Case ID: va_39/html/0848-01.html
Source: Caselaw Access Project
Author: {"author": "TUCKER, P.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*Raynolds & Another v. Carter, Adm’r &c.
    April, 1841,
    Richmond.
    [37 Am. Dec. 642.]
    (Absent Bkooke, J.)
    Usury — Pledge of Slave as Security — Case at Bar. — J. advances $200 to R. and R. puts a slave of the yearly value of $50 into J. ’s possession, upon an agreement that J. shall hold the slave and take the profits for interest on the money, till R. shall redeem the pawn by paying the principal sum of $200 — J. the pawnee holds the slave for two years, and dies ; and then his adm'r takes a bond with sureties from R. the pawner, for the principal sum of $200> advanced by Ms intestate, and restores the slave to the pawner: Heed,
    1. Same — Same,—That the contract between J. and R. was usurious and void.
    2. Same — Same—Bond to Redeem. — That the adm’r of J. stands in the place of his intestate, and the usury of the original contract taints and avoids the bond taken by him for the debt.
    Pawn — Effect Where Pawn Is Lost. — "Where property is pawned generally for debt, if the pawn be lost or destroyed, without fault of the pawnee, he may recover the debt of the pawner; aliter, if there be a special contract, that the pawnee shall take the pawn as the only security for the debt.
    Debt, in the county court of Rrederick, by Carter against Jane Raynolds, Thomas Raynolds and James Wigginton, on a bond executed by the defendants to the plaintiff as administrator of Jackson, for 200 dollars. Plea, the statute of usury. The defendant Jane Raynolds died pending the action, and it was prosecuted against the surviving defendants. The parties agreed, that the following evidence should be taken and received as a case agreed between them.
    1. The bond on which the suit was brought; which was a single bill under seal, executed by Jane and Thomas Ray-nolds and Wigginton, to Carter as administrator of Jackson, dated the 1st January 1827, for 200 dollars, payable twelve months after date, with interest from the date.
    2. The evidence of R. Milton; who proved, that some five or six jrears prior to May 1830, he as deputy ^sheriff had executions in his hands against Thomas Raynolds: that Raynolds told him he expected to get some money (200 dollars as the witness understood from Raj’nolds at the time) from Jackson, the plaintiff’s intestate, for the use of which he Raynolds was to put in pledge with Jackson a man slave named David (as well as . the witness recollected, that was his name) whose services were to go for the interest of the money: that shortly after this conversation between the witness and Raynolds, the witness met with Jackson, and asked him whether Ray-nolds had got the money from him which he expected to get; Jackson answered, that he had not at that time received it, but he intended to let Raynolds have it, so soon as he should put into his hands a man slave named David as a pledge, whose services, Jackson said, were to go for the interest of the money: that the witness told Jackson he had better not make such an arrangement, for it would be considered an usurious contract; Jackson replied, that he would evade the law by taking a bill of sale for the slave; and the witness told.him he could not evade the law by any possible means: that sometime after this conversation, another conversation took place between the witness and Jackson; in which Jackson told him, that he had run the risque, and had let Raynolds have 200 dollars, for which he had a man slave whose labour and services were to go for the interest of the money: that the witness acted as deputy sheriff, for many years, in the part of the country where Raynolds lived, and had in his hands many executions against him, indeed was never without one; that in all these cases Raynolds’s mother Jane became his surety; the debts were always paid by Eaynolds, but how he got the money (except the 200 dollars above mentioned) the witness did not know.
    3. The evidence of Benj. Wigginton, the subscribing witness to the bond on which the suit was brought; who proved that the bond was executed by the obligors *at the house of Thomas Raynolds on the day it bears date: that the plaintiff Carter (Jackson’s administrator was also present when the bond was executed: that it was mentioned by Carter, and by the obligors in Carter’s presence, that the bond was executed to redeem a man slave named Milford, who had been in the possession of Jackson for about two years as a pledge for the money for which the bond was given: that the witness was a brother-in-law of Eaynolds, lived near him, and was frequently at his house; and he was sure, that no other slave of Raynolds but the man Milford was in Jackson’s possession, between 182S and the first of January 1827; Raynolds had a slave named David, who lived at home during all that time, and was constantly in Raynolds’s own service: that Milford was given up to Ray-nolds at the time the bond was executed; and that the services of this slave, while he was with Jackson, were worth SO or 60 dollars a year; he was young, healthy and a good farm hand.
    4. The evidence of William Wigginton; who proved that there was a man slave named Milford belonging to Raynolds in the possession of Jackson between the years 1825 and 1827; that he was the only slave of Raynolds that Jackson had during that time; that Raynolds had a slave named .David, but he remained at home in the service of Raynolds himself; and that the services of the slave Milford were worth from SO to 60 dollars per annum, at least SO dollars.
    And the parties agreed, that the law arising upon the above evidence should be adjudged by the court according to the very right of the case without regard to the pleadings; so that if the court should adjudge the law of the case to be in favour of the plaintiff, judgment should be entered for him for the debt, with interest according to the terms of the bond and costs; and if for the defendants, judgment should be given for them.
    *The county court held that the law was for the jjlaintiff, and gave him judgment; and, upon a supersedeas, the judgment was affirmed by the circuit superior court of Frederick. And then the defendants applied to this court for a su-persedeas; which was allowed.
    Leigh, for plaintiffs in error.
    G. N. Johnson and Cooke for defendants.
   TUCKER, P.

The judgment in this case is, in my opinion, clearly erroneous. Two questions are made: 1. whether the original contract was usurious? and 2. whether Raynolds, by giving the new bond, has lost the right of setting up the defence of usury?

As to the first, it was argued, that there is no usury, because the principal sum was. put in hazard, and the money was not to-be returned at all events. If this were so, and it did not appear that the scheme was resorted to as a device to avoid the statute against usury, there could be no question that the transaction would not be usurious. But I think the proposition is itself a false inference from the facts proved. Because the proof is that the slave was to be returned when the money was paid, it seems to be supposed that the lender had no right to demand payment, and that it was at the borrower’s option to retain the money as long as he pleased, even though the slave should die or prove unprofitable. I do not think this a fair construction of the transaction. Such an arrangement might indeed have been made, but it was not made. The transaction was a simple loan of money without a day of payment being fixed, and the pledge of the slave for its security was but collateral. If there had been no pledge, it would not have been denied that the money might have been demanded presently. But the taking the pledge was not designed to change the contract, but to enforce the performance of it.

There was nothing in the language of the bargain, *from which it could be inferred that the lender intended to take the risque of loosing his money, and to waive the legal effect of the loan bjr which it might be demanded at any moment. It seems therefore clear, that the lender had a right to require repayment when he pleased, upon the stipulated terms of surrendering the pledge; and it is equally clear, that if the slave had died, he would nevertheless have been entitled to his money; for the pledge was given to secure repayment, and not as a substitute for it.

This view of the case is fully sustained by the cases cited by Mr. Leigh on the subject of pledges. In case a pawn be lost without the fault of the pawnee, he has still his remedy for the money against the pawner. Radcliffe v. Davis, Yelv. 17, 179; Anon., 2 Salk. 523. Opinion of Holt, C. J., in Coggs v. Bernard, 2 Ld. Raym. 917; Anon., 12 Mod. 54; Manly v. Westbrook, Bull. N. P. 720. And the rule must be the same, where the property pledged dies, as where it is lost. So, in South Sea Co. v. Duncomb, 2 Stra. 919, it was held, that where money is lent generally upon a pledge, it will not deprive the lender of his remedy against the person of the borrower; and that to discharge the person, there must be a special agreement to stand to the pledge only. The same principle is affirmed in Thomas v. Terry, 1 Eq. Ca. Abr. 139, pl. 5, and recognized by this court in Price v. Williams, 5 Munf. 507, where there was such special agreement. Every pledge implies a loan, and every loan implies a debt; King v. King, 3 P. Wms. 360. And if the pledge be destroyed, the payment of the debt may still be enforced against the person; 3 Bac. Abr. Bailment. B. p. 370, (citing Yelv. 179; Co. Litt. 209,) where it is/laid down, that if a man lend perishable goods as a pledge, and they decay, yet the pawnee may have debt for his money, for the duty continues. These authorities are all decisive of this case, unless it can be shewn to have been the intention of *the parties that the lender should look only to the pledge, and that in no event was he to have a charge upon the person. But this does not appear in the case. There was then a personal obligation to repay, and of course the principal never was in hazard. The contract was usurious.

The next question is, whether the giving the bond by Eaynolds to the administrator of Jackson, deprives him of the defence that the original contract on which it is founded was usurious? I think it very clear, that the contract is not purged of the usury. If it were, the bond would indeed be valid; for though the original contract be usurious, yet if no part of the usury has been received, and a new security is given for the principal sum with legal interest only, it is good. In such case, the parties having repented of the usury, and purged the contract of its taint, the new security has only bound the debtor to 'fulfil a moral obligation by paying what he had borrowed: for he could not even be relieved in equity against the usury without doing this. Barnes v. Hedley, 2 Taunt. 184. But where any part of the new security is for any portion of the usury, or where, after receiving the usury, the lender takes a new security for the principal, it is void; for it is a security given to further the usurious contract, and its direct effect is to give full efficacy to the original corrupt agreement. In truth, the avails of the slave’s hire, in this case, were applicable to the principal, in part, at least. Of course, there was not 200 dollars due of principal. A part of the $200, therefore, was interest, and usurious interest included in the bond, which, consequently, was void. Wickes v. Gogerly, 1 Carr. & Payne 396; 11 Eng. C. L. Rep. 434.

It was argued, that the bond being taken to a third person makes a difference. And this is true, where the third person is not a volunteer, but an assignee for value; and then, if the assignee is ignorant 'of the usury, *the new security will estop the party who gives it from pleading the usury; otherwise not. Chapman v. Black, 2 Barn. & Ald. 588; Cuthbert v. Haley, 8 T. R. 390. According to our decisions, in cases of the kind, the debtor must hold out inducements to the third person who purchases it, to deal with the claim; else, the debtor will not be deprived of his defence; Buckner & al. v. Smith & al., 1 Wash. 299; Hoomes v. Smock, Id. 389; Woodson & al. v. Barrett & Co., 2 Hen. & Munf. 80; Mayo v. Gile’s adm’r, 1 Munf. 533. And the reason of his being bound is, that by his mala fides in concealing the consideration and inducing the assignee to pay his money for the claim, he has exposed him to a loss. But this reason cannot apply to the administrator of the lender, who takes a bond for an usurious debt: he stands in his intestate’s shoes. He has sustained no loss, and unless he acts foolishly, he cannot sustain any. The debt is not assets till recovered, and it is his own folly to treat it as such, either by applying it to the payment of debts or by distribution. But admitting the contrary, it would only afford a ground for relief in equity against the defence of usury, upon proof that the administrator had actually treated the bond as assets, and paid or distributed the amount of it in advance. The suggestion that he might do so, is not enough to deprive the debtors of the defence of usury.

The other judges concurred. Judgment reversed, and judgment entered for the plaintiffs in error, defendants below.