Court Opinion

ID: 6947055
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:26:50.69696+00
Date Added: 2024-06-11T16:07:57.165167
License: Public Domain

The following dissenting opinion was delivered by Koerner, J. I regret that on one point in the ease just decided I cannot agree with a majority of the Court. I mean as to the invalidity of the pleas of usury. The Court, hold that, although the contract in question was made performahle in Massachusetts, and usurious under the laws of that State, yet the Massachusetts law cannot be enforced in our State. I understand that this view is founded on the opinion, that the usury laws of another State, where they provide for a partial forfeiture of the debt, is penal in its nature, and also that it is only remedial, not affecting the contract, and that for both these reasons they cannot be enforced here. It is not denied by a majority of the Court, but what the usury laws of the place govern the contract of the place, as far as regards the rate of interest claimed. It is also admitted, that where such laws declare’ a usurious contract wholly void, such contract, by the comity of nations, cannot be enforced anywhere. Now, if they were really criminal or penal laws in the proper sense, no other State but the one in which they were violated would take cognizance of them. Laws cannot be criminal in part, and not criminal in parts they must be either the one or the other. The case in ? Metcalf, 14, does not go on the ground that the usury laws are penal, or criminal laws. To maintain that we are bound to declare a usurious contract wholly void, when the laws of the contract make it so, whereby the creditor is deprived of the whole of his claim, but that we are not bound to regard the law when it provides for a forfeiture only, hy which the creditor loses hut a part of his claims, seems to involve a singular inconsistency. It, in other words, involves the following remarkable syllogism: “The law everywhere avoids usurious contracts, when they are declared wholly void by the law of the place. This contract was void in part, and consequently it is good as to the whole.” The decision in Massachusetts proceeds upon the ground, that the usury laws of New Hampshire, (which are analogous to the.laws of Massachusetts,) were remedial in their nature, and therefore could not be applied in Massachusetts. I dissent from this opinion with all due deference to the superior wisdom of that Court. If the usury laws of another country are remedial and do not affect the contract, then the usury laws of the State where the suit is brought must apply, because they are remedial. The interest stipulated in the Massachusetts case was usurious according to the law of New Hampshire, as well as that of Massachusetts. If the law is remedial in one, it must be in the other. It seems to me that there is a failure of proper distinction. A law of another State may affect the contract, and also the remedy, in presenting a peculiar mode of trial or a peculiar kind of evidence. As far as such a law operates upon the contract, in declaring it either wholly void, or partially so, or limits and modifies the essential rights growing out of it, it will be enforced by every other State; as far, however, as it affects the remedy, or the means of proceeding to enforce it, it will be disregarded if there is any conflict. Now, in the present case, by the "Massachusetts law, the plaintiffs, having acted in violation of law, must submit to a deduction of their claim, the amount of which deduction to be ascertained by a certain prescribed mode of computation, which every Court is able to make. As far as the law operates upon the quantum allowed to be recovered of the whole claim, it certainly affects the contract most materially. If the Massachusetts law, however, prescribes rules as to evidence in such cases, or the forms of proceeding, or the sum forfeited, which are inconsistent with our remedial laws, they will be disregarded, and their place will be supplied by our own. This view of the case, thus briefly, and I fear imperfectly expressed, seems to me to be sustained by what is said by the Supreme Court of the United States in the case of DeWolf v. Johnson, 6 Cond. R. 141. In that case the question arose on a contract originally made in Rhode Island, where the usury law did not avoid the contract, or the securities given for it, but only declared a forfeiture of one third of the principal, and all of the interest of the loan, as a penalty to be recovered by information or action of debt. This law was set up in Kentucky, where such loan, it was contended, had been secured by mortgage. On page 151, the Court say in reply to the argument that the Rhode Island contract was wholly void: “The law of Rhode Island certainly forbids the contract of loan for a greater interest than six per cent., and so far, no Court would lend its aid to recover such interest. But the law goes no further; it does not forbid the contract of loan, nor preclude the recovery of the principal under any circumstances. The sanctions of that law, are the loss of the interest and one third of the principal, if sued for within one year. On what principle could this Court add another to the penalties declared by the law itself.33 I have italicised some of the words just transcribed, in order to make the applicability of the whole passage more apparent. The policy of the usury laws in general, and the impropriety or iniquity of the decree in this particular case, are subjects on which I am not called upon by anything in the record to express an’ opinion. Justices Caton and Thomas concurred in the dissenting opinion. Judgment reversed.