Case Name: John Garlington ads. John T. Coleman
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1843-12
Citations: 2 Speers 238
Docket Number: 
Parties: John Garlington ads. John T. Coleman.
Judges: Evans, Butler, Wardlaw and Richardson, JJ. concurred.
Reporter: South Carolina Law Reports
Volume: 29
Pages: 238–246

Head Matter:
John Garlington ads. John T. Coleman.
1. On a contract of sale Between partners in a factory, the interest of the partner selling was by agreement estimated at ten per cent upon it for a given time, to which was added debts then due by the purchaser to the seller, including interest at seven per 'cent, thus making one aggregate sum which was divided into five equal instalments, and interest at ten per cent calculated on each. Á general aggregate was thus made which was divided into five equal parts, and five single bills executed, one for each part, payable in five successive years. The calculation in the hand writing of the partner selling, called the ten per cent on each instalment, interest. The proposition óf purchase was to take the co-partner’s interest at ten per cent, on his stock, seven per cent cn borrowed money, and all to be at ten (meaning ten per cent) from a particular date. It was held, that the single bills were Usurious.
2. Held further, that as the money loaned to the purchaser by the seller before the contract of sale, and at that time a subsisting debt, was included in the contract, and ten per cent allowed on it, this amounted to usury.
Befóte Butler, J. at Laurens, Fall Term, 1843.
This was an action of debt on two single bills, both bearing date 13th Oct. 1838, each for the sum of $1150 82, drawn by N. V. Van Patton, John S. James, and John Garlington, the defendant,, the latter two of whom were the sureties of the said Van Patton, and payable to the plaintiff on the 1st January, 1840 and 1841, respectively. The defence was usury: and the defendant, in support of his plea, relied on certain calculations in the hand-writing of the plaintiff, which were made on various notes held by the plaintiff on Van Patton, and $2000, which had been employed by the plaintiff in a manufacturing establishment in co-partnership with Van Patton for about 5 years anterior to the execution of the single bills. The calculations are to the following effect, viz:
1st note, $25 31 1-4 due 1 Nov’r. 1834.
2d “ $880 62 1-2 “ 1 August, 1835.
3d “ $223 25 “ 5 Oct. 1835.
Money ) in Fact’ry ) $2000 00
$3129 18 3-4
Interest is then calculated on the three first items at 7 per cent, until 1st. January, 1839, and on the $2000 at 10 per cent, as stated below.
1st Factory capital, $2000 00
Int. on same from 1 Nov. 1833 to
1 Jan. 1839, at 10 per cent. 1033 33
3033 33
Note for $25 31 1-4
Int. from 1 Aug. 1834 to 1 Jan’y
in 1839, at 7 per cent. 7 82
___ 33 i3 p_4
'Note for $880 62 1-2
Int. from 5 Oct. 1835 to 1 Jan’y
1839, at 7 per cent. 204 19
---- 1084 81 1-2
Note for $223 25
Int. from 5 Oct. 1835 to 1 Jan’y
1839, at 7 per cent. 51 75
—- 275 00
5) $ 4426 27 3-4
Each instalment, $885 26
Int. on first instalment, at 10 per
cent, for one year, 88 52
$973 78
Int. on 2d instalment $885 26
for 2 years, at 10 per cent. 177 04
1062 30
3d instalment, 885 26
Int. on same, 10 per cent, for 3
years, 265 56
1150 82
4th instalment, $885 26
Int. at 10 per cent, for 4 years, 354 08
1239 34
5th instalment, $885 26
Interest on same for 5 years, at ■
10 per cent. 442 60
1327 86
5) 5754 10
Ain’t of each Instalment, $1150 82
Van Patton and his sureties aforesaid, gave five single bills, each for $1150 82, ascertained as per the above calculation. They were all dated 13th Oct. 1838, and payable respectively on the 1st January, 1841, ’2-’3-’4-’5, to the plaintiff. The two first are the subject of this suit.
On the 1st of January, 1839, the plaintiff sold to Van Patton his interest in the Factory, and executed a deed purporting to be for and in consideration of $3000. — At the time of sale it was estimated by the parties that the property had appreciated 10 per cent, and the sale was, no doubt, effected upon that estimate. After 1839, all the money to be paid by Van Patton in different instalments, was calculated at the rate of 10 per cent. The following letter will show the proposition made by Van Patton.
Yan Patton’s Shoals, Oct. 1st, 1838.
Col. J. T. Coleman:
Dear-Sir — According to our last conversation of me taking your interest in the Van Pattons, ifcc. at 10 per cent on the stock, and 7 per cent, on borrowed tnoney, and all to be at 10 from the first of January, 1839 — the first payment to be made January 1840 — so on in five equal payments, annually—
Mr. John Garlington and John S. James, have tendered their services to become my security for the amount.
If the above security is sufficient, write me by the bearer of this.
And at the same time please let Henry Young or your agent arrange the matter with Garlington and James.
P. S. My brother will call on you with this. Please send me an answer on his return.
Yours with due regard,
N. V. VAN PATTON.
Col. Coleman acceded to these propositions, and thereby effected a final settlement of all matters connected with the factory. After the purchase, Van Patton said to several witnesses that the property was worth $20,000. With a view of enhancing its reputation, or to sell it dona fide, Yan Patton advertised the establishment for sale, and at the sale he employed a bidder, Thos. Parks, to go as high as $15,000. This witness was sworn, and gave the following statement: He said he bid as high as $10,000 in competition with some one else who had bid near that amount.
He thought the man who had made the last bid was a gentleman by the name of James Anderson, a man of substance. He heard Van Patton say he had given $5,000 for the mills and that he would not take $10,000. W. thought .it was the intention of Van Patton to effect a sale.
Van Patton said that all the profits of the place had gone into improvements, during, the time he and Coleman were in co-partnership.
Thomas M. Young was sworn, and said Van Patton was the owner pi mills, known as “ Van Patton Shoals,” valued at $2,000, when Col, Coleman entered into co-partnership, who put in the same amount as his share of capital: Van Patton went to the North and bought machinery, which cost more that the $2,000 put in by Coleman, and Van Patton borrowed from Coleman money to pay his part of the debt, and gave his note — wTould bor r->w frequently, and gave his note in the same way. Profits were consumed in improving place. Thinks place would have brought, at the sale referred to, at least. $10,-000.
The case w7as submitted to the jury, under the following instructions on the law. 1st. Up to January, 1839, his Honor said to the jury that he could see nothing usurious in the transaction of the parties. The 10 per cent calculated on the 2,000 was only a mode resorted to for. ascertaining the value of the property at that time, and it appeared that nothing more than 7 per cent had been calculated at that time on the money actually lent. After that time 10 per cent was calculated on all the money to be subsequently paid in different instalments. Looking at this state of things alone, which appeared from the memorandum containing the calculation, the presiding Judge said he should not have hesitated to regard it as presenting a case of usury, to be decided by the Court, as in every case where the instrument contains the terms of the contract.
It was contended, however, as well from the evidence as the mode of dealing between the parties, that this was a mode resorted to only to ascertain, or rather to estimate, the prospective value of the property as the instalments should fall due, and that 10 per cent was not exacted in consideration of forbearance of money lent, (fee. This presented a question of bonajides, to be determined by the jury — and as a question of intention it was submitted to them, to wit: was the 1(3 per cent, calculated, and received, with the bona fide intent to effect a sale ,of the property, at the price to be made up by the aggregate calculation, or Was it the price of forbearance to demand and enforce the payment of money then due, and which might be said to be advanced by Coleman 'l
The jury very promptly returned a verdict for the plaintiff, negativing the plea of usury.
The defendant moved the Court of Appeals for a new trial, on the following grounds.
1. Because the Court should have charged the jury that the computation of 10 per cent on the $2,000 for 5 years and 2 months anterior to the date of the contract sued upon, tainted the consideration of the single bills with usury.
2. Because the jury should have been instructed as matter of law, if the view in the above ground was incorrect, that the calculation of 10 per cent on the $4,426 27 1-2 cts. for five years, in the mode in which it was done, rendered the single bills sued on usurious.
3. Because the verdict of the jury was contrary to law and evidence.
Sullivan <$- Campbell, for the motion.
Mr. Perry, contra, for the plaintiff.
This was a fair and bona fide sale, and no “lending or adancing,” of money. The law against usury is for the protection of borrowers and not 'purchasers. This was a purchase on time; the calculation of ten per cent, was only a mode ascertaining the value of the property purchased. It was supposed to be worth the amount of the notes, or would be when the notes became due.
We must look to the intention of the parties. This was a matter for the jury, and they have decided that it Was a sale and not a loan. ' The intention of the parties is always a question of fact for the jury. In support of this view the following authorities are referred to.
Usury is the “lending or advancing’1'1 money or other commodity upon unlawful interest; 6 Statutes, 409; 4 Statutes, 364; 3 Statutes, 132, 104.
The difference between real sales and shifts to raise money, 2 Bay, 31 & 30 ; 2 M’Cord, 176 ; 3 M’Cord, 370 ; 1 Bailey, 326, 329 ; 2 Dess. Eq. 338 ; 6 Cowen, 144 & 149 ; 4 Hen. & Munf. 490; 2 Edwards, 262; 2 Part of Levin’s Rep. 7; 3 Wilson, 390 ; 1 Cowper, 112 ; 3 Term. Rep. 531; 8 East, 304 ; 11 East, 612.
To constitute usury there must be “a corrupt agreement,” 8 Cowen. 670 ; 1 Bailey, 329 ; 2 Cowen, 712.
“The intent with which the act is done is an important ingredient to constitute usury.” 4 Peters U. S. Rep. 205 ; 9 Peters, 378.
It was not the intention of the Legislature to interfere with individuals in their ordinary transactions .of “buying and selling 9 Peters, 418.
As to the intention of the parties, it is a proper question for the jury to decide. 7 Johnson, 197 ; 5 B. & Aid. 954 ; 2 Starkie on Evidence, 860, 859; 4 Porter, 128; 15 Petersdorff’s Ab: 249, 250. The jury having decided it in favor of the plaintiff, this Court will not interfere.
As to remote speculations and purchases of Estates'on time not being usurious, seethe following authorities. 1 Yes. Jr. 527; Forest Rep. page 4; Loffts Rep. 595; 4 Bro. C. C. 28 ; 7 B. and C. 453 ; 1 M. and R. 143 ; Coop. C. C. 231; 3 M. and P. 130 ; 5 Bing. 485; 1 Yes. 529, 534.
The plea of usury should not be favoured. The policy of the law is doubtful. The statute was intended for the protection of borrowers in needy circumstances ; purchasers cannot be protected, and should not be. The law never contemplated any such thing, and should not be extended to cases not strictly Avithin the statute. " •
In this case the property had to be sold. It was worth the price given, and. would have sold for it at public sale. The offer to purchase came from Yan Patton. The money loaned was secured by the mortgage of Yan Patton’s interest.. It was property considered as so much stock vested in the establishment. The profits and borrowed noney had all been expended in improvements. The plaintiff is no usurer nor speculator, and the character of the parties may be looked to in order to determine the nature of the transaction.

Opinion:
Caria, per
O'Neall, J.
The first ground of appeal was not pressed, and indeed was virtually abandoned by the abandonment of the appeal in the case of Coleman vs. James, in which the same point was ruled against the defendant, on these same single bills. But it is still perhaps best to say that the whole Court agree that the calculation of 10 per cent, on the plaintiff's stock in the factory for the time past, was to be regarded as the means of ascertaining its present value, the whole profits having been expended in improvements. This was, therefore, so far a sale, and neither a loan or forbearance. The case of Beete vs. Bidgood, 14 Eng. Com. Law Reports, 80, decides this point, in an exactly similar case. The second ground, however, is that on which the parties have contested the case. The facts necessary to be stated to understand it are few, and may thus be presented. The plaintiff's interest in the factory was estimated, including the capital and 10 per cent upon it, for five years and two months, at $3033 33, to which were added the debts then due by the defendant to the plaintiff, including interest at 7 per cent, $1,382 94, making an aggregate of $4,426 27. This was divided into five equal instalments of $885 26, and " interest" at 10 per cent calculated on each, and a general • aggregate made of $5,754 10, which was divided into five equal parts, and five single bills for $1,150 82, executed and made payable in five successive years.
The question is, are these single bills tainted with usury 1 If they are not, I confess I should be put to great difficulty to say what would have that effect. The Acts of 1829, 6 Stat. at Large, 409, and 1777, 4 Stat. at Large, 363, are to be construed together; the former was intendr ed merely to repeal the penalty in the Act of '77, and to substitute another in its stead. The former Act very clearly defines usury to be the taking of more than 7 per cent interest for the forbearance of one year.
The contract before us plainly takes more than 7 per cent for the forbearance of one year. The calculation in the hand writing of the plaintiff calls the 10 per cent on each instalment, " interest." For example, it is set down " interest on first instalment, at 10 per cent for one year." This seems to be plain enough. But turn to Van Patton's proposition of purchase, which was accepted, and it makes a plain matter still plainer. It states that, according to a conversation previously had, he would take the plaintiff's interest in the factory " at 10 per cent on the stock, and 7 per cent on borrowed money, and all to be at 10 (meaning 10 per cent,) from first January, 1839." This was as much as to say, ascertain the amount I will owe you for your interest in the factory, at 10 per cent on the capital, and for borrowed money, including legal interest, and I will allow you, for five successive annual forbearances, 10 per cent on the whole. This is usury, almost written out in the words of the statute. But there is still another view. If the contract had been alone for the sale of the factory, there might have been some reason for the allegation, that it was a sale, and not a loan, or forbearance of a debt already due. Thirteen hundred and eighty-two dollars 94-100 was for money previously loaned, and then a subsisting debt of Van Patton. That sum was included in the contract, and 10 per cent allowed on it. This was taking more than 7 per cent for the forbearance on it.
In any point of vigw the usury is clearly made out, and the contract is therefore bad in law, for the usury embraced in it, and the interest which, at 7 per cent, would otherwise be computed from the time each single bill fell due.
The motion for a new trial is granted. -
Evans, Butler, Wardlaw and Richardson, JJ. concurred.