Case ID: sc-eq_6/html/0408-01.html
Source: Caselaw Access Project
Author: {"author": "Colcock, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Executors of L. C. Radcliffe v. William Wightman.
    This was the case of an injunction to stay proceedings at law in a case wherein William Wightman was plain-tiif, and the executors of Mrs Radcliffe defendants, on a note of hand. It appeared that Mrs Radcliffe in her life time, being pressed with numerous and heavy judgments against her, and having no means of extricating herself from her embarrassment, applied to the defendant for assistance which he consented to give on the following ° ° terms : to wit, that he would provide the funds necessary to her relief, and that he should be allowed a commission 0f fm per cenf on whatever amount he might pay ; and 1 also a compensation for all losses, damages and expenses that he might he put to or sustain in such settlement of 
      
      her debts. But afterwards it was agreed that a sum of five thousand dollars should be allowed him in lieu of the commissions of ten per cent, and for all trouble, inconvenience, damages, loss and expense whatever, incident to the payment of the debts. In pursuance of this arrangement Thomas Parker, Esq. in behalf of Mrs Radcliffe, did accordingly give a note to the defendant for the sum of five thousand dollars, which was afterwards settled with Colonel Simon Magwood. The testator Mrs Radcliffe, being dissatisfied with some of the items in the account of Wightman, particularly as to the commissions, they agreed to refer it to their mutual friends, and whatever result they came to was to be final and conclusive. The- agents of Mrs Radcliffe, Mr Parker and Colonel Magwood, attended the settlement and were perfectly satisfied therewith, as was Mrs Radcliffe, as appeared by repeated declarations of hers to that effect. In consequence whereof Mrs Radcliffe was to give Wightman her note with a good endorser for the amount due him; but being unable to procure an endorser for so large an amount, Wightman himself endorsed for her at a premium of one per cent; and in order to enable her to draw the money he was compelled to pledge, besides his endorsement, three hundred shares of United States bank stock in the bank of the state of South Carolina as a security, whereby he lost altogether the control and use of that stock during all the time that the note remained unpaid. The note of $24,127.05 was discounted in the bank of the state of South Carolina, and the proceeds thereof having been passed to Wightman’s credit were received by him, and the note, after having been renewed from time to time, was at last taken up by Wight-man’s endorsing a new note for her to the bank of the United States, the proceeds whereof were passed to Mrs Radcliffe’s credit. The present suit was brought with a view to enjoin the defendant from proceeding at law on the note given by Mrs Radcliffe to Wightman upon their flnai settlement, on the ground that the original transaction was tainted with usury in taking usurious interest Qn tjle m0ney paid, and also a compensation for services. it was ais0 objected that the charge for losses on bank stock was usurious.
    
      presentatives cannot open the settle-account*of usury in the accounts. Where a testatrix in her life time submitted accounts to arbitration and was satisfied with the award and performed it, her re-
    
      1826.
    
      Charleston.
    
    
      January 1826.
    Thompson, Chancellor.
    It is objected that the charge for losses on the pledge of the bank stock was enormous, and it really had that appearance; but, inasmuch as it was allowed in their final settlement, agreed to by Mrs Radcliffe’s confidential agent, and ratified and confirmed by herself, her legal representatives shall not now be allowed to call it again into question. With respect to the $5,000 note, given to cover all losses, trouble, inconveniences, damages and expenses incident to the paying of the said debts, Wightman acted in the double capacity of an agent and furnisher of the necessary funds. He was entitled by law to three per cent for the moneys advanced, and no person I presume would consider three per cent too large a premium for the trouble and risk of taking up and settling such large and numerous demands as subsisted against Mrs Radcliffe. Colonel Magwood declares he would not have done it for twice that amount, and he was her agent and well acquainted with all her business. Besides the $5000 note is the only usurious part of the transaction insisted on by complainants’ counsel; and as that was paid out of moneys which Wightman received on account of Mrs Radcliffe, and she assented to it, her legal representatives, admitting it had been usurious, cannot recover it back; it being an established principle in equity, that a borrower on an usurious contract cannot recover money paid thereon. It is further contended, that the premium of one per cent should not be allowed for endorsing the note of Mrs Radcliffe. A premium for endorsing is no usury; it is not the loan of money, but a loan of credit and risk. Upon the whole I am clearly of opinion, that there exists no ground of equity which would justify the interposition of this Court. It is therefore ordered and decreed, that the injunction be dissolved and the bill dismissed with costs.
    The complainants appealed on the ground that the transaction was usurious.
    
      Dunkin, for the appellants.
    If the original transaction was usurious, no subsequent confirmation can give validity to the contract. Lord Chesterfield v. Jansen, 1 Atk. 301. In Tate v. Welling, 3 Term Rep. 537, Lord Kenton said, “ It has been argued by plaintiff’s counsel that we are precluded from considering whether, or not, the first contract was usurious; because, admitting it to be so, it was merged in the second bond: but as the former bond was the consideration of this on which the present action is founded, if that were void, as being given for an usurious consideration, most undoubtedly this second bond would be also void.”
    29 March
    In 1810 Wightman, by his own statement, agreed to take up the judgments against Mrs Radcliffe (part being his own) amounting to $,‘23,798 at 10 per cent for his trouble. His commissions would then be $2,379 by his own statement. But in 1813 he sends by the sheriff a statement to Mrs Radcliffe, in which he acknowledges he holds her note for $5,000 to cover commissions, &c. states a pretended loss on bank shares, and after submitting a calculation directs the sheriff to proceed, unless a settlement is made on this basis. Under these circumstances the acknowledgment is given, which was the basis of the settlement made in 1818.
    The first objection is to the duress.
    The second, to misrepresentation as to loss on stock.
    
      The third, to the calculation as usurious.
    The first payments were deducted from Mrs Rad-cliff e’s note of $5,000. For taking up $23,798 Wight-man received ;$5,000, above 20 per cent on the principal. There was no hazard as her whole property was bound, and part by his own judgments. The greater part was actually paid with her money. It is evident, however, from the whole transaction that defendant was to raise the money either from his own funds or on loan, and that in addition to all interest and incidents he was to have f5,000. Nay, more, almost all the judgments to be satisfied were at the suit of defendant; so that he was to get this premium for paying his own judgments out of her money.
    A charge for trouble in getting a loan is usurious, and vitiates the contract. It would open a door to avoid the statute. 1 Johns. Cha. Rep. 6. The calculation of Mr Bentham made a difference of $11,520 on the 26th of January 1818. Even if the 10 per cent was allowed, the excess would be very great. As to premiums upon endorsements, he cited Fanning v. Dunham, 5 Johns. Cha. Rep. 134. There was no risk, as the endorsements were still open.
    
      Hunt, contra.
    In the life time of Mrs Radcliffe, a settlement, with the advice of eminent counsel, assisted by an honest and intelligent merchant, was made of all these matters ; and she, up to the time of her death, remained perfectly satisfied with it; and this Court will not now be disposed to open it.
    By the terms of the contract the defendant was to raise a fund to meet judgments to the amount of $23,000. He was to become her agent, both as respected her own affairs, and the estate of her husband. The. result has shewn that he had a great deal of trouble ; and the compensation was, in the opinion of Col. Magwood, by one half less than it was worth. There is no pretence for the charge, that the per centage for endorsing the last note, was usurious. '
    The accounts between the parties were settled, and a note given. This note was discounted at the bank of the state, which falling due, Mrs Radcliffe, in order to pay it, procured a new note to be discounted at the United States Bank, adding what sum she wanted; and with the proceeds paid the note in the bank of the state.
    Her note to the United States bank being unpaid, Wightman had to take it up, and she was sued upon it; on which the executors of Radcliffe filed a bill to open the account. The original transaction was closed to the satisfaction of the deceased, who was represented by a competent agent. It therefore amounted to accord and satisfaction; and usury is no ground to set aside accord and satisfaction, as it is optional in the party to pay ; and usury being only malum prohibitum, the law will, after payment, apply the maxim melior est conditio possidentis.
    
    The evidence establishes that Wightman’s advances saved the estate of Mrs Radcliffe from ruin : and had he been disposed to make an unconscionable bargain, he could have forced her estate to sale by the sheriff, and purchased it at half its value. Of this she was conscious, and for it grateful, and accordingly settled with him. The note now sued upon is a distinct contract; and the fact, that the money raised by it was applied to pay the amount due to Wightman, on a final settlement, does not vary the effect of that settlement. The effort is to open it and vary the balance, by deducting what is alleged to be illegal charges; and this too by the executors. The example would render all adjustments of account uncertain; and destroy faith in settled accounts. It would lead to infinite perjury and fraud, to open accounts after the death of parties who were in their life time satisfied with their adjustment. It would prove a precedent, which would delude parties to destroy their vouchers, relying on such settlements ; and then subject ^6111 losseS) for so placing their trust. I conclude that the mutual accounts having been satisfactorily settled in the life time of Mrs Radcliffe, this Court will not now open them; and the decree of the Circuit Judge should stand.
    
      Grimke, same side.
    It is not pretended, that there is any thing in the case from which usury is pretended to be inferable, but the note of $5000. The true mode of determining whether the contract was usurious or not was, to ascertain whether the contract was or was not intended to avoid the statute “? Now, there is no foundation for the pretence that any such consideration entered into that note. The witness proves that the trouble and risk were worth it. The whole matters were, however, referred to O’Gier and Magwood, and they settled it; and Mrs Radcliffe was perfectly satisfied.
    
      Lance, in reply.
    It was the duty of the complainants to carry on this suit; for if there was any well founded suspicion of usury, it would have been a devastavit even in them if they paid it. Toll. 283. 486. A note given for the balance of a note founded on an usurious consideration is void. When the original consideration is usurious, no subsequent modification or affirmation of it can purge it. 2 Desaus. Rep. 333. J Const: Rep. (Tread. Edit.) 144.
    By the terms of the contract, the defendant was to retain the lien which the judgments to be paid had on the estate of Mrs Radcliffe; which rendered the debt abundantly secure. All that defendant was to do was to raise money and pay them off; or, in other words, he was to advance the amount, and over above the legal interest. The arrangement secures to him ‡5,000, which is clearly usury. 2 Johns. Cha. Rep. 191.
    When parties submit a case expectittobe coSfag to" teehnicaUaw.
   Cuma, pet'

Colcock, J.

The Court are unanimously of opinion that the decree of the Chancellor be affirmed but they put the case distinctly on the ground, that parties referred all their accounts and disputes to bitrators of their own choosing, who fully investigated them, and made an award, which was approved of the testatrix in the strongest terms, and acquiesced during her life. The claim of the complainant is res judicata, and therefore cannot now be investigated. It is admitted to be of great interest to the community that the laws regulating contracts should be enforced; but majus interest reipublicce ut sit finis litium. The determination of these domestic tribunals ought always to be regarded as conclusive on the rights of the parties, unless there be partiality or fraud, or such injustice as would authorize the presumption of some degree of misconception, or some palpable mistake in the law, or then-calculations. Now when we consider who were the arbitrators in this case, we are authorized to say, that more able tribunal could not well have been found. The one a gentleman of the bar, preeminent for his learning, his ability and his zeal; the other equally distinguished for his knowledge in mercantile affairs : and both of unquestionable integrity. Who better understood the law of arbitrations than Mr Parker ? He well knew that when a reference is made to such a tribunal, the parties do not intend, they do not wish nor expect, that their differences are to be adjudicated with technical nicety, or according to any prescribed form. And upon a reference to decided cases this will be found to be the correct view of the subject. In Tittenson v. Peat, 3 Atk. 529, the defendant pleaded an award : and the Lord Chancellor said the only ground for impeaching an award is collusion or gross misbehaviour in arbitrators; for, otherwise, being made by the judges of the parties own choosing, it is final and binding on all the par|;jes. ■- ^n<\ speaking of the account between the parties he says, the award is conclusive as to the account; unless an error can be shewn in taking the account, — meaning in some part of their calculation. So in the case of Morgan v. Mather, 2 Ves. Jun. 21, where compound interest was allowed, as this depended upon view which the arbitrators took of the evidence, jt was jjgjd that the award could not be set aside. And Lord Rosslyn says, “I have no authority to review the proceedings of the arbitrators. All the matters before them were within the compass of their \ submission. You have not stated corruption, misbeha-vjour or excess 0f power, which are the only three grounds I know for setting aside awards.” In the case before us the conclusion of law depended on the view taken of the evidence. We cannot then say that the award is against the law ; and it is not pretended that it is against the facts of the case. I conclude with a reference to later authorities, which will be found to support the same views of the subject. In Herrick v. Blair, 1 Johns. Cha. Rep. 101, Chancellor Kent observes, “to interfere and set aside an award upon a slight and immaterial irregularity would be contrary to the general doctrine of the Court in this respect. The uniform language of the law is that an award cannot be impeached but for corruption, partiality, or gross misbehaviour in the arbitrators, or for some palpable mistake of the law or fact. The arbitrators are judges of the parties’ own choosing. Their proceedings and award are treated with great liberality ; and even a mistake on a doubtful point of law will not open an award.” And he refers to a number of authorities in support of his opinion ; to which I will only add those of our own Courts, 3 Desaus. Rep. 305, and 2 Bay, 370. 450. The motion is dismissed.

The determi-bUratois°f should always ed m partiahty or fraud, or such injustice misconcépk tion or mistake in Jaw or calculations are inferable.

Decree affirmed.