Case Name: Bejamin Smith and Ebenezer Wilson, Executors of Seth Burn, deceased, against Dan Beach
Court: United States Circuit Court for the District of Connecticut
Jurisdiction: United States
Decision Date: 1808-06
Citations: 3 Day 268
Docket Number: 
Parties: Bejamin Smith and Ebenezer Wilson, Executors of Seth Burn, deceased, against Dan Beach.
Judges: 
Reporter: Day's Reports
Volume: 3
Pages: 268–271

Head Matter:
June, 1808.
Bejamin Smith and Ebenezer Wilson, Executors of Seth Burn, deceased, against Dan Beach.
A corrupt agreement, in which the minds of the parlies meet, is necessary to constitute usury, Therefore, where more than iawfulinlerest was reset--ved with the knowledge of but without thefciiowiedg-e of tlte borrower, it was transaction was not usu-nous.
MOTION for a new trial.
This was an action on a promissory note, executed by the defendant, to Seth Bird, the plaintiffs’ testator.
The defendant pleaded usury, alleging, in the usual form, a corrupt agreement,
On the trial, it appeared, that more than lawful interest was reserved in the note; but that the defendant did not know of such reservation, until some time after the note was executed, anddelivered. The plaintiffs contended that, under these circumstances, the note was not usurious. But the court directed the jury, that if they found that Bird, the payee, knew of the illegal reservation, at the time of the execution and delivery, they must find the issue in favour of the defendant.
The jury found a verdict for the defendant accordingly; whereupon the plaintiffs moved for a new trial, which motion was reserved for the opinion of the nine judges.
Gould, in support of the motion.
The statute, upon which the defendant’s plea is founded, declares, that all securities made for the payment of money lent upon or for usury, whereby there shall be reserved above the rate of six dollars in the hundred, shall be void. To bring this case within the statute, it must be shown, that there was a loan upon usury, as well as a reservation of more than six per cent. What is the precise mean ing of the term usury the statute does not point put, but leaves it to be defined by the common law. This always speaks of usury as implying a contract. 2 Bla. Com. 454. 4 Bla. Com. 156. 5 Bac. Abr. 405. But a contract always supposes a mutual consent of the parties. In this case, the defendant did not, and could not, consent to the unlawful reservation, as he did not know that such reservation was made. To show, that the fiayee had knowledge of it, may conduce to show, that he acted fraudulently in the transaction; and such fraud may be a proper ground of relief in a court of chancery.
If more than legal interest had been reserved; by mistake, it clearly would not be usurious. This point has been settled by repeated decisions. JVevison v. Whitley, Cro. Car. 501. Booth v. Cook, Freem. 264. pi.' 286. Bush v. Buckingham, 2 Vent. 83. But why has this class of cases been held not to be within the statutes against usury ? Because a corrupt agreement was wanting.
So long as there was no corrupt agreement between the parties, the knowledge of the payee, or his private intentions, cáá have no efFect in this case.
There must be the same corrupt agreement to constitute a usurious reservation as a usurious taking. But if one were to take more than lawful interest ¿y/bree, it will not be contended, that he would thereby subject himself to the penalties of usury.
It is essential to the substance of the plea, that it allege quod corrupte agreatum fuit. Com. Dig. út.f’lea-der, (2 W. 23.) JVevison v. Whitley, Cro. Car. 501. This form of the plea may be seen in Lilly's Ent. 183, 184. Clift. 183. 185. Lib. Plac. 146.//. 71. Id. 156. pi. 99.
But there is one consideration, which must be decisive. The issue in this case is, that it was corrvptly agreed, lie. This issue could not be found for the defendant, upon the facts stated. The direction of the court to the jury, therefore, was erroneous.
A. Smith, contra.
The object of the statute, as appears from the very title, was to restrain excessive usury. The first section prohibits the taking, of more than six per cent, per an-num. for giving day of payment. By the second section, securities, in which is included more than at the rate of six per cent, are declared to be void. Such is the security in this case. Here was a loan, a giving day of payment, and a reservation of more than lawful interest. What more was necessary to bring the case within the statute? It is claimed by the plaintiffs’ counsel, that the defendant ought to have known that more than lawful interest was reserved. But it is to be remembered, that he was the borrower, and that the statute was made for his benefit and protection, and was designed to operate exclusively against the lender. If, out of regard to the borrower, the statute would render void a security given by him understandingly and voluntarily for the payment of unlawful interest, there can be no reason why a similar security, given ignorantly and undesignedly, should not be equally void. As to the lender, no favour ought to be shown towards him, on account of the borrower’s ignorance. If he understood the nature of the transaction, it is sufficient at least as against him.
The case of Busk v. Buckingham, read by the plaintiffs’ counsel, is not applicable to the present question. There the plaintiff did not know of the unlawful reservation. It was not made bv his consent.
It is said, there must be a corrupt agreement. By this, however, we are not-to understand, an agreement which is in itself immoral, or corrupt in foro conscienliee. It is in contemplation of law corrupt,' when the statute, is violated. It was proper for the court to leave it to the jury to decide, whether the reservation, which was admitted to be above the legal interest, was made with the knowledge and consent of the plaintiffs’ téstator; and if it was, it follows that it was by a corrupt agreement.
te) Slat. Conn, tit. 170. s. 2,

Opinion:
Bv the Court,
unanimously. A corrupt agreement is essential to constitute usury; and to form a corrupt agreement, as in all other contracts, the ittinds of the parties must meet. The assent of Beach was, therefore, as essential to the existence of, a usurious agreement as that of Bird.
From these premises it follows, as an undeniable consequence, that there could be no corrupt agreement while either of the parties remained ignorant of the excessive reservation; and the jury ought to have been so instructed.
NevV trial to be granted.