Case ID: conn_28/html/0080-01.html
Source: Caselaw Access Project
Author: {"author": "McCurdy, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Mechanics' and Working-Men's Mutual Savings Bank and Building Association vs. Norman Allen and another.
    The act of 1856. validating certain usurious contracts previously made and which under the statute with regard to usury were void in part, is not unconstitutional or invalid.
    Bill for a forclosure. The plaintiffs were a corporation organized under the act authorizing the establishment of savings banks and. building associations, The mortgage had been made by the defendant Allen, who was at that time a member of the corporation, (the other defendant being a second mortgagee,) to secure a loan of $1,000 made to him by the plaintiffs on the 16th of February, 1863. For this loan a note had been given by him at the time, payable on demand, with interest, and a bonus of three-fourths of one per cent, per month in addition to the interest. By the statute above mentioned such [ *98 .] ^corporations were authorized to take a bonus in addition to the interest upon loans made to their own members ; but it was held by the supreme court of errors, in the year 1855, in the case of Mutual Savings Bank v. Wilcox, (24 Conn., 147,) that the bonus intended by the statute was a single sum to be paid at the time of the loan, and not a monthly per centage as in the.present case, and that accordingly the loan in that case was usurious, and subject, under the statute with regard to usury, to a deduction from the principal of all the interest and bonus paid. The savings and building associations throughout the state, having generally, under the construction which they put upon the law, made loans upon monthly bonuses, an act was passed by the#next General Assembly, in May, 1856, known as the “ healing act,” which provided that such loans, theretofore made, should not be held, by reason of the taking of a monthly bonus, “ usurious, illegal, or in any respect void,” but that, if otherwise legal, they were thereby “ confirmed and declared to be valid, as to the principal, interest and bonus.” It was claimed on the part of the defendants that this act was unconstitutional and invalid, and that the loan secured by the mortgage was to be regarded as usurious, and that all payments of interest and bonus that had been made upon it were to be applied under the statute with regard to usury, in reduction of the principal. It was agreed that the sum due upon the mortgage note, if such application was made, was $545, and if not made, and the plaintiffs were entitled to recover the whole amount of principal, interest and bonus, that the sum due was $1,083.10.
    Upon these facts the case was reserved by the superior court for the advice of this court.
    
      Blackman and Ives, for the plaintiffs.
    1. The act of 1856 is not invalid as repugnant to any provision of the constitution of the United States or of this state. The constitution of the United States only forbids the enacting of any law impairing the obligation of contracts. This act does not impair the obligation of the contract; it only confirms *it. Its object is not to destroy but to heal. [ *99 ] There is no provision of our state constitution at all touching the question.
    2. Our courts have no power to nullify a legislative enactment, where it is not in clear violation of the constitution of the state or of the United States. They can not proceed on any abstract general principles which the sovereign people have not by these instruments adopted for their guidance. ■ So long as the legislature has kept within constitutional limits, the propriety of its action can not be called in question by the judicial power. 1 Bla. Com., 91, and Christian’s note on the passage referred to. Remarks of Iredell, J. in Calder v. Bull, 3 Dallas, 386. Remarks of Church, C. J. in Bridgeport v. Housatonic R. R. Co., 15 Conn., 497. If the propriety of the action of the legislature, where within constitutional limits, can ever be called in question by the courts, it must be in some case where that action is in clear violation of natural justice. See remarks of Hosmer, C. J. in Goshen v. Stonington, 4 Conn., 226. It can not be pretended that there has been here any violation of natural justice.
    3. 1 he decisions of our own and of other states in favor of the validity of retrospective acts, and in many instances of acts very similar to the one in question, are very numerous, and although some judges have expressed the opinion that in some instances courts would be justified in declaring retrospective acts void, yet such instances have always been extreme ones, altogether unlike the present case. The decisions of this state are all in favor of our position, and some of them entirely decisive of the question. Goshen v. Stonington, 4 Conn., 209. Bridgeport v. Hubbell, 5 id., 237. Mather v. Chapman, 6 id., 55. Beach v. Walker, id., 190. Norton v. Pettibone, 7 id., 319. Booth v. Booth, id., 350. Savings Bank v. Bates, 8 id., 505. Bridgeport v. Housatonic R. R. Co., 15 id., 475. Calder v. Bull, 3 Dallas, 386. Andrews v. Russel, 7 Blackf., 474. 
      Walker v. Bacon, 8 Mass., 468. Locke’s admr. v. Dane, 9 id., 360. Satterlee v. Matthewson, 2 Pet., 379. Wat- [ *100 ] son v. Mercer, 8 id., 110. Charles River * Bridge v. Warren Bridge, 11 id., 540. Webb v. Den, 17 How., 576.
    
      Hooker and Harrison, for the defendants.
    1. The act of 1866, upon which the plaintiffs rely, is not a law, but a decree, declaratory of the meaning of a pre-existing Jaw. It was passed for the purpose, not of prescribing a new “ rule of action,” but for the purpose of indirectly, under the form of a new law, compelling this court to reverse the construction which it had given to a pre-existing law. Mutual Savings Bank, &c. v. Wilcox, 24 Conn., 147. It will accomplish neither more nor less than that precise result, if this court yields to its mandate. It is therefore void, as an attempt by the legislative department of the government to interfere with the free constitutional action of the judiciary. Const, of Conn., arts. 2, 3, 5.
    2. Retrospective legislation in general has been condemned by the most able jurists as dangerous and unconstitutional, and has never been sustained by our courts except in peculiar cases and with great hesitation. 1 Kent Com., 455 and notes. Ogden v. Blackledge, 2 Cranch, 272. Jones v. Wotten, 1 Harring., 81. Dash v. Van Kleeck, 7 Johns., 477, 505. Society, &c. v. Wheeler, 2 Gall., 105, 139. Bedford v. Shilling, 4 Serg. & R., 410. Ogle v. Somerset Turnpike Co., 13 id., 256. Pierce v. Potter, 7 B. Monr., 169. Holmes v. Holmes, 4 Barb., 295. White v. White, 5 id., 474, 481. Good v. Zercher, 12 Ohio, 364. Chestnut v. Shane, 16 Ohio, 599, 610, 623, 630. Dikeman v. Dikeman, 11 Paige, 484. Greenough v. Greenough, 11 Penn., 489. McCarty v. Hoffman, 23 id., 507. Eakin v. Raub, 12 Serg. & R., 372. Merrill v. Sherburne, 1 N. Hamp., 212, 216. Brunswick v. Litchfield, 2 Greenl., 28. Warren Manufacturing Co. v. Etna Ins. Co., 2 Paine, 502. People v. Supervisors, 4 Barb., 64. Berlin v. New Britain, 9 Conn., 175, 181. Norwich Gas Light Co. v. Norwich City Gas Co., 25 Conn., 36. Oriental Bank v. Freese, 18 Maine, 109. Foster v. Essex Bank, 16 Mass., 270.
    3. This act is clearly distinguishable from laws [ *101 ] validating ^marriages, defective certificates of acknowledgment, defective levies of executions, and the like. Such laws have been properly sustained by our courts. They do, substantially, only what a court of equity often does. They go behind the defective form presented by a real and lawful 
      contract, appropriation of property or other transaction, and declare that such actual and lawful transaction shall stand good, notwithstanding the defect of its form. This act attempts to create between parties a contract which they never did lawfully make. The contract never having been lawfully made, had no legal existence. Especially will it be so regarded, in view of the fact that it was made in the face of a direct and positive prohibition of the law. Such a contract creates no obligation which the law will recognize for any purpose, so that, if an obligation now exists tinder it, it was wholly created by the healing act. This we claim to have been entirely beyond the power of the legislature.
   McCurdy, J.

The restricting of the price to be paid for the use of money is everywhere a statutory regulation. In the absence of unfairness or oppression there is no more inherent wrong in receiving ten dollars for the loan of one hundred dollars for a year than in taking the same sum for the use of any other article.

By the law of 1850, the lender and borrower in certain cases were allowed, in addition to the regular rate of interest, to agree upon a bonus» to be paid for the money loaned. According to an understanding of this statute which prevailed throughout the state, it was generally arranged that this bonus should take the form of a monthly per centage, instead of a gross sum in advance. That construction was held in the case of Mutual Savings Bank &c. v. Wilcox, (24 Conn., 147,) to be erroneous; whereupon the law of 1856 was enacted. It is admitted that this statute applies directly, in its meaning and its terms, to the case before the court, and the only defense is that the law itself is void. There is nothing in the contract in question which this court can say is unfair or unjust. The difficulty in enforcing its execution *which was created by the [ *102 J doubtful phraseology of one statute, was removed by the positive provisions of the other, and the parties were thus left to their original agreement, unembarrassed by the mistakes of form.

It is not easy to see how the objection of the respondents can be sustained, except by taking the broad ground that a retroactive law is of course and under all circumstances to be treated as a nullity—a position which we can not believe any court in this country at the present time would be likely to assume ; for healing enactments are found absolutely necessary, continually, and under all governments, to remedy the evils arising from human imperfections. This subject was thoroughly investigated in the case of Goshen v. Stonington, 4 Conn., 209, and the questions now raised were elaborately discussed and were supposed to be settled. The retroactive law objected to in that case was far more extensive in its effects than the statute of 1856. It made husbands and wives of persons who, except for its provisions, were single. It made children legitimate who were otherwise bastards. It altered settlements, and conferred new rights, and imposed new duties and restrictions upon towns and individuals. It changed lines of descent and deranged rules of property. The principle adopted was, in substance, that when a statute is expressly retroactive, and the object and effect of it is to correct an innocent mistake, remedy a mischief, execute the intention of parties, and promote justice, then, both as a matter of right and of public policy affecting the peace and welfare of the community, the law should be sustained.

That decision has been followed in this state in the cases of Bridgeport v. Hubbell, (5 Conn., 237,) Mather v. Chapman, (6 id., 55,) Beach v. Walker, (id., 190,) Morton v. Pettibone, (7 id., 319,) Booth v. Booth, (id., 350,) and Savings Bank v. Bates, (8 id., 505.) The last case is nearly identical with the present.

The case of Goshen v. Stonington has become a leading one throughout the country, and its reasonings and results have been generally approved, although it must be admit- [ *103 ] ed there *are numerous dicta and some decisions which seem to militate against 'them. We deem it unnecessary to review the cases elsewhere, as the decisions in this state are so numerous, uniform, manifestly just, and entirely satisfactory.

WTe advise judgment for the plaintiffs for the full amount of their claim.

In this opinion the other judges concurred.

Judgment for plaintiffs for full amount.