdict was contrary to law and to evidence, and that the jury had been misdirected by the judge. His Honor informed the counsel for the plaintiff that the verdict would be set aside and a new trial granted, unless the excess of interest was remitted. The plaintiff then remitted $350, "the excess aforesaid," whereupon the rule was discharged, and judgment rendered for the plaintiffs, from which the defendants appealed.
We are satisfied with the decision of the Court in Bank v. Pugh,
But it is said that we ought to grant a new trial because the plaintiff, by remitting what is called "the excess of interest," has admitted that the contract was usurious. This affords ground for a judgment for the defendant if it affords foundation for any act of this Court, for it is an admission of record that the contract was usurious. Why, then, send it to a jury to try that fact? But there is no admission of such fact. It is quite probable that it was admitted as usurious interest under the charge of the judge; but the court acts upon facts, not upon probabilities, and this admission is nothing but evidence of a fact; it is possible the plaintiff may have remitted from other causes. He might for some reasons unknown to us wish to retain his verdict. He may have feared that he would not be able to obtain so large a one at another time; he may have feared that delay would produce the loss of the debt through insolvency; or he may have had an immediate demand (123) for the money. These, it is true, are very improbable conjectures, but they may be correct; and if they may be so, it proves that it is not an inference of law, but of fact. In addition to this, it would not be sufficient for the plaintiff to acknowledge simply that he was guilty of usury in the contract, but he must confess how, that the court may see that the statute has been violated; for peradventure he might mistake what usury is within that statute. This is, therefore, neither cause for a new trial nor for a judgment for the defendant. But if the plaintiffs distinctly admit upon the record any fact which *77 shows they are not entitled to recover, the court would be as much bound to notice it as if found by the jury, for the admissions of the parties upon the record are the highest evidence of the facts.
If there is any error examinable by this Court, it arises from those parts of the charge which were in favor of the plaintiffs, for these are understood as excepted to by the defendant. These are, that taking interest in advance on this bond was not usurious; and that taking interest for 92 days on this bond, it being given for renewal, is not usurious, for so I must understand this charge, notwithstanding the qualification that if the defendants had the use of the plaintiff's money, they ought to pay interest on it.
That the statute of usury is violated by taking the interest in advance, on the whole sum lent, is almost too evident to require argument. If the sum, say $100, agreed to be loaned for one year, at 6 per cent per annum, is counted down, and the lender immediately withdraws $6, by way of discount or interest, the sum actually forborne, which is the matrix of interest, is only $94, which at that rate of interest, together with itself, produces at the end of the year $99.66 — less, by 34 cents, than the sum to be paid at the end of the year. As, therefore, taking the interest in advance gives an interest of $6 for one year, or $94, the statute is violated, for it plainly directs that six (124) pounds only (i. e., $6) shall be taken on the hundred for forbearance for one year, and in the same proportion for a greater or less sum, and for a longer or shorter time. The rule extended completely shows its impropriety by producing a result perfectly absurd. A note for $100, payable 16 years and 8 months after date, is offered for discount on the day of its date; if the interest on the whole sum is taken in advance it absorbs the whole amount of the note; the person who discounts it pays not a cent for it; of course, the person who offers it gets nothing. The rule of a discount — and such, no doubt, the Legislature intended to be permitted by the statute of usury (whatever they may have meant when they incorporated the State Bank) — was that such a sum should be advanced upon a discount as would, together with its interest, amount to the sum to be paid at the maturity of the note. I speak not of the purchase of a note or bill in market, for that may be made at any price, taking care that it is not a device to cloak a loan; if it is a fair purchase the statute has nothing to do with it. We can derive nothing from what was said by the Supreme Court of the United States, that an authority to make discounts gives *78 an authority to take interest in advance. True; but is the discount to be equal to the interest on the whole sum lent or only equal to the interest on the balance, after taking out the discount, the words in the statute being that more than six pounds on the hundred shall not be taken by way of "discount or interest." And I take it to be very clear — indeed, so much so that not a shadow of doubt is left on my mind — that the authority to make discounts gives the power to make them in such a way only as to leave as much outstanding as will, with its interest, amount to the sum to be paid at the maturity of the bill, note or bond; for a bond, being assignable by our law, it is as much the (125) subject of discount as a note. Were this case, therefore, to be decided by the application of our statute against usury to its facts, unaffected by other considerations, I could not hesitate to declare the bond usurious, and therefore void.
But an exposition, legislative, judicial, and popular, has been given to this statute and to usury laws similar to it, which I am bound to respect. When the charter of this bank was granted there had been in operation for some years two banks chartered by the State, whose operations were extensive, and whose practice of taking interest in advance on the whole sum loaned must have been known to the Legislature. The old bank of the United States had been in operation for twenty years, which discounted in the same manner. Banks in adjoining States and others with which we had great intercourse were also in operation, governing themselves by the same rules. With this information before them this charter was worded, in substance, in the same manner as to the point we are now considering and I believe in the same words as that of the bank of the United States. The State was a stockholder in each of our local banks and many shares were retained for the State in this bank. These are strong legislative expositions.
In the courts in New York, Pennsylvania, Massachusetts, and Connecticut, this practice has been declared not within their statutes of usury, which are similar to our own, and it has been sanctioned by the supreme judicial tribunal of the Union, and in England, even in the case of private bankers; but I shall be told it has been sanctioned only in case of negotiable bills and notes, and not in the case of bonds. The principle has been applied there to negotiable securities, and bonds there, not being negotiable, could not be discounted; they there applied the remedy as far as the evil extended. The same principle will extend here to bonds. The popular exposition is (126) equally universal, for during the thirty years that our *79 banks have been in operation, although many millions have been lent on the same terms, this is the first instance of resistance which I have heard of made on these grounds to a recovery. And were I at liberty to hazard a conjecture as to the cause of this contest, I would say that it arose from the oppressive practice of this branch of the bank, in claiming interest on two bonds, running at the same time, that is, charging interest on the old bond and on the newly discounted bond, until the proceeds of the latter were applied to the discharge of the former. But I am free to declare that in a case where the change of construction would produce those evils only which ordinarily arise from the change of decision, I should feel that all which has been done is sufficient to control the plain words of the statute. But when I look to the incalculable injury which must arise from giving a different exposition — injury, the extent of which no man can foresee, the whole of our circulating medium in the hands of individuals, and in our treasury, annihilated and rendered worthless at a single blow — I must confess I am appalled at the consequences, and must abstain from acting, convinced that the obligation which I am under to the State, of asserting the supremacy of the law, does not require it at the expense of the peace and prosperity of individuals and the best interests of the State.
I am inclined to think that taking interest for 92 days on the note for 88 days is not usurious. It is clearly not so for charging interest for the days of grace, although they are not demandable on a bond; for if the contract as made with an understanding that they were to be allowed, the making of a writing whereby they were excluded would not be usurious, for it is the usurious contract which vitiates the security. There cannot be any usurious security if the contract is not usurious. If an authority is wanting to prove a position so plain as this, it will be found in Nevison v. Whitley, Cro. Car., 501; (127) Ord. on Usury, 59. Computing interest for the day on which the new note was taken, if interest for the same day had been taken on the old bond, would be usurious, if it was the same or one continued loan. But I think that it is not, and the most satisfactory evidence of this is afforded from the fact that it was at the option of the bank to continue it or not. It is true that on notes of accommodation it is understood that it is quite probable that the time will be extended upon a compliance with the rules of the bank; but at the same time it is also well understood that the bank may, at its option, enforce payment, which must exclude all idea that the borrower, by the terms of *80 the contract, has a further time for payment. I think that it was usury of the most oppressive kind to take interest on the new note before its proceeds were applied to the discharge of the old note, for until that time the bank advanced nothing, and it is no excuse to say that it was Hunter's fault, for he should have paid the difference and drawn a check in favor of his old note. These were the terms imposed by the bank on the new loan, and until they were complied with nothing was advanced; it was a bare agreement to lend upon the performance of the terms by Hunter. It is a fallacy to say that the money was to Hunter's credit and subject to his check; it would only stand to his credit upon his paying the difference, when he could check for it, and then he could only check in favor of the old note. Nothing, therefore, was lent by the bank until the proceeds were applied, and until that time no interest should have been charged. But this Court cannot get at that question; if it could, the judgment would be reversed; for I believe that this mode of doing business is confined to the Tarboro branch of this bank. It has not either a legislative, judicial, or popular sanction.
The universality and notoriety of the practice of taking (128) interest in advance by the banks and their connection with the Government would seem almost to exclude the idea of criminality. Usury, by our laws, is deemed to be a crime, for which forfeitures are inflicted on the offender, as loss of the debt, and double the amount loaned or forborne, together with a liability to an indictment. In offenses of this kind if the actor is guilty, every person who is concerned in the transaction is guilty also: the directory, as having ordered the usury, which may well be inferred from their subsequent sanction, and even the stockholders if they knew it, by receiving the dividends, incurred the forfeiture. In this latter case the State would be implicated, it being a stockholder to a large amount. This must exclude all idea of actual criminality. I say actual criminality, for in reality there cannot be a crime without an actual intent to violate the law. Crime presupposes a knowledge of the law; and ignorance of law is no defense, not because a knowledge of the law is not essential to crime, but because ignorance is not permitted to be averred and proven, it being a presumption of law that every man (however false in point of fact) knows the public laws. These presumptions of law are nothing else but certain conclusions of fact which the law draws from motives of policy and convenience; as where the probability of a fact is very strong, that there is scarcely a possibility *81 of its being otherwise, policy, and perhaps justice also, require that it should not be controverted, for, in the first place, it is so often the fact that it had better in all cases be so considered rather than undergo an investigation in each case; and, secondly, even if an investigation in each case was permitted, so imperfect are all human means of arriving at truth that there is more reliance to be placed on the general conclusions than on the result of a particular investigation. Thus, if a stroke is given with a bar of iron it is a presumption of law that he who gave it intended to kill; and, therefore, when death (129) ensues, the actual intent is not the subject of inquiry, although a murder cannot be committed without an actual intent to kill. Here the law presumes the actual intent. So in England, leaving the goods in the possession of the vendor isper se a fraud, that is, a presumption of law that the transaction is fraudulent. It is not so in this State. It is said that the common custom and usage of that country require that this presumption should be made; here we think they do not. There has been an extraordinary change in the presumption of law in the case of murder. Originally murder could only be committed in secret, for it being of its essence that it should be committed with deliberation, that is, with malice aforethought, he who killed another openly and publicly was not believed to have done it with malice aforethought. The punishment being death, it was inferred that he was moved to the act by passion, not by judgment or reason. The presumption of law, therefore, was that he did not commit the act with malice aforethought. But experience proving that this presumption was in fact unfounded, and that wicked men would even in public commit homicide with malice prepense, the rule of presumption was therefore abolished.
I am also induced to believe that, upon the principle that a mistake in point of fact exempts a person from the penalties of usury, the plaintiffs are exempted in this case, for I think it cannot well be believed that they knew that they were violating the law; and ignorance of law, could it be believed, forms as good an excuse as ignorance of fact. They are based on the same principles, the only difference being that in ordinary cases the one is not to be believed, but the other is. Upon the whole, I am of opinion that the judgment should be affirmed.
(130)