The daily exchange. [volume] (Baltimore, Md.) 1858-1861, 1859-03-24
INTERESTING DECISION OF THE COURT OF
APPEALS OF MARYLAND.

In the case of BandeI Isaac, which was argued
before full Court, the following important de-
csion upon the question of usry as affected by the
present Constitution, was made. The unanimous
opinion of the Court delivered by Chief Justice
LeGrand, and we sure it will be read with in
terest by our citizens generally.
This was action instituted in the Court of Com
mon Pleas of Baltimore city by Isaac, the holder,
against Bandell, the drawer of a promissory note,
to recover its amount.
At the trial below there was full and unoues-
toned proof of the making and endorsement of the
note Under the plea of non-asspmpsit, the defence
relied upon was that Of usury and other. To
that objection address ourselves and as this is
matter which concerns the daily transactions and
dealings of men, we will be plain and brief as the
nature of the inquiry will allow.
1t the defence in this case be at all available it
must be because OF the language of the Constitution
In the 49h section Of the Sd article of the Constu-
tion is the following:
'The rate of interest in this State shall not ex-
ceed SIX per cent. per annum, and no higher rate
shall be taken or demanded, and the Legislature
snail provide, by law, all necessary forfeitures and
penalties against usury."
Were it not for an opinion pronounced bv the
Judges of the Circuit Court of the United STATES for
the District of Maryland, in the case of Dill u.s. Eli-
colt, we would experience but little, if any, diff
Guilty in determining the true import of the Consti-
tutional provision Our high respect for the iudp-
ment of the learned judges who gave that opinion,
has called upon us to weigh most carefully the rea
sons given In its support, and to review, with the
strctest scrutiny our opinions in regard to the
matter. The more we have reflected on the sub-
ject the more tn rough has been our conviction
that the rule laid down in Dill u.s. EHicon
ought not to be accepted in this State as the
proper Interpretation of the Constitution in this
particular.
The theory which rests the decision to which
we have adverted, is simply this: That the taking
OF more than six per cent. interest for the use of
money is usury, and therefore prohibited by law;
and, as consequence, any contract which reserves
or authorizes the taking of more than six per cent
Is ,ohoty void, and, on grounds of policy, incapable
of being enforced by our courts. To this general
proposition to our minds there are substantial and
unanswerable objections The effect of the decision
OF that Court, is that contract providing for the
payment OF more than six per cent. is not simply
void as to the ercess, but void entirely The only
| authority adduced in support of this view is the
case of the Bank Of the United States us. Queens g
Peters, 527. In that case, by bare majority of the
Court, it was held that under the charter of the
| bank contract by which more than six per cent
| was to be paid could not be enforced and that al
though such contracts were not, in eoords, by the
charter pronounced void yet, the policy of the law
| made them so in fact, and worked a forfeiture of
| the money loaned. In that case it was also held
that "receiring' was the equivalent to ''takinq"
| When the same case again appeared before the
same Court this declared to be error and the
distinction between the two clearly pointed out in
the opinion of Justice Story. ''The reservation"
says ne, "of usurious interest makes the contract
utterly void; but if usurious interest be not stipu
lated for, but but only taken afterwards then the
contract is not void but the party is only liable to
| the penalty for the exccess."-9 Peters, 399 This
decision also established that the transaction which
had been formerly declared to be usurious and void
was free from all taint, and whilst the Court does
not in terms, overrue the doctrines of the decision
! in Peters, yet, in explanation of them
places it upon the ground that the case came before
the Court on demurrer which admitted the trans
action to have been f'unlawfur, usuriously and
corrupty entered into" With this notice of the
! Court then declare that they "dehberafelu adhere"
to the doctrine of Fleckner u.s. The Bank of the Uni
ted States, Wheaton. In that case it is said: "The
| Statues of Usury of the States, as well as of Eng
land contain an cypress proUision, that usurious
contracts shall be utterly void; and without such
an enactment, the contract would be valid at least
in respect to persons who were strangers to the usu
ry." Now this language was held as applicable to
clause IN the charter OF the Bank which declared
"that the Bank shall not be at liberty to purchase
any public debt whatsoever, shall it take more
than at the rate OF six per cenum annum for or
on its loans OF discounts" 1t is this clause in the
charter which the Court examined in the case in
Peters, and on the Interpretation of the import
there given the case Of Dill u.s. EHicott was decided
by the Circuit Court for the District of MARYLAND
If the decision of Flechner The Bank ofte Uni
ted States is, was said in Peters, to be adhered
to, it follows, the Interpretation given in Peters
cannot be maintained for it is in direct conflict with
it. Whatever, therefore. might have been the
force, as authority, of the in Peters, it has
| ceased since the decision in Peters, where it is
substantially overrued, and its opposite the doctrine
| of Wheaton, set up, and which we think is con-
| elusive of this case, it being, in our Judgment, in
conformity with the decisions of most of the differ
ent States, and in conformity with good reason.
| The Court say: "The taking of interest by the
| Bank beyond the sum authorised by the charter
| would, doubtless, be violation of its charter, for
! which remedy might be applied by the govern
| ment; bW as the Act Of Congress does not declure
that shall acoid the contract it as not erceired hoo
the original defendant could avail himself of this
| ground to defeat recovery"
If this be sound law and we shall
| presently proceed to show that it is, WHY
should different Interpretation be given
to the 49th section of the Sd article of the
Constitution of Maryland? 1t 'does not declare''
thata contract eracting than sac per cent shall
be void any more than did the clause in the Bank
charter So far from it, it is plain to us from the
very words of the section that its purpose was first
to fix and establish certain legal rate of Interests;
second to leave it with the legislature to provide
"by law, what amount and kind of forfeiture
and penalty should be suffered by, and imposed up
on, those who should take or demand more than six
per cent The thing forbidden by the Constitution
is the taking demanding higher rate of interest
than six per cent it is not forbidden to take and de-
mand that or lesser rate. The thing forbidden is
the and nothing else and that is what lille
gal and void, and it is within the province of the
Legislature to punish this illegality by foreitures
and penalties. Whilst the Constitution makes it
competent to the Legislature ''by law to forfeit
the whole, or any part, if the money loaned, and =,
in addition, to impose penalty, vet until it does
exercise this office, all that is ''av0ded by the
Constitution is the excess beyond the six per cent.
interest depended upon the legislative pleasure to
be changed whenever it seemed expedient The fra
mers of the Constitution thought it best to deprive
the Legislature of this discretion, and therefore
fixed the rate in the Constitution, but
continued to the Legislature the power
of determining the torteitures and penalties.
By the act of 1904, chapter 60, section l, it was
provided that no person or persons whatsoever
should "exact, or take directly for loan of any
moneys" &C., at ahigher than certain rate speci-
fed in the section. This language is certainly as
strong as that of the Constitutions and vet the Leg
isature that passed that act did suppose that If
a higher rate exacted taken, the contract
was therefore, avoided because of this declaration,
and accordingly, therefore, went on by the second
section of the act to make all such usurious con-
tracts void and by the third section to provide for
FIXTURES and penalties for the making of such CON
tracts The power exercised by the Legislature in
the passage of the second and third sections of the
act of l704, is the that which it is author
ised to exercise by the 10th section of the third ar
tcle of the Constitution. IT, is the case, the Leg
isature has not provided "by law forfeitures and
penalties, the Court cannot usurp the authority
which the Constitution has, in express terms EN-
powered it to exercise If the trainers of the Con-
stution understood that the mere fixing in that in
strument the legal rate Of interest per avoided
the contract, they would not have confded to the
Legislature the power to provide by law "forfei-
tures," for, in that there would be nothing to
forfeit, and they would have simply directed the
Legislature to provide penalty. We must pre-
sume that the Convention which framed, and the
people who adopted the Constitution, understood
what the previous state of the law on the
given subject, and that they were aware of
of the fact, that whatever may have been the view
entertained in times gone by in England and else
where, to the sinfulness of taking interest that
here, in Maryland, both the Legislature and Courts
held it lawful and proper to do certain rate
and hey yond that only nahum prohibitun, and not
as morally wrong in itself; that they considered it
but little, if anything short of immoral for per-
SON to avoid his solemn promise to refund what he
had actually received of another's money. They
could not have been uninformed of the existence OF
the Act of lS45 chapter 1852, which made it incum-
bent upon any claiming to avail himself of the
provisions of the Act of 1904. specially to plead
and set out both principal and interest actually and
fairly due, and that when this should be DONE
the party so pleading made liable for the prin
cipa and interest actually due; and if not ignorant
of this it is impossible to believe they could have
intended to repeal this Act by indirecton when ii
was so easy to have done it in plain words. The
conclusive evidence, to our minds, that they never
intended to do So but designed to leave that subject
to the Legislature. And nasmuch a repeal of
law not to be unnecessarily inferred, and as the
third section of the Bill of Rights continues in force
"All Acts of Assembly in force on the first Mon
day of November, eighteen hundred and fifty, ex
cept such as NAV have expired, may be altered
by this Constitution, conclude the Legislature
not having done SOY that the Act of 1S45 is still in
full force, subject ''to the revision Of and amend
ment or repeal by the Legislature of this State"
In constituting Constitution, we must take into
consideration the circumstances which attended its
| adoption, and what appears to have been the
~