Hutchinson v. Hosmer

in an action ry on a loan íars^ecuri by a note of 950 dollars, dated Oc<o-plaintiff offered to prove, that mMarch, 1813, the plaintiff agreed with the defendant to pay, and afterwards did pay, unlawful interest on a balance at that time due on said note : Held, that such evidence was irrelevant and inadmissible. The defendant in an action qui tam for taking usury, having placed his defence on the | ground that the sum received by him beyond the lawful interest was a compensation for time, j trouble and expense in obtaining the money from certain banks and running his notes, offer- I ed in evidence sundry notes signed by him, payable at the banks specified, corresponding ml. date and amount with the statement, which, after being discounted at such banks, had been j duly paid by the defendant, and were respectively endorsed “ Paid at the bank Held, that / these notes were admissible, as they conduced to prove the fact on which the defence rested/ To take a compensation exceeding the lawful rate of interest, for obtaining money at a bank, on one’s own security, for the use of another, is not usury. If such compensation be unreasonable and extravagant, though it will not necessarily contaminate the contract with usury, yet it may furnish evidence of an intent, in this way, to cover an usurious loan ; and whether the transaction is, in its nature and design, a compensation for time, trouble and expense, or a cover for usury, is a question of fact to be submitted to the jury.

THIS was an action qui tam, to recover the penalty, prescribed by the statute,(a) for taking excessive usury. The usury was alleged to have been taken of Thomas Rich, for the loan of 850 dollars for one year, secured by a note, dated the 2d of October, 1811, for 950 dollars, and the lawful interest. The cause was tried at Windham, September term, 181?, before Trumbull, Brainard and Hosmer, Js. On the trial, the plaintiff claimed, tbat the sum of 850 dollars only was loaned by the defendant to Rich, and that the note of 950 dollars, taken by the defendant, was made up of that sum, and 100 dollars for the use and forbearance of the money loaned, which, as the note carried interest from its date, was so much more than the lawful interest. The defendant admitted, that 100 dollars was included in the note beyond the sum actually loaned, but insisted, that it was not reserved for the use and forbearance of the money loaned, but as a compensation for the defendant’s time, trouble and expense in procuring it from the banks at JYew-London, and in running the notes given for that purpose. To prove the statement made by the plaintiff, he read in evidence Rich9» deposition, which was in substance, as follows : That he, (Rich,) on or about the 1st of September, 1811, being pressed for money to pay for a farm which he had purchased, applied to the defendant, made known to him liis necessities, and requested of him a loan of money $ that the defendant replied, that he had not any money to loan, and could not procure it, unless he went to the banks, which would be attended with great trouble and expense; that Rich then desired the defendant to state upon what terms he (the defendant) would procure and loan to him (Rich) the sum of 850 dollars, for the term of one year; that the defendant said, that if Rich would procure him a good man’s note, for 950 dollars, payable in one year, with interest from its date, he would give Rich for it, 850 dollars, in case he could obtain it from the banks j that in compliance with this proposition, Rich met the defendant, at his dwelling-house, on the 2d of October, 1811, accompanied by Sylvester Manly ; that Rich then and there sold and delivered to the defendant, Manly’s note for 950 dollars, dated the 2d of October, 1811, payable in one year, and on interest from the date, which Rich had obtained from Manly, by giving him his own note, for the same amount, dated, and made payable, at the same time; and that the defendant, for this note given by Manly, paid Rich 850 dollars $ that Manly then delivered to the defendant Rich’s note, and took up his own note, and immediately afterwards, Rich took up his note to Manly in the defendant’s hands, and gave a new note payable to the defendant, of the same tenour, secured by mortgage of real estate; and that, on the 1st of April, 1813, Rich took up the last mentioned note, and, for a balance claimed, gave the defendant a new note for 150 dollars, payable in four years, with interest annually, the amount of which, except thirty dollars, be paid to the defendant o\i the 1st of April, 181". At the close of the deposition, the counsel for the plaintiff proposed to the deponent the following question : “ Did you, or did you not, in compliance with the defendant’s demand, agree to pay him, on or about the 10th of March, 1813, the same rate of interest on the balance due on your note of 950 dollars, from the 2d of October, 1812, to said lOth of March, 1813, as 100 dollars bears to 850 dollars, for one year; and have you not since actually paid the same l” To which the deponent replied : “ It is my impression, that I did pay him, as stated in the above question, in consideration of the defendant’s trouble and expense at the banks.” To the admission of this question and answer, the defendant objected, on the ground, that they were irrelevant to the issue, as they had no reference to the contract alleged in the declaration, but to one made on the 1st of April, 1813, in relation to a note of 150 dollars. The court decided, that such question and answer were not admissible testimony, and ordered them t® he erased from the deposition $ which was done accordingly. In the progress of the trial, several witnesses produced by the plaintiff, testified, that the defendant had said, that he obtained the money, viz. 850 dollars, for Rich, from the banks, and that he was obliged to take out double that sum, to meet the instalments on his notes, and, in fact, had notes discounted for that purpose, to the amount of 1700 dollars. The defendant, thereupon, offered in evidence sundry uotcs, signed by him, which were discounted at the banks in New-London, and by him paid. Three of them were dated in September, 1811, amounting to 1700 dollars, and were endorsed, “ Paid at the bank.” Two others were dated in November, 1811, and amounted to 1400 dollars. To the admission of these notes in evidence, the plaintiff objected ; but the defendant insisted, that they were- admissible to shew that he actually did obtain the money from the banks. The court admitted them, and they were read to the jury. In committing the cause to the jury, the court instructed them as follows : “ It is agreed, that 100 dollars was contained in the original note, above the sum of 850 dollars,, actually loaned. If you shall find, that this sum of. 100 dollars, was contained and reserved for the loan and forbearance of the sum of 850 dollars, that contract was clearly usurious. jf ⅛ wa8 contained and reserved bona fide, a» a compensation to the defendant, for his time, trouble and ex cuse, in procuring thc:money fr-.nn the banks, on his own securitj, for the benefit of the said Rich, and running his own notes for that ° purpose, then this contract was not usurious, if the compensation was unreasonable and extravagant, it dops not follow, of necessity, that this contaminated the contract with usury : but a compensation plainly unreasonable and extravagant, may furnish evidence of an intent, in this way, to cover an usurious loan. In this light, it is proper for you to attend to the transaction, and deduce from it such inferences as you are of opinion it may warrant. “ But if you should be of opinion, that the original contract was usurious, this alone will not warrant you to find the defendant guilty. This offence consists in receiving actual payment of a sum of money, over and above the rate of interest at six per cent., for the forbearance of the sunt loaned for the term of a year. “ With these directions, you will take the case into consideration ; and if you shall be of opinion that the original contract was usurious, and that the defendant has, in fact, within the term of one year before the commencement of this action, received in payment any sum, either in whole, or in part, which was in that contract usuriously reserved, and contained, you will find that the defendant is guilty, and find for the plaintiff to recover of him the sum of 850 dollars, being the amount actually loaned, one moiety to his own use, and the other to the use of the treasurer of this state. But if you shall be of opinion from the evidence, that the original contract was not usurious ; or if usurious, that no part of the sum usuriously reserved and contained in said note of 950 dollars, has been actually received in payment, by the defendant | in either case, you will find the defendant not guilty.” The jury found a verdict for the defendant; and the plaintiff moved for a new trial, on the ground, that the decisions of the court, upon the interlocutory questions, and the charge to the jury, were incorrect.- This motion was reserved for the consideration and advice of the nine Judges.