Case ID: sand-ch_4/html/0281-01.html
Source: Caselaw Access Project
Author: {"author": "The Assistant Vice-Chancellor.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

D. Leavitt, Receiver, &c., v. De Launay & Co.
    Privies to the person to whom a loan is made, either by representation or by operation of law, are borrowers, within the meaning of the statutes of usury.
    The receiver of an insolvent corporation or association, may maintain a suit to avoid usurious transactions entered into by the company which he represents.
    Facts considered, upon which an ostensible sale of foreign bills of exchange was held to be a loan of credit.
    Loans of credit, where there are no hazards other than those incident to an ordinary loan of money, held to be within the usury acts.
    
      Sept. 10, 11, 12, 15, 18, 19 ;
    Sept. 25, 1846.
    D. & Co. having a house in New York and another in Havre, were dealers in foreign exchange. N. was a banking corporation in N. Y., in embarrassed circumstances. N. obtained from D. & Co., in N. Y-, bills of exchange, payable ■ in francs, in Paris, at 60 days sight, drawn on D. & Co., in Havre, and agreed in writing, with a deposit of state stocks, as collateral security, to return to D. & Co. within 55 days from date, the same amount of francs, in bills at 60 days sight on Paris, satisfactory to D. & Co., adding interest at seven per cent, and one and a half per cent commission. Held, that the transaction was a loan of credit, and was usurious. The agreement was directed to be cancelled, and the stocks returned.
    A banking association issued a large amount of bonds, (so called,) secured by a transfer of securities in trust. The bonds went into the hands of various persons, and a few were deposited by the bank with D. & Co, as collateral security for a loan of credit. The receiver of the bank, on its insolvency, filed a bill against the trustees, D. & Co., and all the other holders of the bonds, to set aside the trust because of its alleged illegality, and to have the bonds cancelled. Pending that suit, the receiver filed a bill against D. & Co., to avoid the loan of credit on the ground of usury, and to have the bonds, and other collaterals held by them, returned to the receiver. Held, that the former suit was not a bar to the latter, nor did it put the receiver to an electron as to'his remedy in respect of the bonds held by D. & Co.
    This was a bill filed May 25, 1843, by David Leavitt, as receiver of the North American Trust and Banking Company, a banking association in the city of New York, which became insolvent, and upon which a receiver was appointed by the court of chancery, on the 30th day of August, 1841. The defendants, John B. De Launay, and Victor De Launay, constituting the firm of De Launay & Co., carried on business as bankers and dealers in exchange, in the cities of New York and Havre.
    The object of the suit was to compel the defendants to deliver up to be cancelled, certain agreements for the sale and return of hills of exchange, and to restore to the receiver, various collateral securities deposited with the defendants ; on the ground that the agreements were a cover for a loan, and were usurious. The bill also prayed that the defendants might refund tfye amounts which they had received in part payment.
    The pleadings and testimony were very voluminous. The report of the case will contain only the facts requisite to a proper understanding of the judgment of the court.
    
      The complainant introduced in evidence, two instruments, of which the following are copies :
    “New York, Jan. 6th, 1841.
    “ We, The North American Trust and Banking Company, of New York, hereby acknowledge to have this day received from Messrs. De Launay & Co., their drafts at sixty days sight on Paris, for one hundred and thirty-one thousand nine hundred and eighty-six 2-10Gths francs, (fcs. 131,986 2-100ths,) and we do hereby promise to return Messrs. De Launay <fc Co., within, or at the expiration of fifty-five days from this date, the same amount of francs, say 131,986 2-100ths, in bills at sixty days sight on Paris, satisfactory to them, adding interest at the rate of seven per cent, per annum, and one and one-half per cent, commission, having deposited with them as collateral security, thirty-seven bonds of the state of Arkansas for one thousand dollars each ; Nos. 876, 877, 878, 879, 880, 881, 882, 883, 884, 885, 387, 388, 389, 963, 964, 965, 966, 496, 497, 498, 499, 500, 442, 443, 451, 452, 391, 382, 383, 390, 332, 333, 192, 886, 395, 396, 397 —and we hereby fully authorize them to sell the whole or any part of said bonds, either at public or private sale, immediately after the maturity of this contract, in the event of the non-fulfilment on our part of the same or any of its conditions, and we promise to pay forthwith any balance which may be due them in consequence of the proceeds of said bonds not amounting to the face of this note, with interest and commission thereon, as specified above.
    “ |>25,3S1 92.
    Thos. G. Talmage, Pres’t.”
    “New York, Jan. 16th, 1841.
    “We, The North American Trust and Banking Company, of New York, hereby acknowledge to have this day received from Messrs. De Launay <fc Co., their drafts at sixty days sight on Paris for one hundred and seventy-two thousand eight hundred and fifty-seven 10-100ths francs, (fcs. 172,857 10-100ths,) and we do hereby promise to return Messrs. De Launay & Co., on or before the fifteenth day of March next, without grace, the same amount of francs, say 172,857 10-100ths, in bills at sixty days sight on Paris, satisfactory to them, adding interest at the rate of seven per cent, per annnm, and one and one-quarter per cent, commission, having deposited with them as collateral se-„ curity, twenty seven bonds of the state of Arkansas, and twenty bonds of the state of Indiana, all for one thousand each—and we do hereby fully authorize them to sell the whole or any part of said bonds, either at public or private sale, immediately after the maturity of this contract, in the event of the non-fulfilment on our part, of the same or any of its conditions ; and we promise to pay forthwith, any balance which may be due them in consequence of the proceeds of said bonds not amounting to the face of this note, with interest and commission thereon, as specified.
    “ Thos. G, Talmage.”
    [t appeared that the defendants delivered to the banking com-’ pany, the bills of exchange mentioned in the respective agreements, The parcel of 6th January, was delivered for the company to Caminann, Whitehouse &• Co,, brokers, and were used to take up its note to J. M, Fuller for $24,734 48, dated October 28th, 1840, with the interest from its date. The bills received on the 16th of January, were delivered for the company, to the same brokers, who sold them and applied the proceeds to the benefit of the company.
    On the 2d of March, 1841, another instrument was executed by the company, of which the following is a copy :
    “ New York, March 2d, 1841.
    f£ Received from Messrs. De Launay & Co., their drafts at sixty days sight on Paris, for one hundred and thirty one thousand nine hundred and eighty-six 2-100ths francs, (fcs, 131,986 2-100ths,) which amount we promise to return to them or to their order, on first day of April next, without grace, in similar drafts, satisfactory to them, adding interest at the rate of seven per cent, per annum, having deposited with them as collateral security, thirty-seven bonds of the state of Arkansas, for one thousand dollars each ; Nos. 876, 877, 878, 879, 880, 881, 882, 883, 884, 885, 387, 388, 389, 963, 964, 965, 966, 496, 497, 498, 499, 500, 442, 443, 451, 452, 391, 382, 383, 390, 332, 333, 172, 886, 395, 396, 397; and 15 trust bonds of the North American Trust and Banking Company, for one thousand dollars each, Nos. 301 to 315 inclusive—and we hereby fully authorize them to sell the whole or any part of said bonds, either at public or private sale, immediately after the maturity of this contract, in the event of the non-fulfilment on our part, of the same, or any of its conditions; and we promise to pay forthwith, any balance which may be due them, in consequence of the proceeds of said bonds not amounting to the face of this note, with interest and commission thereon, as specified above.
    16 Thos. G, Talmage, Pres’t.”
    The object of this arrangement, so far as the company was concerned, was to provide bills to meet the contract of January 6th. The bills thus obtained from the defendants, were sold by the same brokers on the 4th of March, and with the proceeds and a small sum furnished by the company, they bought of another French house, satisfactory bills on Paris, for francs 135,357 99-lOOths, which were delivered to the defendants to discharge the contract of January 6th.
    On the 15th of March, 1841, the company made another agreement with the defendants, in order to meet their contract, dated January 16th. The same brokers sold the bills thus obtained, and with the proceeds, and $893 10 paid to them by the company, they bought bills on Paris, satisfactory to the defendants, and delivered them to the defendants, amounting to francs 176,866 42-100ths. The bills of exchange mentioned in the agreements of March 2d and March 16th, were actually issued by the defendants; and the collaterals therein mentioned, other than those already in their hands under the previous agreements, were delivered to them.
    The agreement of March 15th, was in the following words, viz:
    
      “ New York, 15th March, 1841.
    “ Received from Messrs. De Launay & Go., their drafts at sixty days sight on Paris, for one hundred and seventy-two thousand eight hundred and fifty seven 10-100ths francs, (fcs. 172,857 10-100ths,) which we hereby promise to return them-on 1st prox., without grace, in similar bills, satisfactory to them, with interest at seven per cent, per annum, having deposited with them as collateral security, (with full authority to sell the same, either at public or private sale, immediately after the maturity of this contract, in the event of the non-fulfilment on our part, of the same, or of any of its conditions,) twenty-seven bonds of the state of Arkansas, twenty bonds of the state of Indiana, and five North American Trust Company bonds, all for one thousand dollars each, and twenty of the last mentioned for five hundred dollars each ; and we hereby promise to pay forth-, with, any balance which may be due them after said sale.
    “ Thos. G. Talmage, Pres’t.”
    The following note was read in evidence, and it was proved to have preceded the April arrangement.
    “ Dear sir :—We have instructed Messrs. Cammann, White-house & Co. to advertise the sale of the 64 Arkansas and 13 Indiana bonds, for Friday, the 15th, at two o’clock, to enable us to settle the loan, for the packet of the 16th.
    “In case of your settling with us, without having recourse to a sale, it can be stopped.
    “ Yours,
    
      “ De Launay & Co.
    “ T. G. Talmage, Esq. Tuesday.
    
    
      President, cpc,”
    Thereupon, the two previous affairs were consolidated, and the following agreement was executed by the company, viz.:
    
      “New York, April 16th, 1841.—Received from Messrs. De Launay &• Co., their drafts at sixty days sight, on Paris, for two hundred and fifty-three thousand and twelve 86-100 francs, (frs. 253,012 86,) which amount we hereby promise to return them in fifty-five days from this date, in similar drafts, to be approved by them; adding interest at the rate of seven per cent, per annum ; having deposited with them as collateral security,, sixty-four bonds of the state of Arkansas, for one thousand dolJars each, twenty North American Trust and Banking Co. bonds, one thousand dollars each, and twenty ditto for five hundred dollars each, with full authority to sell the same, either at public or private sale, immediately after the maturity of this contract, and without previous notice to us, in the event of the non-fulfilment on our part, of the same, or any of its conditions; and we hereby promise to pay forthwith, any balance which may be due after said sale.
    “As a further security on the above, we have given Messrs. De L. & Co. our own note for $13,000, (thirteen thousand dollars,) at thirty days date, the amount of which, when paid, is to be invested in a bill on Paris, as above stated, and applied in part payment of this obligation.
    “ $47,537 00. Thos. G. Talmage, Presí.” «
    This agreement was in the possession of the defendants, when the suit- was commenced. The bills mentioned in it, were received by the same brokers from the defendants, and were sold here. With the avails, and the proceeds of Indiana bonds sold, out of the collaterals in the previous contracts, the brokers purchased satisfactory bills on Paris, for francs 310,144 28, and delivered them on the same 16th of April, to the defendants. The agreements dated in March, were then cancelled, as those of January had been in March. A small balance, $314 13, was paid to the brokers by the company, to make up the entire sum paid for the bills purchased.
    The defendants set up, in their answer, that on the 16th of June, there was a renewal of the transaction of April 16th, and a new set of bills received by the company. It appeared that certain other of the collateral securities were sold, and the proceeds received by the defendants; and on the 31st of October, 1842, the balance claimed by them to be due from the company, was francs 112,702 40.
    The bill set out with alleging, that on the 26th of August, 1840, the company was indebted to Tracy, Gould & Co., on a note due 31st August, for $20,283 14, which was secured by collaterals. - That the company, wanting a loan to pay this debt, employed Cammann, Whitehouse <fc Co. to effect it. That they applied to the defendants for such loan, and on the 3d of September, 1840, an usurious agreement was made for the same, between them and the company, that the defendants should issue or loan to the association, their bills of exchange on their own house at Havre, for 125,000 francs, at sixty days sight, payable in Paris, upon the agreement of the company to repay to them, in fifty-five days from date, the 125,000 francs, in approved drafts, payable in Paris at sixty days sight, with interest at the rate of six per cent, per annum, and two and a half per cent, commission, upon the amount of the loan, being $591 02, in addition to the interest; and that the company should deposit with the defendants, as collateral, the several securities mentioned in the bill, and should substitute other collaterals, as therein stated. That in pursuance of such agreement, the defendants drew their bills of exchange, and delivered them to the company, or its agents, in lieu of money. That the company executed to the defendants, their note, and delivered the collateral securities, and did afterwards substitute thirty-seven Arkansas bonds in lieu of the original securities; and that the company sold the bills loaned by the defendants, and applied the principal part of the proceeds to the payment of Tracy, Gould & Co., on the 3d September, 1840; and that the principal part of the securities, held by Tracy, Gould & Co., were thereupon transferred to the defendants as collateral. That the bills were obtained by the company, from the defendants, for the sole purpose of raising money in the city of New York, and were loaned by the defendants for that purpose. That out of the proceeds, the defendants were paid, on the 4th September, 1840, $591 02, for their commissions, over and above interest.
    The bill further charged, that this loan was renewed by a like agreement and transaction, on the 28th of October, 1840, except "that the agreement was made by the defendants in the name of James M. Fuller. And that the transaction on the 6th of January, 1841, was a renewal of the latter. The answer denied that the defendants had any thing to do with the affair of October 28th ; and as their connection with it was not proved, the testimony respecting it is omitted.
    The answer set up as a bar to the suit, that previous to the filing of the bill, the complainant exhibited in the court of chancery, his bill against these defendants, and also against Henry Yates and others, trustees, and against several other parties, the holders of the company’s bonds, secured by what was usually called the Yates trust; to set aside the transfer to those trustees, as illegal, and to have the bonds given up and cancelled. That the company’s bonds held by these defendants as collateral, under the agreements of April 16th, and June 16th, 1840, were a part of the bonds secured by the Yates trust. That the trust so called, consisted of a transfer by the company, of securities exceeding half a million of dollars, to secure its bonds or obligations, to that sum, issued in amounts of $500, and $1000 each, to various persons. And that the suit against Yates and others, was still pending and in active litigation. This statement in the answer, was proved at the hearing.
    
      G. N. Titus and E. Sandford, for the complainants.
    I. The proofs in the cause fully establish an agreement on the part of the defendants with the association on the 3d September, 1840, to loan their credit or bills of exchange to the association to the amount of 125,000 francs, upon the condition that the loan should be repaid by the association to the defendants in 55 days from that date, with interest at the rate of 6 per cent, per annum, and 2-|- per cent, commission on the amount of the loan.
    1. This transaction was a loan of credit, not a sale of exchange.
    
    
      a. The association was greatly embarrassed from the want of money to meet its engagements in the city of New York at the time, and the application of the president was for a loan to meet such engagements.
    
      b. The mode of reimbursement required by the defendants from the association, and the form of the security for repayment taken by the defendants, imports a loan. (The New York Dry Dock Company v. The American Life Insurance and Trust Co., and the cases therein cited. Asst. V. Ch. Sandford.)
    
      c. This transaction did not involve, contemplate or require, the withdrawal or use of any funds of the defendants in Havre or at Paris. By the terms of the agreement, the association were hound to furnish and deliver to the defendants in New York, the return drafts in francs payable in Paris, with interest and commission in time to cover in Paris, the bills loaned on the 3d of September, at or before their maturity; and they did furnish them. The contract required from the borrower, the association, a return in kind of the thing lent.
    
      d. A charge of a commission, in a bona fide sale of exchange, is never made. The very term “ commission,” implies a loan in the transaction.
    e. Defendants language in their answer shows that it was a loan of credit; a “banking commission,” has no connection with a sale of exchange. And see their letter of April 1841.
    This contract cannot be explained, upon the principle that it was intended to be the evidence of a purchase and sale of exchange. (1 McCulloch, Comm. Dict. 656, tit. Exchange. Manice v. The N. Y. Dry Dock Co., 3 Edw. 146. Ord on Usury 23, 26 to 29; Steele v. Whipple, 21 Wend. 104; 1 Campb. R. 177.)
    
    
      2. This transaction was a loan of the defendants credit or bills of exchange, at an usurious rate of interest. The commission of 2\ per cent, amounted to $591 02 over and above the interest at the rate of 6 per cent, for 55 days.
    There is nothing stated in the answer or shown by the proofs that will justify this charge.
    1st. There is no evidence that the defendants were subjected to any charge for postage or banking commissions in Paris, either upon bills loaned or upon the return drafts.
    2nd. Evidence of a usage or custom in Paris to charge such banking commission was inadmissible. (Dunham v. Dey, 13 John. 40.) The rate allowed in any case in Paris, ranged from \ down to | per cent; but whether this or any other rate, was paid in this case, is not averred or proved by the defendants.
    3rd. By this transaction the association agreed to deliver to the defendants in New York, bills payable in Paris, in time to meet the bills loaned; and gave-the defendants collateral security for the performance of their agreement. The defendants' were indemnified against all hazard or risk of nonpayment of the return drafts.
    4th. The commission charged, (in addition to the lawful interest,) alone exceeded the legal rate of interest for the time the note had to ran. This was usury in disguise. (Dunham v. Gould, 16 John. 367; Dunham v. Dey, 2 J. Ch. Rep. 193.)
    3. In addition to the claim of a commission of 2-L per cent, the association was subjected to the risk or chance of a loss in procuring the return drafts in the event of a rise in the price of French exchange ; but the defendants were not subjected to any risk growing out of a rise or fluctuation in the price of exchange. The association lost in this affair, by the use of French exchange, between the 3rd of September and the 28th Oct., 1840, $877 11.
    II. The law of New York must govern this, and all the subsequent transactions referred to in the pleadings in this cause. The loan of the credit was made, and the return drafts on Paris were by the terms of the contract to be delivered to the defendants, in the city of New York. They were all New York transactions. (Chapman v. Robertson, 6 Paige, 630.)
    If it should he adjudged that the proofs have not fully connected the defendants with the Fuller note, and the loan made thereon, and that the loan of the 3rd of September is to be deemed settled and paid ; then
    III. The arrangement for a loan on the 6th of January, 1841, as stated in the bill, is fully established, and its terms were fully executed by and between, the said parties. The defendants received the 37 Arkansas Bonds mentioned in the note of the 6th of January, and that loan was corrupt, usurious and void. (We refer to the 1st point and its sub-divisions in connection with this transaction.)
    IV. The pleadings and proofs establish in like manner the arrangement of the 2d of March, 1841, as stated in the bill.
    And that in pursuance of such agreement, the note of the 2nd of March, and the 15 Trust Bonds were received, and the 37 Arkansas Bonds were retained by the defendants, in or as a renewal of the loan of the 6th January ; or that the defendants issued and loaned the bills mentioned in the note of the 2nd of March, for the purpose of enabling the association to perform the contract of the 6th of January, 1841. That these bills were sold in New,York, and the proceeds invested in the return drafts required by the contract of the 6th January, 1841.
    The credit granted on the 6th of January, 1841, was by this arrangement renewed or extended to the 1st day of April, 1841, upon the agreement of the association to pay interest at the rate of 7 per cent, in addition. The interest and commission specie fied in the note of the 6th January having been paid by the return drafts furnished as before mentioned, (See the 1st point and its sub-divisions in connection with this transaction, and Seneca Co. Bank v. Schermerhorn, 1 Denio, 133.)
    The pleadings and proofs fully established the agreement of 16th January, 1841, as alleged in the bill; and the deposit of the securities, viz., 27 Arkansas and twenty Indiana bonds, of §1000 each; and such agreement was corrupt, usurious and void, for the reasons already advanced.
    VI. It is in like manner proved that the arrangement of the 15th March, 1841, was a -renewal of that of January 16th, on the further security of five bonds of the Banking Association of $1000 each, and twenty bonds of §500 each.
    VII. It is further proved, that the note dated March 2d, 1841, for 131,986 3 francs, and the note dated March 15th, for 172,857 10 francs, fell due on the 1st of April, 1841, and that the association was unable to meet the same ; that the defendants claimed from the association, for principal interest and commission on those notes, 310,144 28 francs. That it was known to defendants that the association was unable to meet the same. That a portion of the collaterals were sold or redeemed, to the amount of §10,805. That after this payment, the defendants claimed from the association, on account of said notes, §47,851 13. That, on or about the 16th April, 1841, the association applied to defendants for a new loan, with which to enable them to purchase the return draft mentioned in those two notes, (less the §10,805,) or to extend the time for the payment of the balance claimed on the notes or contracts, or for the purpose.of adjusting the same. That thereupon, the arrangement of the 16th April, 3 841, was agreed upon and executed between the defendants and the association ; and the same was usurious and void.
    The credits granted on the 6th and 16th of January, and renewed on the 2d and 15th of March, 1841, were by this arrangement brought together, and again renewed or extended for the sum of253,012 86 francs, for 55 days, and the association was charged and paid interest thereon, at the rate of 7 per cent per annum, and besides, paid to the defendants, in the new bills bought, the commission of one per cent upon 307,073 55 francs.
    The defendants also exacted a commission of one per cent, on the loan of the 16th of April, to be paid in the return drafts.
    Till. The statements in the defendants answer, in relation to an agreement, alleged to have been made on the 16th of June 1841, in relation to the renewal of the credit, or the issuing of bills to the extent of 150,000 francs, is not responsive to any allegation in the bill, and is not proved.
    IX. The complainant has fully established his right to a decree against the defendants, requiring them to assign, transfer, and deliver up to him as receiver, all the state stocks, bonds, notes or obligations, and all the securities transferred by the association, to them on account of the loans or contracts, or renewals of loans or contracts, in the bill referred to; and to pay to the complainant as receiver, the moneys received by them upon such usurious contracts or agreements or any of them, or the renewals of the same.
    
      Mr. Sandford,
    
    in reply, referred to Drew v. Power, 1 Sch. So Lef. 182, per Lord Redesdale ; Seymour v. Strong, 4 Hill, 258, 259, per Cowen, J.; Hance v. Williams, 7 Paige, 581; Pratt v. Adams, ibid. 637; Barker v. Van Somer, 1 Bro. C. C. 151.
    
      C. B. Moore and F. B. Cutting for the defendants, argued the following points:
    I. The other suit now pending, involving an inquiry into the same matters, is sufficient to prevent the prosecution of the present one. This applies to the Yates trust bonds.
    II. The 1st Transaction.—The agreement of 3rd September, 1840, was a purchase of bills, fairly made, and not a loan upon which usury can be founded ; and even if otherwise, it was not usurious. (Holford v. Blatchford, before the Assistant-Vice Chancellor, reported in 3 N. Y. Legal Observer, 311, and cases there cited ; Spencer v. Tilden, 5 Cowen, 144 ; Holmes v. Williams, 4 Wend. 679 ; Pratt v. Adams, 7 Paige, 636.) Excessive commissions would not make it usurious. (6 J. C. R. 95 ; 7 ibid. 77; 4 Hill, 211; 9 Peters, 378 ; 13 ibid. 65.)
    III. The agreement of 3rd September, 1840, was fully performed and settled; if usurious, the remedy is limited to a recovery back of the usury merely ; for that the remedy xvould be at law, and the action must be brought within a year. (20 Johns. 290; 7 Cowen, 292; 10 Mass. 121.)
    IV. The 2nd Alleged Transaction.—The defendants had nothing to do with the Fuller note of 28th October, 1840 ; nor are they to be prejudiced by the manner of its use or abuse.
    V. The 3rd Transaction.—The agreement of 6th January, 1841, was a purchase of bills fairly made, and not a loan upon which usury can be founded ; and even if otherwise, it was not usurious. It is to be treated as a new transaction. {Murray v. Bethune, 1 Wend. 191.) This agreement was so far performed and settled, (though by means of a new agreement,) that even if usurious, the remedy in respect to it is limited to a return of the usury merely. The remedy is at law and is limited to one year.
    VI. The 4th Transaction.—The agreement of 16th January, 1841, was also a purchase of bills fairly made, and not a loan upon xvhich usury can be founded, and even if otherwise, it was not usurious. This is not claimed to have been connected with any previous transaction xvith the defendants. And this agreement was so far performed and settled, (though by means of a new agreement,) that even if usurious, the remedy in respect to it is limited to a return of the usury merely, and is barred by lapse of time.
    VII. The 5th and 6th Transactions.—The agreements of 2nd March, and 15th March, 1841, were purchases of bills fairly made, and not loans upon xvhich usury can be founded, and were not usurious.
    These two agreements were so fully performed and settled, that even if usurious, the remedy in respect to them is limited to a return of the usury merely, is at law, and is limited to one year.
    VIII. The 7th Transaction.—The agreement of 16th April, 1841, was a fair purchase of bills, and not a loan. And even if otherwise, it was not usurious.
    This agreement was not fully performed and settled; no new agreement having been signed. So far as performed, the remedy in respect to it, (if it was usurious,) is limited to a return of the usury merely, must be pursued at law, and is limited to one year.
    IX. The 8th Transaction.—The arrangement of 16th June, 1840, must be treated as a renewal in part, of the previous agreement of 16th April, and as valid. It is not charged in the bill to have been usurious, nor was it so. The defendants are entitled to hold the securities until paid in full.
    X. The answer being responsive to the bill, must be taken as true in all particulars, not being met with a positive denial by two witnesses on any point. Knowledge of the purpose for which the bills were intended, is charged and answered separately as to each agreement.
    The Indiana bonds were disposed of by the association, and the defendants cannot be made accountable for them.
    The sale of the 25 Arkansas bonds, is shown to have been the act of the association: and at all events, cannot be the foundation of a claim. The same must be said of the sale of the 14 Arkansas bonds.
    XI. The association had power to deal in bills of exchange, and no question can fairly be raised, as to the power of the officers. If they had no power, the remedy is at law. The agreement of 3rd Sept., 1840, was signed by president and cashier. The others were signed by the president, and were confirmed by the indorsement of the cashier on the returned bills.
    XII. The complainant is not a “ borrower” within the meaning of the act of 1837. (Post v. The Bank of Utica, in the Court of Errors, December, 1844.) Or if he is such, the relief to be granted him, is limited to a decree declaring the security void, and enjoining a prosecution thereon.
    XIII. Excluding commissions, and treating all the agreements, since those of the 6th and 16th January, as mere renewals; there is still due the defendants, 95,701 49-100ths francs, with interest from 3lst October, 1841, until the payment of which this court will not interfere with the possession of the Arkansas stock. (Judd v. Seaver, 8 Paige, 548.)
    
      Mr. Cutting,
    
    referred in addition, to Trotter v. Curtis, 19 John. 160; De Forest v. Strong, 8 Cowen, 513 ; Suydam v. Westfall, 4 Hill, 212: Carstairs v. Stein, 4 M. & S. 192; Nourse v. Prime, 7 J. C. R. 69; Ketchum v. Barber, 4 Hill, 224; and S. C. affirmed in the court of errors.
   The Assistant Vice-Chancellor.

The pending suit instituted by the complainant, for the avoidance of all the securities embraced, in what at the hearing, was called the Yates Trust, is no bar to this suit, nor does it necessarily put him to an election as to his remedy in respect of the fifteen bonds issued under that trust, which the defendants hold as a part of the security for their debt. The former suit impeached a large amount of bonds, held by numerous individuals having no joint or common interest in the same; on a single ground, their being issued by a banking association contrary to law. All the bonds were secured by one assignment, to Messrs. Yates and others, in trust; hence all the bond-holders with the trustees, were proper parties to that suit. But if the complainant, after stating the common ground of relief against all the bonds secured by the Yates Trust, had proceeded to charge that the bonds held by De Launay & Co. were usurious, or that those held by some other firm were obtained from the North American Trust and Banking Company by fraud, the charge .would have made his bill multifarious. In fact, there was no statement in that bill, under which he could prove the usury alleged in this suit. If the former bill had been filed against these defendants alone, the complainant would not be permitted by a new bill, to set up a new defence to the bonds. A newly discovered defence might be allowed by way of supplemental bill. But when a party has filed a bill for relief against an obligation, on a ground which requires him to make numerous parties, and he has a distinct ground of relief against one of such parties, which could not be presented in that suit, and which goes to that obligation, and also to other securities, which are not and could not be brought into that suit; he is not precluded from bringing a new suit against such party, in respect to all the securities to which the latter ground applies; although it may turn out that either was sufficient to avoid the particular security to which both grounds were applicable. The court will not permit him to litigate the same point in both suits, and will take care that the defendant be subjected to no undue expense or oppression, nor to have two decre.es against him for the same thing.

Another objection to the suit, which is in its nature preliminary, is that the complainant is not a 11 borrower” within the meaning of the “ Act of 1837, to prevent usury,” so that ¡he ma3r file a bill to be relieved from the alleged usurious contract, Without paying or offering to pay the principal sum loaned. In Livingston v. Harris, (11 Wend. 329.) in the court for the correction of errors, Judge Sutherland, in his opinion for affirmance, and Senator Tracy in his • opinion, (which was the only other that was delivered, and which was for a reversal of the chancellor’s decree.) held, that a surety was a “ borrower” within the statute of usury, as enacted in the revised statutes. In Pearsall v. Kingsland, (3 Edw. Ch. R. 195,) the vice-chancellor decided, that an assignee of the mortgagor, for the benefit of creditors, stands in his place, and may impeach the mortgage for usury. The same was decided by the supreme court in favor of a judgment creditor of the mortgagor, in Dix v. Van Wyck, (2 Hill, 522.)

These two cases, though not directly to the point before me, show the adherence of the court to the earlier decisions extending the privilege of avoiding usurious contracts to privies in estate, as well as to privies in law, and in representation or succession.

The act of 1837, was passed about three years after the decision in Livingston v. Harris, in the court of errors ; and that decision, which was contrary to the opinion previously entertained, that the revised statutes had dispensed with the necessity of offering to pay the principal loaned on filing a bill for a discovery of the usury, was the principal cause of the passage of the act.

With the term “ borrower,” already in use in the existing statute of usury, and judicially construed in the leading case on the subject, and with the well settled rule, that privies of all sorts could take advantage of the usury ; it is not to be presumed that the legislature, in 1837, intended to fetter and restrict the class of persons, who might avail themselves of the more liberal provisions against usurers, which they were then enacting.

The statute of 1837, was really designed to be a remedial act; and its construction is to be no more strict, than statutes in general; although to lenders, one class of the persons affected by it, it is penal in its consequences. This view of the act has, with but a single exception, been taken by the courts. Thus it was acted upon by the chancellor, in favor of assignees and creditors of the person who obtained usurious loans, in Pratt v. Adams, (7 Paige, 615.) Again, in Cole v. Savage, (10 Paige, 583,) the chancellor decided that the word u borrower,”' as used in the revised statutes, and in the act of 1837, embraced a subsequent grantee of the premises mortgaged to secure an usurious debt, who took them adverse to the mortgagee. And he held that the sureties, heirs, devisees and personal representatives, of the person to whom the loan was made, are “ borrowers”, within the meaning of the statutes concerning usury.

Subsequently to this decision in May, 1844, the case of The Bank of Utica v. Post, came before the chancellor, in which the purchaser of mortgaged premises, under a judgment against the mortgagor, filed a bill to have the mortgage cancelled on the ground that it was usurious. The chancellor sustained the bill, for the reasons assigned by him in Cole v. Savage. The defendant, Post, appealed to the court of errors, and the decree of the chancellor was reversed by that court on the 27th of December, 1844. The case is not reported, and I have seen no account of the reasons for the decision, but the only point contested was that which I have stated.

To go back a little in the order of time, the supreme court, in July, 1841, decided that the word “plaintiff ” in the second and eighth sections of the act of 1837, was restricted in its meaning to the plaintiff on the record in the suit at law; and that the party owning the usurious security, not the plaintiff on the record, but the real plaintiff in the cause, could not be called as a witness under the second section. (Bank of Salina v. Henry, 1 Hill, 555.) Yet in September, 1843, the court of errors re? versed that judgment, and by a strong vote decided that the word “ plaintiff” in the second and eighth sections of the act of 1837, extends to the party in interest as plaintiff, though he may not be the plaintiff on the record. (Henry v. Bank of Salina, 5 Hill, 523, 547.) On what principle off construction these two decisions of the court of errors are to be reconciled, it is not for me to say, nor is it necessary to ascertain for the disposal of this case.

To the extent of privies in representation and by operation of law, the decision of the chancellor remains unshaken, and must be my guide. The judgment of the court of last resort in Henry v. The Bank of Salina, forbids the extension of the apparent ground of its adjudication in Post v. The Bank of Utica, be* yond the point directly involved. And with the utmost defer? ence to that court, and to its decrees, I humbly submit, that a construction of the act of 1837, which will cut off from the heirs and personal representatives of the person who obtains a loan, the privileges which the act was so careful to provide for such person, is not consistent with good sense, nor with sound legal principles.

In this case, the complainant became by operation of law, a privy to the transactions which he alleges to be usurious, and in my judgment is a “ borrower” within the meaning of the act of 1837.

Proceeding to the principal points in issue between the par? ties, I may at once lay out of view, (so far as they concern the relief sought by the bill,) the two transactions of September 3d and October 28th, 1840. The proof does not connect De Launay <fc Co. with the latter; and whatever may have been the character of the former, it was closed, and the debt discharged; and it is now too late to call it in question.

The first contract which becomes material, therefore, is that of January 6tb, 1841, and the leading point involved is the true nature of the transaction. Was it a sale of bills of exchange, made in the usual course of trade, or was it a loan ?

No one will dispute the right to sell foreign exchange, at any price which the drawer or seller may think proper to ask ; and he may fix that price at ten per cent, premium, or 5 30-100 francs, together with a commission of one or more per cent.; or he may establish his price at a round rate of premium, without a commission. The latter is the usual course, but the adoption of the former mode will occasion no embarrassment, except in ascertaining whether there were nothing more than an actual sale intended.

• But when a needy borrower applies to a merchant who is a banker, as well as a dealer in exchange, for a loan either of cash, or credit, and wanting money and money alone, receives foreign bills at an exorbitant rate, only to sell them on the same day for cash, it is very plain that this is not a sale; it is a loan in disguise. The real difficulty in cases of this character, is to penetrate the mists and unravel the webs of mercantile forms, with which the keen and inventive ingenuity of bankers and brokers, covers and cloaks their transactions, when they intend to evade the operation of the statute against usury.

I was referred to Holford v. Blatchford, (3 N. Y. Legal Observer, 311, which I decided in October, 1844, as being parallel to this case. But I do not deem it applicable. There, the point which is here so essential, was entirely omitted, viz : that the contract was a loan, or a cover for a loan ; and, in the absence of that vital allegation, there was an effort to make out usury, (assuming it to have been a sale,) on two grounds ; first, that the bills of exchange drawn by a merchant here on his own house in London, had no vitality in his hands, and were not the subject of sale, and thus the affair was a mere exchange of credits; and secondly, that there was an usurious forbearance of the price of the bills, by reason of the charge of more than the current rate, and a commission besides.

To return to the contract of the 6th of January, 1841: What was its true nature and character ? The answer, responsive to the bill, denies that any application for a loan of money or of bills, was made to the defendants. The form of the application, therefore, does not aid the complainant’s case.

The answer avers that the brokers of the N. A. Trust and Banking Company, applied to De Launay & Co. for the purchase of bills of exchange on Paris, of the tenor, and apon the terms specified in the contract, dated 6th January, and the bills were sold accordingly. The application, therefore, was for precisely such an agreement as was consummated.

Let us look to that agreement, and the circumstances connected with it, to ascertain the objects of the parties.

The banking company by that note or contract, acknowledged to have received of De Launay & Co. their bills on. Paris at sixty days sight, for francs 131,986 2-100ths, and promised to return to them, within or at the end of fifty-five days, the same amount of francs, in bills at sixty days sight on Paris, satisfactory to them, adding interest at seven per cent, per annum, and one and one-half per cent, commission; having deposited with them as collateral security, thirty-seven bonds of the state of Arkansas for one thousand dollars each ; and the banking company thereby authorized De Launay & Co. to sell the whole, or any part of the bonds, on the maturity of the contract, in case it were not fulfilled ; and the company were to pay forthwith, any deficiency there might be in the bonds paying the face of the note, with interest and commissions.

Without looking beyond the agreement itself, the first impression produced by its perusal, is that the operation was one very much out of the usual course of dealing in foreign exchange. In its proper and legitimate function, (Cambio Real,) exchange is the payment of money in one country, to be repaid the just value in specie in another country, according to a price agreed upon between the exchanger and the deliverer or purchaser. The latter pays the money stipulated, and receives the draft or bill of the exchanger or drawer, on his correspondent in the foreign country. The drawer has funds in the foreign country, or a debt due to him by his correspondent the drawee ; or he has credit there, by means of which the draft is to be paid. The deliverer or remitter’s business is to pay the price in the country where it is drawn ; the drawer is to see to providing for its being honored, in the country where it is payable. The drawer, instead of receiving payment in hand, may give a credit for the price of his draft. But a stipulation that the remitter is himself to furnish to the drawer in the foreign country, the means of paying his bill at maturity, is an anomaly in the sale of exchange. That this was the design of the contract in this instance, is apparent from its careful provision to have the banking company furnish here to De Launay &. Co., satisfactory bills on Paris, in good time, in the ordinary course of transmission, to be in the hands of the Havre house, before any of the bills accepted by that house would mature. In calculating the difference in time, there must be added to the five days, the time likely to be gained by a direct transmission of the bills received in payment, over the circuitous transmission for presentment in the course of trade, of the bills furnished here by De Launay & Co.

The price of the exchange is one of the principal, and to the parties, the most interesting of the stipulations, in a contract for its sale. Yet this note shows on its face, that there was no price fixed or negotiated. For a certain sum of money payable in Paris in bills, the company were to return the same sum of money in like bills, payable at the same place, with interest and commissions added. There was no need of any price. The whole compensation lay in the interest and commissions. So the charge of commission, although as I have already remarked, it may be charged in addition to some fixed rate, as a part of the price on a real sale ; is not a customary charge, and subjects the transaction to the suspicion that the contract does not express its true character.

If an application had been made to Mr. De Launay, on the 6th of January, 1841, for bills on Paris, to remit to Lyons, by a merchant in New York, with money in his hand, 1 venture to say there would have been nothing said about commission. Mr, De Launay would have told the merchant, that his price for bills was 5 18-100ths or 5 20-100ths francs, and on receiving that price, he would have drawn the desired amount.

In short, if this had been a regular sale of bills on a credit, the company would have given their note for the price, calculated in dollars at the rate agreed upon, (for instance 5 18-100ths francs to the dollar,) with interest during the term of the credit, with a pledge of the Arkansas stock as security. On the other hand, if it had been an avowed loan, the form actually used in this contract, would have been as appropriate to its completion, as any that could have been devised.

Setting out with this unusual character of the contract itself, I will next state the circumstances which are proved. It is clear that Mr. De Launay, the partner residing here, must have been aware of the embarrassed condition of the Banking Company, His requiring full collateral security, both in September and on this occasion, from a Banking Company conducted on as large a scale as the proof shows that this one was, is of itself strong evidence of such knowledge; and it is made conclusive, by the fact that he knew the Banking Company had in September before, sold in New York the bills which they had obtained from him on a contract precisely similar. I say he knew this, because it is charged in the bill that he was aware of it when the September contract was effected, and his answer denying that charge, does not state when he first became acquainted with the fact. From this omission, from his being a dealer in bills, keeping advised of the market for them here, his correspondence with the Havre house, and the deduction of the broker’s commission for selling the bills, from the 2J commission he then required ; it is not to be doubted, that he knew before January, that the bills he issued to this company in September, were sold here. Indeed, his house is not shown to have been so very large bill drawers as to rebut the probability that the throwing of 125,000 francs of his own bills upon the market here, at one time, would have speedily come to his notice.

Another novel feature in this case, regarded as a sale, is that Mr. De Launay directed his house in Havre to accept the bills to the debit of the Banking Company. Why the Havre house should keep any account whatever with the Banking Company, if this were a sale and not a loan, is not readily perceived. If the sale were on a credit, it would be a matter of account purely with the New York house. The Havre house would not enter the Banking Company on its books; it would debit the bills to the New York house, and credit whatever was remitted from that house.

A still more remarkable circumstance, and one in perfect harmony with the inference derived from the written contract, is the expectation or assurance avowed in Mr. De L.’s letter of advice to the Havre house, that the Banking Company would cover them in season, with a commission of 1-J per cent. Not that the company would secure them for the price of bills sold. That was provided for by the Arkanas bonds; and the same letter advises the Havre house fully on that point. But by covering in season, was plainly meant that the Banking Company were to put the Havre house in funds, to pay the bills which Mr. De Launay had drawn. And as those funds were to be furnished in bills having sixty days to run, the language of the letter shows that Mr. De Launay expected those bills could be turned into cash in Havre or Paris as soon as they were received, so that he did not contemplate any appropriation or withdrawal of the drawer’s funds abroad. In the letter enclosing the remitted drafts furnished in March, he directs them to be credited to the Banking Company, “to cover our drafts on.you on their account and after specifying the amount of the latter, and the interest and commissions, he directs the Havre house to balance the account. Thus not only the drafts sold in New York, but the interest and commission were made matters of account with the acceptors of the drafts in Havre.

A most extraordinary sale of exchange is this, in which the buyer neither pays, nor agrees to pay, money in the country where it is sold, but does agree to replace it in kind in the place where it is payable, and in lime to meet it there—and the accounts of which are kept in the foreign country.

The subsequent transactions reflect much light upon the real views and intentions of the parties in this affair of the 6th of January. Mr. De Launay in his answer, insists that each one was of the same character as that under consideration ; the application was the same, and the contract the same in substance.

They are spoken of by Mr. Be Launay in his letters as credits to the Banking Company to be covered by them, and as a credit on the same stocks as before, and finally he calls one of them a loan.

The currency in which the bills were payable is not important, nor is the place where payable, so long as both sets of bills were to be paid in the same place, and the return bills were to be satisfactory ; that is, as good as the defendants. In each case, the bills represented so much money, expressed in francs, the currency of France, instead of our national currency, dollars. Now suppose that instead of these bills on Paris, the Company’s note had acknowledged the receipt of six promissory notes of Aug. Dapier, payable in Paris, at three months, for 125,000 francs, and had promised to pay the same amount in 55 days in notes payable at Paris, satisfactory to the defendants, and having three months to run. Would it not be just as much a sale of the notes of Dapier, as this is of the bills of De Launay & Co. ? The fluctuation of exchange is no argument to the contrary, because the amount is to be paid in francs in Paris, which are of a fixed standard value. So if the contract had been to receive the notes of De Rham & Moore, indorsed by De Launay & Co., payable in dollars in New York, and to be replaced in like satisfactory notes, with the interest and commission added ; it might with as much propriety be called a sale of De Rham & Moore’s notes, as to say that the transaction in question was a sale of bills of exchange.

I cannot resist the conclusion that the contract of the 6th of January, was a loan of the credit of De Launay & Co., through the medium of their bills of exchange, to the North American Trust and Banking Company. The company entered into it to raise money. Mr. De Launay, I think, was aware that such was their object in obtaining the bills. It does not appear that he had money to loan. He had credit, and they applied for such credit, and the contract was framed to accomplish the objects of both, in the form of a sale of bills of exchange.

The resort to the form of bills of exchange, when something else was intended, is an old device, although new varieties of it are frequently developed; and doubtless more novelties of the kind wall be invented, as those in use are from time to time exploded. More than three hundred years ago, acts of parliament were passed in England, to prohibit the raising of money by the necessitous, in the usurious modes then resorted to, by what was called dry exchange, and fictitious exchange.

As a loan of credit, there is no doubt, in my opinion, that the contract of the 6th of January, 1841, is usurious. There was much ingenious and plausible reasoning about the hazards encountered by De Launay & Co., and the interest and commissions to which they were entitled on their actual and possible advances, and their liabilities on the return bills. As to the latter, the form of return bills on Paris, instead of the payment in New York, at the maturity of the contract, of the francs loaned, computing their value in dollars, at the rate of exchange at the date of the loan, was probably adopted by Mr. De Launay to avoid the risk of any loss by the intermediate fluctuation in the price of exchange. If he received francs in Paris for francs paid there, it was precisely the same as if he received dollars here for dollars loaned fifty-five days before; so that this very stipulation removed one of the hazards which was urged at the hearing. As to the liability on the return bills, it was optional entirely; because the bills if satisfactory to Mr. De Launay, would be good in Paris, without the name of his house. And in each case, it seems the liability of the banking company, preceded that of De Launay & Co., on the return bills.

The defendants counsel submitted a statement, by which, computing interest on the respective loans of credit, on their advance, and their guaranty or indorsement on the return bills, it is shown that the banking company paid for both interest and commissions, much less than the defendants were entitled to. In order to make this mode a fair test, the defendants should debit themselves with the same interest on the credit furnished to them by the company in the return bills, and on the company’s credit, furnished by way of indorsement on the same bills. The effect of this would be to bring the question back to the interest and commission actually charged by De Launay & Co.

Stripped of all its machinery, and brought to a practical test by its operation, the contract may be thus stated: It was a contract of loan, by which De Launay & Co., on the 6th of January, agreed, and by their bills then issued, became liable, to advance F. 131,986 2-100 in Paris, at the end of sixty days after presentment of those bills in Havre ; and they were to receive payment in as good bills on Paris, to be delivered to them here on the 2d of March, payable sixty days after presentment in Paris. They were to receive interest on the whole sum for fifty-five days, and a commission of one and a half per cent. Allowing that an actual advance to take up their own bills, and not a discount of the return bills, was intended; and reckoning the usual periods for presentment of both sets of bills, De Launay & Co., would advance the sum specified in their bills, about forty-five days before they would be in the receipt of the amount of the return bills remitted. For this loan of forty-five days, they were to receive interest at seven per cent, for fifty-five days, and one and a half per cent on the whole sum besides, under the name of commission. Both items, estimated as interest for the use of the money, during the forty-five days, make the rate of interest more than twenty per cent per annum; or if it be computed on the credit for fifty-five days, instead of the cash advance, the rate of interest is about seventeen per cent.

In ascertaining the result, no interest should be cast upon either set of drafts during the time (the sixty days) they were to ran ; for in that respect, one set would balance the other. The idea that De Launay & Co. might be compelled to keep funds ready for an indefinite period, to meet their own bills, is illusory. They bore no interest, so that the holders would of course collect them as soon as possible; and the greater the delay in their transmission, the shorter would be the period between the advance made by De Launay & Co. and their reimbursement by the return bills, assuming that an advance was expected to be made; and instead of providing funds in advance, on an uncertainty as to the time when they would be required, the house in Havre were certain to know sixty days in advance, the precise time when the money would be required to meet each bill which they accepted.

The charge for commission was justified on the score of a banker’s charge in Paris, and the stamps'and postages payable between Havre and Paris, and other petty expenses. All of these would not account for a third of the charge. But in truth, there is no foundation even for these. Mr. De Launay’s letters, and his entries in his books, show that he entertained no such idea of the office of this commission. And in the regular course of trade, all these charges are borne by the drawers of bills, and are covered in the price for which they sell their exchange. A merchant buying a bill on Paris, in the usual course, would be astonished, if besides the current rate of F. 5 26-100, he were required to pay for postages, French stamps, and one-eighth of one per cent, for the Paris banker’s commission.

The hazards of the transaction, do not afford a pretext for the commission ; for they are no other or greater than are incident to loans of money.

And the actual result of the operation tó the borrower, whe ther, as generally happens, it prove to be disastrous, and in time, ruinous ; or whether through chance, or an advantageous use of the money, it results in a benefit to him ; is not a criterion for determining the question of usury. If the lender is, at all events, to receive more than the lawful interest, the contract is usurious.

It was argued, that this contract differs essentially from the ordinary case of an accommodation note, which the payee procures to be discounted at usury, because there the borrower is the party who is to pay the note, and not its maker ; but here there was a real transaction, the bills of De Launay <fc Co. were to go into actual circulation, and to be paid by them in Paris at maturity.

This difference is only nominal. De Launay & Co. were to be « covered” by return bills of satisfactory character, and if those were retained by them until paid, the result would be an advance of money on the faith of those bills, for a short time. Whereas, the real intention was, to make no advance in the affair, relying on having the covering bills cashed in season.

The illustrations from loans or sales of cotton, sugar, and other merchandise, to be returned in kind, with compensation, are not pertinent, because all merchandise fluctuates in value. This distinction is the ground of the decisions in the supreme court, in Holmes v. Wetmore, 5 Cowen, 149, note; Spencer v. Tilden, 5 ibid. 144; and Cummings v. Williams, 4 Wend. 679. Here the thing to be returned, was equivalent to the thing loaned. Both were money, in Paris, which does not fluctuate in value, in the sense in which we say that of goods and articles of sale. The loan was to be returned in genere, in francs, which at Paris are of fixed value, and are the standard and measure of all values in commerce. As all the bills were to be payable there in francs, and the return bills were to he as good as De Launay <fc Co.’s., each set represented so much money at Paris, and they are to be treated accordingly, in the estimates of the credit loaned.

The argument that De Launay & Co. are to be allowed for expenses, trouble and other outgoings in the premises, cannot he sustained. On a loan, all these things are remunerated by the interest reserved. If an additional compensation be taken on that pretence, it renders the contract usurious. The trouble of acquiring or providing the money, is not to be added to the interest at 7 per cent. (Hance v. Williams, 7 Paige, 581; Jacks v. Nichols, Feb. 25, 1846. Assist. Vice Ch.;) and the custom of bill-sellers is not to be received to support such an exaction. (Pratt v. Adams, 7 Paige, 637.)

1 was referred to Ketchum v. Barber, 4 Hill, 224, and Suydam v. Westfall, 4 ibid. 212, and the kindred cases, as sanctioning this charge of a commission. In Ketchum v. Barber, the court placed it on the ground, that there was no loan ; and in Suydam v. Westfall, because none was contemplated, the bills being accepted in a regular mercantile transaction, and to be paid out of the proceeds of produce which the drawer was to remit to the acceptor. In all these cases, the courts merely held that the contracts were not usurious, per se ; but they conceded that it was a question for a jury, whether the commission or other charge in addition to interest, was for trouble and expense incurred in good faith, or was usury in disguise.

My views on the subject of loans of credit were so fully expressed, on deciding the case of The New York Dry Dock Company, v. The American Life Insurance and Trust Company, (Feb. 6th, 1846,) that I need not enlarge upon it here. Subsequent reflection has confirmed me in the opinion which I then entertained ; and applying the same principles to this case, I must pronounce the contract usurious.

The transaction of January 16th, 1841, cannot be distinguished from the one of the 6th, and must also be deemed usurious. The subsequent contracts were merely renewals of those two, and are infected with the taint by which they were pervaded.

A similar arrangement is set up in the answer, as made on the 16th of June, 1841; under which it is claimed that the defendants may retain the securities which they hold, inasmuch as the bill does not charge it to be usurious. It appears by the answer and testimony, that a renewal was agreed upon on the 16th of June, but it was never carried out so as to cancel or extinguish the contract of April 16th. No new note or contract was executed, and that of 16th April is still held by the defendants. The parties proceeded so far towards the renewal, that the Banking Company paid to De Launay & Co. bills for F. 167,995 12-100ths, and received from them their bills for F. 156,000. As this reduced the debt, the defendants suffered nothing by reason of the arrangement being broken off. There is no doubt that the note of 16th April is still out-standing, and the securities in question are held under it by the defendants.

As to the point that the relief to be granted in these cases is to be limited to declaring the security to be void, and enjoining its prosecution, and that the court, under the statute, cannot direct the delivery up of the collaterals; 1 cannot accede to the position.

The relief provided in the fifth section of the act of 1837, does not preclude the court from granting general relief under the preceding section. It would be singularly incongruous, so to construe the statute, that a man who had no collateral security for a usurious debt shall lose it, while one who has such collaterals may retain the security, though he shall cancel the principal debt. I think the act leads to no such absurdity, and the contract being void, every thing that the lender has obtained by the contract, must be given up. He has no right to retain a collateral security held upon such a contract; and the court having jurisdiction to annul the latter, will not stop short half way, and leave him in possession of the former. (1 Story’s Eq. Jur. § 64 k; 2 ibid. § 699, 700.)

The complainant is entitled to a decree for the delivery to him of the contract of 16th April, 1841, and all the state stocks, bonds and other securities which the defendants held for its payment, when this suit was commenced, or which had not before that time been actually sold, and the proceeds applied towards such payment. But he is not entitled to a decree for the re-payment of any of the moneys which the defendants had received and applied on their debt before the suit was brought; the payments made, falling short of the principal sums loaned and legal interest.

The defendants must pay the costs of the suit.

Decree accordingly. 
      
       Th6 ease was reported in 1847, in 7 Hill, 391.
     
      
      
         Sinpe reported in 2 Sand. Ch. R, 149.
     
      
       How reported in 3 Sand. Ch. R. 313.
     
      
       Now reported, 3 Sand. Ch. R. 215.
     
      
       This decree was reversed, and the bill dismissed, by the Supreme Court m the first district, after this volume was put to press; on the ground exclusively, that the arrangement of June 16,1840, was a renewal of the previous agreement of April 16, and as the bill did not charge that arrangement to be usurious, it is to be treated as valid, and the defendants were entitled to hold the securities, until they were paid according to the same. The cause is now pending in the Court of Appeals, on an appeal fiom the decree of the Supreme Court.