Court Opinion

ID: 6600522
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:07:14.489114+00
Date Added: 2024-06-11T15:57:59.991199
License: Public Domain

Upon a motion for a rehearing, William P. Lynde, of counsel for the defendant Barnes, argued that the stipulation for the payment of exchange upon Troy, in addition to ten per cent, interest, rendered the contract usurious; that it was entirely immaterial whether the money was to be reloaned in this state or remitted to Troy, N. Y., the place of the lender’s residence ; that if the lender, residing in’ another state, sends his money to this state and loans it here, he has no right to impose upon the borrower the expense of remitting the money to him, if that expense, added to the rate of interest agreed upon, amounts to more than the highest rate of interest allowed by the law of this state; that if the stipulation is to pay the current rate of exchange at the time payments of principal or interest are made, without any limitation of the amount to be so paid, the mere chance thus reserved for requiring of the borrower .a greater amount than *486the highest legal rate of interest, renders the agreement usurious, whatever may be the rate actually prevailing at the time of the loan, or whatever the probabilities at that time as to the rates of exchange during the term of the loan. In support of these views he cited Towslee v. Durkee, 12 Wis. 480; Cleveland v. Loder, 7 Paige, 557; Leavitt v. Delauney, 4 Coms. 363; Chippendale v. Thurston, 4 Car. & P. 98; Barnard v. Young, 17 Ves. 44; Thomas v. Murray, 34 Barb. 157; Rock Co. Bank v. Wooliscroft, 16 Wis. 22; and a recent case decided in the U. S. circuit court for Wisconsin, “ where the defense was usury, the bond requiring exchange to be paid to the lender residing near Boston, Mass.,” in which case Judge Miller is represented to have said: “ It is well settled that upon a contract for the loan of money, the lender is not at liberty to stipulate even for a contingent benefit beyond the legal rate of interest, if by the terms of the agreement he has a right to the repayment of the money loaned, with the legal rate of interest thereon, at all events. (2 Parsons on Con. 103, 405; Cleveland v. Loder, 7 Paige, 557.) A stipulation even for a chance of advantage beyond legal interest is illegal. A profit made, or loss imposed, on the necessities of the borrower, whatever form, or shape, or disguise it may assume, when the treaty is for a loan and the capital is to be returned at all events, has always been adjudged to be so much profit taken upon a loan, and to be a violation of those laws which limit the lender to a specified rate of interest. In the case under consideration, the money was in Milwaukee when it was advanced, and there the plaintiff agreed to receive in the same funds, as to their par value, that he advanced, with the highest rate of interest, and one per cent, added. The note is not payable in Boston, with exchange, but in Milwaukee. There is no proof in explanation of the reason for making the note payable with exchange. Neither party requested it. The *487note was thus drawn and signed. In the absence of proof on the subject, the mere fact of the payee’s residence being near Boston will not relieve him from the imputation of indirectly contracting for a greater profit on the loan than the law allowed; and this case comes fully within the prohibition of the statute. I think the note usurious on its face, as a contract for a greater sum for the loan of money than twelve per cent. A usurious interest is inferable from the contract.”
Fuller & Dyer, for the plaintiff, contended, in reply, that “ usury is a matter of intention, and, to render a contract usurious, both parties- must be cognizant of the facts constituting the usury, and have a common purpose of evading the law” (Otto v. Durege, 14 Wis. 574; Fay v. Lovejoy, 20 id. 407; 1 Hill, 227; 1 Barb. Ch. 44; 9 Ind. 140; 3 Gill & J. 123; 7 id. 44; 1 R. I. 151; 2 Harrison (N. J.) 191; 4 McLean, 360; 1 Dall. 217; 2 id. 92); that if the position taken for the defendant were true, then in every case where a purchaser of goods or borrower of money agreed to pay exchange in addition to interest, he might be making a usurious contract, however innocent of any such intent; that, on the contrary, even where the highest legal rate of interest is otherwise to be paid, exchange may be stipulated for, in good faith, as payment for the transportation of the money, and the contract is not usurious (Towslee v. Durkee, 12 Wis. 487; Marvine v. Hymers, 2 Kern. 233; Merritt v. Benton, 10 Wend. 116; McLean v. La Fayette Bank, 3 McLean, 601); that the evidence in this case was conclusive against the usurious intent; and that, in particular, any such intent was conclusively negatived by the fact that Barnes, by the terms of the bond, had the option to make his payments either at the Troy City Bank, or at Racine, with exchange on Troy. In reference to the decision of Judge Miller, cited by defendant’s counsel, they stated that in that case the money when advanced was *488in Milwaukee; that it was to be repaid absolutely at the Marine Bank, in Milwaukee, with the highest rate of interest, and one per cent, added, and without any option of the borrower to pay at Boston, where the lender resided; and that there was no proof on the first trial of the reason for making the note payable in that manner; but that a motion was made for a new trial in that case, and that upon its being shown that the note was made payable in Milwaukee, with exchange added, for the accommodation of the maker, and that exchange was not required as extra interest or compensation for the use of the money, a new trial was granted; and that, upon such new trial, the note was held not usurious, and the plaintiff recovered.
The motion for a re-hearing was denied.