Case Name: The State of Ohio, for the Use of the Fund Commissioners of Muskingum County, v. James Taylor et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1841-12
Citations: 10 Ohio 378
Docket Number: 
Parties: *The State of Ohio, for the Use of the Fund Commissioners of Muskingum County, v. James Taylor et al.
Judges: 
Reporter: Cases decided in the supreme court of ohio : upon the circuit at the special sessions in Columbus
Volume: 10
Pages: 378, 379–382

Head Matter:
*The State of Ohio, for the Use of the Fund Commissioners of Muskingum County, v. James Taylor et al.
A stipulation to pay five per cent, as collection fees, in addition to the legal interest for money loaned, is against public policy and void.
This is a motion from the county of Muskingum.
It was reserved on the last circuit, upon an agreed statement of facts, signed by counsel, from which it appears, that in 1837, James Taylor, one of the defendants, borrowed from the fund commissioners of Muskingum county $25,000 of the surplus revenue of the United States, deposited with the State of Ohio, for the payment of which he executed his bond to the State of Ohio, in the form required by law, but containing no agreement to pay the attorney’s fees for collection. At the same time he executed a warrant of attorney on the same paper, to confess judgment for the amount, with seven j>er cent, per annum, and five per cent, thereon in addition, being the fees paid by the state to its attorney for collection and costs of suit. Taylor, at the same time, executed a mortgage to the state, the condition of which was that he should pay the sum so borrowed and also the attorney’s fees, not exceeding five per cent., which the state might have to pay its attorney, with the interest on the principal sum.
The bill was filed to subject the mortgaged premises to sale, and a decree pro confesso rendered against Taylor. The court of common pleas refused to include the attorney’s fees for collection in the amount due upon the mortgage. The land was sold, and the money brought into court, when the counsel for the complainant moved to tax the attorney’s fees, as by the agreement of the parties, they became a part of the costs in the case. This motion was overruled by the common pleas, and an appeal taken by the complainant, and the same application is. now urged here, to include the five per cent, for attorney’s fees, in the bill of costs.
*Goodard and Convers, for the motion :
We maintain that the stipulation for the payment of the expenses that might be incurred, was both legal and proper. The object was not speculation, or profit, but indemnity merely. It was intended to enable the commissioners to fulfill the purposes of the law. Ramsdon v. Langley, 2 Vern. 536; Lomax v. Hyde, 2 Vern. 185; Arcambel v. Wiseman, 3 Dall. 306; S. C., 1 Pet. Cond. 135.
This is a case in which, a contract is fairly made, between parties competent to contract, with full knowledge and understanding of its force and effect, and prohibited by no statute. ■ Why ask this court to change the contract and thus usurp the place of the contracting parties themselves? Is it said that the contract is against public policy? The right view of the consideration of public policy is taken by Best, C. J., in the case of Richardson v. Mellish, 2 Bing. 229; S. C., 9 Eng. Com. Law, 397, in which, speaking of the transaction in that case, he says:
“We have heard much of this being a contravention of public policy, and that, on that ground, it can not be supported. I am not much disposed to yield to arguments of public policy; I think the court of Westminster Hall (speaking with deference as an humble individual like myself ought to speak of the judgments of those who have gone before me) have gone much further than they were warranted in going in questions of policy; they have taken on themselves, sometimes, to decide doubtful questions of policy; and they are always in danger of so doing, because courts of law look only at the particular ease, and have not the means of • bringing before them all those considerations, which ought to enter into the judgment of those who decide on questions of policy. I therefore say it is not a doubtful matter of policy that will decide this, or that will prevent the party from recovering; if once you bring it to that, the plaintiff is entitled to recover; and let that doubtful question of policy be settled by that high tribunal. 380] namely, the legislature, which has the means of ^bringing before it all the considerations that bear on the question, and can settle it on its true and broad principles.
“I admit that if it be clearly put upon the contravention of public policy, the plaintiff can not succeed; but it must be unquestionable — there must be no doubt. Looking at all the facts of this case, I can see no unquestionable principle of policy that stands in the way of the plaintiff, to hinder him recovering in this action.” And in the same case Mr. Justice Burroughs says, “I, for one, protest, as my lord has done, against arguing too strongly upon public policy; it is a very unruly horse, and when you once get astride it, you never know where it will carry you. It may lead you from the sound law. It is never argued at all but when other points fail.”
Stillwell, contra.

Opinion:
Wood, J.
It must be admitted, if this agreement can be enforced; the statutes of Ohio regulating the rate of interest, whether upon loans by the fund commissioners, or in other cases, are at once virtually repealed. The statute passed on March 28, 1837, provides that the fund commissioners, in a certain event, may loan the money to individuals at a rate of interest not exceeding seven per cent. Seven per cent, is the maximum of interest the commissioners are authorized to contract for, or receive for the forbearance of their loans. They are prohibited from receiving more, in fact, in express terms — that is, as interest. It is said, however, that the five per centum in this case is by the agreement of the parties, to be added to the seven per cent., not as interest, but as costs, agreed upon as such, for collection, by the parties.
Now, it seems to us to be of little consequence, in this case, what this five per cent, may be called, but the inquiry is, what is the thing itself? However it may be disguised, it is very clear-io,us it is a mere shift oFdevice by which twelve per cent, is retained, as interest, upon this loan, and in this view of the *case [381 can not be enforced. This court haSe decided that under the laws of Ohio, but six. cent .interest isjrecoverable, though the parties contract for more or higher rates.
But is it such a contract as public policy should execute ? What may be supposed as the natural result to the community from the execution of this agreement? It would be the condition of future loans, at banks, that the borrower should pay the expenses of collection, and, perhaps, the tax thereon. The brokers in this state would hold a general jubilee; and as their sense of morality and law usually expands with their hopes of gain, in proportion to the borrower's necessity they would find, probably, additional items of costs, as the means of a legalized extortion upon their loans. In our opinion, such agreements are against the public policy of the country, and ought not to be enforced in courts of justice. They have, by this court, on the circuit, been denied to be obligatory, and further reflection confirms us in the correctness of such opinion. The absence of adjudicated cases in the reports, either English or Amoriean, show these agreements are of modern invention, having their origin in the improvements of the age.
That this five per cent, is not costs, is certain, from the fact that it is not so recognized by law. At common law, no costs were allowed. If a plaintiff failed in his action, he was amerced for his false clamor, but costs were not adjudged against him. In Ohio, no costs are given to a successful party, unless authorized by statute, with but one or two exceptions, and the statute defines the items, and imposes severe penalties upon the ministers of the law, for taking other or higher costs or fees than are expressly provided for. On the whole, wo think the common pleas were right in holding the agreement void to pay five per cent, collection fees, and such item will not be permitted to be taxed in the costs by this court. Motion overruled.