#### *Rodes' ex'ors. vs. Bush.*

Chancerv.

Case 104.

Appeal from the Hart Circuit; Benjamin Monroe, Judge.

October 6.

*Conditional sales. Usury. Jurisdiction.. Forfeiture< Parties. Pleading in equity. Error.*

Statement of the facts.

Chief Justice Bibb

delivered the Opinion of the Court.

On the 13th March, 1817, Wm.. T. Bush assigned to Robert Rodes, three notes on Gid-. dings, for six hundred dollars each, bearing date on the 16th December, 1815; the one due 15th- December, 1818; the second due 16th. December, 1819; the third due 16th December, 1820. Bush took from Rodes a writing obliging him,to. return those notes if Bush- paid to Rodes the- sum of twelve-hundred and sixteen dollars, within one year from the 13th March, 1817. The-transaction by which Rodes. acquired the assignment of thesc-notes, and agreed to. return them, was an advance of a sum to B.ush, which, with the interest thereon, at the rate of fifteen per centum for the year added together, amounted to the said sum. of $1216. Rodes collected of Giddings the two notes first falling due, and one hundred and eighty-one dollars part of the last, amounting to $1380; and the executors of Rodes put this last note in suit, against Giddings, had judgment, execution and a replevin bond, founded on that judgment and execution, and were proceeding to collect the balance; whereupon Wm. T. Bush, in July, 1823, exhibited his bill against Rodes’ executors, and against Giddings, and. obtained an injune*468tion staying the collection of the money upon the replevin bond. The bill charges'the transaction fis usurious, that it was a loan and security for the loan, at the usury of fifteen per cent as aforesaid between Rodes and Bush, claiming to have refunded to him, out of the proceeds of the three notes of Giddings, the excess above $1216; the legal interest.

Decree of Be oji'cuit court.

Answer of the executors of Rodes.

Limitation.

Upon the hearing, the court decreed that the executors of Rodes pay to complainant fifty-nine dollars forty-seven cents, (being the excess actually collected of Giddings, above the sum of *$1216,*and interest from the time it was to have been paid *by Busk*to redeem the notes) that the executors be perpetually enj oined from proceeding on their judgment at law against Giddings, except for the costs of that suit at law, and that they pay the complainant his costs in chancery; and as to Giddings, a decree was pronounced, ordering him to pay over to the complainant, Bush, the uncollected balance, of principal and interest, due on the replevin bond.

From the decree against the executors, they alone appealed.

By the answer of the executors they insist that the transaction between Bush and their testator was a conditional sale of the notes, to be void if Bush paid the sum of $¡1216, within the year, which he had wholly failed to do. The answers do not pretend that Rodes advanced to Bush, the sum of $1216; on tiic contrary, they expressly declare, “what amount their testator paid for the assignment of said notes, the defendant is unable now to state. But insists that the transaction between the complainant and the said Robert Rodes, was a conditional sale of said notes to become absolute, in case the complainant should fail to pay the sum of $1216, within twelve months from the date of said memorandum.” They suggest that equity has not cognizance of the matters of the bill.

They rely also on the statute of limitations, as a bar to the relief sought; that the right of redemption, if it existed at all, should be'limited to five years from the 18th March, 1818.

*469Proofs.

Bush obtainS1®57 ami ass¡„.net| him good gj 800,"xml took his *ob*hgation for bo°rotnrnodt0 on condition B. paid him ^f^nionths otherwise ’ not: field to be a 2lear., casco usa”'

The proof is decisive, that Rodes advanced to Bush only so much, as together with fifteen per centum thereon, for the year, produced the sum of twelve hundred and sixteen dollars; (that is, advanced to Bush not more than $1057 40.)

But it is said this was a conditional sale of the notes, and not a pledge and security for money advanced and loaned on usurious interest. It is not pretended that Rodes took the notes without Bush’s guarantee of the solvency of Giddings. Bush, by his assignment, Stood as security for ultimate payment *by*Giddings. It is not pretended' that Giddings was in doubtful circumstances, or that Rodes risqued the circumstances and solvency of the obligor in those notes. He did not purchase the notes as a commodity in market. They were themselves but securities,' or documents for money; these securities Rodes received, with the farther security by the endorsement of Bush. But what is this which is called by the executors, a conditional sale? For $1057 40 cents, Rodes acquired securities for $1800. Conditioned, however, that Bush might have back these securities, if be should return, pot the principal of $1057 40 cents, at the end of one year, but the principal with fifteen per centum *thereon. For*this forbearance for one year, Rodes secured fifteen per centum, at least, for interest and profit. The security of Gidding’s bonds was backed, and assured by Bush’s endorsement, so that Busb was, at all events, bound personally to return principal and legal interest, on the sum advanced by Rodes, even if Giddings did not pay it. it is a mere cloak to bide the usury of fifteen per centum, in case Bush should repay in a year. But if Bush did not repay in a year, then the usury would be more extravagant, provided Rodes shall be permitted to retain $1800, for the advance of $1057 40 cents. Rodes' advanced his money, retaining the responsibility of the receiver to return him his principal and interest at all events; but as to the fifteen per centum, Bush must pay it, and pay it punctually, and to a day, or forfeit $584, over and above principal and usury. If usury, at the rate of fifteen per centum, can he secured and retained by annex*470ing to the non payment of it a penalty like the present, under cloak of a conditional sale, the statute against, usury would become a dead letter. Disguised, as this transaction is attempted to he, it yet shows the device to cover the unlawful interest and gain of fifteen per centum for the forbearance for one year.

Jurisdiction of equity to prevent the collection of usurious interest, order its repayment, and to relieve aliainst forfeitures.

Limitation to pay money received for usury is five years, to be computed from the receipt of the money.

in a. bill by ojio who bad boiTowed at usury, and us-*471signed a promissory note on auother, to re-the usnrer the excess he had collected pñncipal'and legal interest, and to have judgment the usurer had recoveredforthe balance due on the assigned note, neinote^orhis surety in his replevin ’.j11®’,10' ties, if they acquiesce in ^Thimisurcr cannot assign íor error, that judgment are not parties— f°déíod°toS pay the borrower, in^ure^in*10 whoso name the judgment Vor, it would avail,

*470Considering it as a case of usury, it appertains to the jurisdiction of a court of equity, as well to compel the lender to disgorge that excess which he has too greedily devoured, as to prevent him from satiating the cravings of an inordinate appetite. *It*belongs to the equitable jurisdiction of a court of chancery, to relieve against unreasonable and uncoilscientious penalties and forfeitures. The relief against the penalty of a bond, forfeited by non-payment of the sum mentioned in the condition by the day specified, is a familiar, long used subject of equitable jurisdiction. So also, of relief against other penalties; as that of six per cent interest, inflicted for nonpayment by the day, of a principal, hearing four per cent interest. To relieve against a penalty of eighteen hundred dollars,, for nonpayment, of twelve hundred and sixteen dollars, compounded of principal and usury, at fifteen per cent, by the day specified, belongs also to the powers and jurisdiction of a court of equity. The objection to the jurisdiction of the court cannot be sustained.

The limitation to a suit to recover back the excess paid upon an usurious contract, begins to run and to be accounted from the time of the actual payment and receipt, not from *the*time when .it should have been paid by the agreement. The sum of $'59 47 cents, decreed against the executors, was received and collected on the third boixd of Giddings, not by anticipation neither, but after the bond fell due; it did not fall due xmtil 16th December, 1820; the bill was filed in July 1823,, within less than five years.

As to the residue of the sum decreed in favor of Bush,-the executors are enjoined from collecting it of Giddings; they have not received it; the injunction granted at the institution of the suit, and per*471petuated by tbe final decree, has stopped that sum *in*transitu, and ordered payment to the complainant, instead of to the defendant. There is, therefore, no bar by limitation of time, to the relief and granted.

It is objected in this court, that the proper parties were not brought before the court below. • This objection is predicated upon the facts, that Giddings was not served with process, and has never answered nor appeared, although named as a party in the bill. The clerk certifies that the process issued, has never been returned. Was Giddings, or his surety in the replevin bond, a necessary party to the subject matter of the complaint, and relief sought by Bush against the executors of Rodes? The money due and uncollected from Giddings, was prayed to be stayed and enjoined, until the court a v «/ *j j*should hear the cause, and decide whether the complainant or the defendants, executors of Rodes were entitled to have it. So far as Giddings had paid, that payment is by the bill, stated and acknowledged as well made, as to the balance unpaid, the only question raised by the bill or answer, is, whether Bush or Rodes’ executors shall have it. Giddings is but the stakeholder, having no interest m the controversy between Bush and the executors of Rodes. If the hill had not named Giddings as a defendant, there would have been no objection for want of necessary parties. It was as proper to enjoin the executors from proceeding to collect tiie money of Giddings without making him a party, as by making him a party. If the court had decreed that the executors should assign over to Bush the uncollected balance duo on the replevin bond, it could have been no objection to such decree, that Giddings was no party, Tiie omission to serve Giddings with process leaves hirn, (as he has neither answered nor appeared,) just as if he had not been named as a party. If the complainant was under no necessity to make him a party; he was under no necessity to serve him with process after naming him as a party in the hill; he was at liberty to drop lnm at any stage of the procccding. If Giddings shall hereaitcr complain of the decree rendered against him, because he ivas *472not a party to the proceeding, by process served, nor by appearance, the decree against Giddings in favor of Bush as now made, could not stand, unless the process shall be found and returned as executed-But the decree against Giddings is separate and distinct from that against the executors. The decree against Rodes’ executors, is the only one appealed from; Giddings has not appealed nor complained; Rodes’ executors would not be proper parties to a writ of error by Giddings. So that the controversy between Bush and Rodes’ executors, is as completely and as effectually within the power of the court for final adjudication without disturbance hereafter, by any party interested in the subject matter of that controversy, as if Giddings and his sureties in replevin bond were also before the court. To have made Giddings and his sureties, parties, would have been an act of abundant caution and auxiliary means, against a disobedience to the injunction; but they were not parties necessary to the complete and final adjudication of the question of right, between the complainant Bush, and the defendants, the executors of Rodes. Giddings was no more a necessary party, than the Register of the land office would he in a caveat between the claimants upon two conflicting surveys unpatented; or the sheriff to a bill of injunction between the debt- or and creditor, named in the execution put into his hands.

Petition for ; ru-hearing.

It is therefore ordered and decreed, that the decree of the circuit, in favor of the complainant Bush, which has been appealed from by the defendants, the executors of Rodes, bo affirmed, with ten per cent damages on the sum of *$59 47.*

Appellants to pay to appellee his costs.

Mr. Caperton

*moved for a rehearing on the ground that the usury was not sufficiently pleaded, which he stated in the following petition:*

After a full and attentive consideration of the opinion pronounced in this case, the counsel of the plaintiff feels himself constrained to ask the court to rc-consider their decision. From a *473mistake as to tlie facts contained in tlie record, which it is apparent the court has been led into, great injustice has been done the plaintiffs, and the decision of the cause has been made to turn upon a point not relied upon in the pleadings, and which the undersigned with great confidence, conceives is not presented by the record. In the opinion dc-* livered, the court say, “the bill charges the transaction as usurious, that it was a loan and security for the loan, at the usury of fifteen per cent.” This, evidently, is a mistake on the part of the court. There is no such allegation or statement in the bill. The transaction is not. charged as usurious; nor is there any allegation that the loan was at the usury of fifteen per cent or any other rate of per cent. Had there been such an allegation in the bill as the opinion recites, I should not have troubled the court with this petition. I shall not now undertake to prove that the transaction set .forth in the bill, is not usurious, notwithstanding much might be said with propriety and force, to establish that position. 1 only wish to call the attention of the court to their misconception of the allegations of the bill.

Petition for a re-hcaring. .

Neither courts .of law or equity have ever enforced the laws against, usury when the transaction is not relied upon as usurious in the pleadings. Good sense would dictate the propriety of this doctrine, independent of any authority upon the subject. But authorities are not wanting to show that, as well in chancery as at common law, relief cannpt be granted without appropriate allegations or averments, expressly charging the transaction to be corrupt and usurious. Thus, in the case of Morrison vs. Whitley, Cro. Car. 501, it is said that in framing a plea of usury, care must be taken to state that it was corruptly agreed &c. And in 2 Shower, 329, it is'decided that the usurious agreement mu st be particularly set forth, and the quantum of interest agreed to be given. See also as to the same point, Selwyn’s *nisi*prius, 583. Indeed all the books of entries abound with authorities to this effect. Nor has a single' diet mb been found, after an attentive research, to the contrary. But in the case of Brown vs. Heard, 3 Marsh. 390, a case very much like the *474present, this question lias undergone a diréct adjudication. The facts stated in that case more clearly amounts to usury than they do in this case, and the court say it is usurious. They refuse relief because they say, “there is no allegation *in the*bill that the loan was made upon an usurious interest, or that the obligation for the corn was intended as a shift or device to evade the statute. This will be found to be the settled doctrine in chancery, when it is looked into. This court', I am fully satisfied, would not have disturbed the well established rule upon this subject, had they not been mistaken in point of fact. A rehearing is respectfully solicited.

Petition for a re-hearing.

Allegations of a bill that complainant was in great need of money, that to raise it he borrowed of defendant a $1000, and for that agieed to pay him $1216 in 12 months, and to secure the payment, assigned promissory notes for $1800, to be forfeited if not punctually redeemed, is a sufficient pleading of the usury.

Opinion of the court, overruling the petition for are-hearing,

by Chief J ustice Bibb.

The petition supposes that the bill does not contain a charge of usury. This is a mistake of the petitioner, and not a mistake of the court. The bill states that the complainant was in great need of money; to raise it he borrowed of Rodes between nine hundred and one thousand, dollars, but he is confident it did not exceed one thousand dollars, and for that sum he agreed to pay said Rodes twelve hundred and sixteen dollars, in one year; to secure the payment of that sum of $1,216 in one year, the three notes were assigned, amounting to eighteen hundred dollars, and Rodes gave the obligation to return the notes if the sum of $1216 was paid in one year. These facts are set forth and charged in the bill, clearly and positively. From these facts the legal conclusion is, that the transaction was usurious. It does amount to a charge of usury of fifteen per *cent*and more, for the year, and usury upon usury, by way of enormous penalty. All the constituents of usury are charged. The necessity of the complainant, the lending and borrowing, the sum actually borrowed and lent, the sum reserved upon the loan for the year; the assignment of the three notes by way of security for tbe loan and profit so reserved, and the intention of the transaction as a security and pledge for repayment of the sum of principal and profit, are distinctly and specifically stated, in language nqt *475to be misunderstood nor doubted. Having stated the facts from whence usury followed as a legal conclusion, it was not necessary in a bill in equity, to charge those legal deductions, they belong to the court. Legal deductions or conclusions without- the facts on which they are based, would be bad pleading; but facts from which certain legal and equitable conclusions must inevitably follow, are sufficient in equity pleadings, although the libellant, or complainant, his attorney, -proctor or solicitor, shall omit to state the legal or equitable conclusions from 'those facts. After the bill had so distinctly set out the facts, it was not necessary to allege- that twelve hundred and sixteen dollars for the loan,and forbearance for one year, of one thousand dollars,, was more than legal interest. It was unnecessary to-aver that the law allowed but six per cent;; it was unnecessary to aver that twelve hundred and sixteen were more than one thousand and sixty; that, fifteen or twenty are more than six, or that sixty are- not two hundred and sixteen. The petition is founded upon the absence of the words, “usury,” “corruptly agreed,” “unlawful interest,” “fifteen per cent” or upwards. A court of equity does not require the pleadings to be technically nice and formal. Chancellors regard things more than names, substance more than form. They try no indictment against a trope, receive no special plea to a metaphor, reject no complaint or defence for lacle of a pleonasm, sustain no demurrer for want of form.' They withdraw the veils and cobwebs set in *modo*and forma, they look at the very deeds of men.

In pleadings in equity it-is sufficient to state the facts relied on, .without the use of the technical words which signify the legal consequences of the matter, stated, as unlawfully, and usuriously, and corruptly agreed.

Suppose a demurrer to this bill, which so. clearly states the contract of lending and borrowing; the principal lent; the profit reserved; the time for which the loan was made; tire security for payment of the sum borrowed, with the excessive gain, fortified by a penalty if payment be not made to the day. Suppose the demurrer to assign for cause— First: For that the hard name of “corrupt agreement,” is not applied — Secondly: For that the proper surname, title and addition “Usury” is not superadded — Thirdly: Because the profit reserved, is stated in gross, and not by its exact, ratio, by way *476of per centage, in integrals and fractions, upon every hundredth part of the principal sum lent. Such causes of demurrer might excite merriment, but could not command serious attention. The chancellor would pass by such objections and look to the substance of the transaction stated in the bill; at the acts and deeds of the parties, and the legal and equitable conclusions to be drawn therefrom; disregarding the names, or nicknames, by which the one party or the other had chosen to call or miscall them.

Modo ofstattef of*1TM^' |)lo!ulings ' and facts of tlToofnion delivered.

The opinion of the court to which the *petition*{ias been presented, does not profess to copy the cbarges in the bill *literatim*and *verbatim.*The object in view was, to make such a general statement as would explain the principles decided by the court- The bill having stated the profit reserved, by reference to the sum loaned, and the whole sum to be re-paid; the exact ratio of profit, or rate of interest was not necessary to the understanding of the principles of the decision. The rate of interest calculated upon the facts stated, amounted to fifteen per cent and more; but from the prayer of the bill and the relief given thereupon, the precise ratio of profit and excess, above legal interest was of no importance, the complainant having asked only for relief for the surplus above $1216; with interest thereon, allowed by law subsequent to the time fixed by the contract for re-payment. The bill does therefore, in substance and effect, clearly charge tiic transaction as usurious, as a loan and security for the loan, at the usury of'fifteen per cent, and more; not by the mere names of usury, and corrupt agreement, and exact decimal proportions of the rate of interest, but by stating the facts, positively and clearly; from whence those conclusions necessarily follow, and by praying relief from them. Should a painter draw a faithful and striking likeness, in quantity of superficies, lineaments and proportions, could the fidelity, meaning and consequence of the representation be denied, because the artist had not superadded, “this is the Bear.” The mistake is not with the court as supposed in the petition.

*477The case of Brown and Heard distinguished from the present.

The case of Brown vs. Heard, (3 Marsh. 390,) is distinguised from the present, in very important particulars. Heard stated by his bill, that he borrowed fifty dollars, and that as a pledge or security for the re-payment of *that*sum, he, with his securities, executed the obligation for the delivery of seventy-five barrels of corn, at the end of twelve months. Upon this obligation, a judgment at law had been rendered for *$*150, in damages. But the bill did not charge, that any profit or interest whatever, had *been*reserved or intended to he secured. On the contrary, the bill charges, that the security or pledge was given for the return of the sum borrowed; not even legal interest, no interest or profit, whatever was included, or reserved to be paid at the end of the year to redeem the pledge. The value of the corn at the date of the contract is not alleged; no fact is charged, from which the legal conclusion of usury could be drawn. The proof, however, tended to raise a presumption that the obligation was intended to secure to Brown a greater sum than the legal rate of interest, would have amount ed to. The court said, “considered in this point of view, the contract must unquestionably be deemed void.” But the court refused relief in that case, because the complainant did not prove bis case as stated, and proof of that not stated, cannot be the ground of relief. In that case, the court said if it were intended to secure to Brown more than the legal rate of interest, the contract would be void. But that fact was not alleged by the bill; no reservation of interest or profit Was charged, on the contrary, the interest as charged was lawful. But in Bush’s case, the unlawful gain and reservation of interest and profit exceeding the legal rate, is distinctly stated and charged. If Heard had charged in his bill that not more than fifty dollars were lent and borrowed; that sixty dollars were to be paid therefor in one year; that to secure that sum of sixty dollars, a ■writing was given for seventy-five barrels of corn, of the value of one hundred and fifty dollars, and that Brown gave a writing to return this note for the corn if the sixty dollars were paid at the end of •the year; had Heard so stated his case, and proved

*478Petition overruled.

Caperton, for appellant; Crittenden, for appellee. .

it substantially as stated, then Heard’s case with Brown, would have been in principle Tike unto Bush’s case, and ought to have received like remedy. Heard’s bill did not allege the facts which make the constituent parts of an usurious agreement; he stated a fair contract and a pledge for performance by his bill; he attempted to prove it foul; the court declared the contract void, if it were as the proof conduced to show; but that which is not alleged, is not the subject of proof, nor the basis of a decree. But in the case of Bush and Rodes, all the constituent parts of an usurious agreement are set forth by the bill, the proof accords with the bill. According to the principles recognized in Brown vs. Heard, the contract between Rodes and Bush is usurious and void, and Bush is entitled to be relieved as he has asked.

Not disapproving the zeal of counsellors, in advocating the interests of their clients, we have con-sidered the petition presented for a re-hearing, but have discovered in it nothing more than zea}.

The petition is overruled.