The Opinion of the Court was delivered by
Treat, J.*
On the 29th of January, 1844, Charles H. Sutphen filed a bill in Chancery in the La Salle Circuit Court against Alexander Ferguson, Davis C. Ballard, and the unknown heirs of William Taylor. The bill alleges in substance, that Sutphen and Ballard had made extensive improvements on certain tracts of public land, containing eight hundred acres, which were advertised for sale by the United States; that being destitute of money and unable to buy at the sale, they applied to William Taylor for the loan of sufficient money to purchase the lands and one other tract of eighty acres, and that it was agreed between them and Taylor, that he should loan them $1,100 for the purpose of buying the land, and that the land should be purchased in the name of Taylor to secure him in the payment of the loan; that it was mutually agreed that they should pay Taylor for the loan and forbearance $330 in each of the three following years, and $1,420 at the end of four years; that this agreement was made about one month previous to the sale, and was to be executed at the time of the sale; that on the 30th of October, 1839, in pursuance of the previous arrangement, the land was purchased in the name of Taylor at $L25 per acre, and a written agreement was then entered into under the hands and seals of the parties; and which agreement is made part of the bill, and is substantially to the effect, that Taylor agrees to sell to Sutphen and Ballard the lands for $2,420, to be paid as before stated, and upon the payment thereof, to convey them the lands so as to vest in them a perfect and unincumbered title, and Sutphen and Ballard covenant to make the payments, and in default of any of the payments being made, Taylor is, at his election, authorized to declare the contract at an end, and in the event of his doing so, Sutphen and' Ballard are to forfeit absolutely all of the previous payments, and thenceforward become the tenants at will of Taylor at a rent equal to an interest of ten per centum per annum on $2,420, payable quarter yearly; and the bill then alleges that the written agreement was made in pursuance of the original verbal contract, and the purchase was made in the name of Taylor for the benefit of Sutphen and Ballard, subject to the payment of the loan, and that the purchase was so made for the purpose of avoiding the question of usury; that the one thousand and one hundred dollars was advanced as a loan for the purpose of purchasing the land described in the agreement, and one other eighty acre lot; that Taylor had full knowledge of the improvements in the lands, and purchased them in his own name to avoid the appearance of usury, promising and agreeing to convey them to Sutphen and Ballard on the payment of $2,420, it being expressly understood that $1,320 was to be paid by them for the forbearance of $1,100, for the period of four years; that the sum of $330, specified in the agreement as payable annually, was the amount of interest to be paid annually on the loan of $1,100, amounting to thirty per centum per annum; that on the 1st of October, 1840, Ballard, for a valuable consideration, by an instrument in writing (which is made part of the bill,) assigned his interest in the land to Sutphen, and requested Taylor to make the conveyance to Sutphen when the conditions of the written agreement were performed; that on the 26th of December, 1840, Sutphen paid to Taylor on the contract the sum of $330; that Taylor died in 1842, leaving the defendant Ferguson, his executor, but whether he left any heirs complainant is ignorant; that there is now due on the loan and six per cent, interest thereon, deducting the $330 paid, the sum of $989-41, which sum the complainant has deposited with the clerk, subject to the order of the Court; that complainant expressly releases Taylor and his representatives from all penalties, under the usury laws, and is ready to pay the sum of $1,100 and lawful interest from the time of the loan, deducting the amount already paid to Taylor; and the complainant waives the oaths of the defendants to their answers, and prays for a conveyance of the land, and for general relief.
On the day the bill was filed, the complainant filed an affidavit, stating the non-residence of all the defendants; and a summons was issued against them, which was returned not found. Due notice of the pendency of the suit was given to the defendants; and at the succeeding March térm, the bill was taken for confessed, against the defendants. The money brought into Court by the complainant was placed in the hands of a receiver, who gave bond to pay it over on the order, of the Court.
On the 7th of November, 1844, Ferguson was permitted to file his answer, in which he admits that Taylor purchased the lands at the public sale, at $1-25 per acre, but alleges that he purchased with his own funds, and for his own benefit; expressly denies all of the allegations of the bill respecting a loan of money, and any agreement concerning the land prior to the day of sale, but insists if there was any such arrangement, it was contrary to the provisions of an Act of Congress, entitled “«Bn diet for the relief of purchasers of public lands, and for the suppression offraudulent practices at the public sales of the lands of the United States,” approved, March 31st, 1830; admits the execution of the written agreement, but insists that it was made in pursuance of a bona fide sale of the land after the purchase thereof from the Government; denies that the written agreement was made in pursuance of any previous parol contract, but insists if there was any such parol contract before the purchase of the land, it was void by the Statute of Frauds; admits the payment of $330, and alleges that the balance is justly due and unpaid; admits the death of Taylor, and states, that he left the defendant and James Duncan, since deceased, his executors and residuary legatees, and exhibits a copy of the will of Taylor, showing who were his heirs and legatees.
On the coming in of the answer, the complainant obtained an order of publication against the unknown heirs of James Duncan, but no steps were ever taken under the order. On the 15th of January, 1845, the complainant filed a supplemental bill, making Newton Gannie, Nathaniel Forquer, George Porter, Elspit Porter, William Primrose, Elizabeth Primrose, George Taylor, James Duncan and Mrs. Taylor, the persons described in the will as the heirs and legatees of William Taylor, defendants; and on affidavit of their non-residence, notice of the pendency of the suit was regularly given, and the bill taken pro corf ess o against them.
On the 14th of January, 1845, the complainant took the depositions of John I. Cook, Amos Foster, and Abraham P. Hosford. This was all the testimony in the case, except an admission of Ferguson, that Ballard had assigned his interest in the land as alleged in the bill. The witness Cook deposed, that Sutphen and Ballard settled on the lands in question in 1834, and continued to occupy them till after the land sales; their improvements were worth $2-000 at the time of the land sales; that in September, 1839, Sutphen applied to Taylor to borrow $1,100, with which to buy the lands, and Taylor, after ascertaining the character of the improvements, agreed to let him have the money; it took them some time to agree on the terms, as Taylor was loaning money at a greater rate of interest than Sutphen thought he could afford to pay; Taylor said he was loaning money to the settlers to buy their land with at thirty-five and fifty per cent interest, but he would let Sutphen and Ballard have the money at thirty per cent., as they had valuable improvements, and wanted a large amount of money; Sutphen tried to get the money at twenty five per cent, but Taylor said he could do better with his money than to loan it at that rate; Sutphen proposed to take the money and secure Taylor by personal property, or by procuring good men to indorse his paper, but Taylor refused to let the money go in that way, and said that he would have the land bid off in his name, and take that in security in preference to any thing else, and that he would not loan money to purchase lands that were not improved, as the improvements were his chief security; Sutphen, on inquiry, finding money to be scarce, agreed to borrow the money of Taylor; he was to have $1,100 for four years, and was to pay Taylor interest at the rate of thirty per cent, and for the security of the money, he was to bid off the lands in the name of Taylor, and Taylor was to give a title bond to convey the land on the payment of the money and interest; Taylor said he did not want the land, but his money and the thirty per cent interest;.witness was present at the land sales, and the lands described in the written agreement were bid off in the name of Taylor, under the direction of Sutphen; and Taylor paid the purchase money, $1000, into the land office and received the certificates of purchase. Foster testified, that he saw Taylor a day or two previous to the land sales, and Taylor told him that Sutphen had applied to him for $1000, or $1,100, with which to buy ten or eleven lots of land, and that he had agreed to let him have, the money at thirty per cent, interest; Taylor said he was to take the certificates in his own name as security, and give Sutphen a bond for a deed, and he would convey the land to Sutphen and Ballard at the end of four years; he said he would not invest his money in land, and did not want the-land; in the evening after the sale, Taylor came into the land office and received the certificates, and in addition to the $1000 to pay for the lots purchased in his name, he handed Sutphen $100 to buy another lot in his (Sutphen’s) name; the written agreement was already drawn, and the $100 was included in the amount specified in it; Taylor was not present at the sale, but the land was bid off under the direction of Sutphen; the improvements were worth $2000. Hosford testified, that he was present at the land sale, and bid off the lands in the name of Taylor, at the request of Sutphen; the improvements originally cost $2000, and at the time of the sale were worth at least S1000.
The cause was heard at the March term 1845, and a decree entered, that the defendants convey the lands to the complainant by deed of warranty, so as to vest in him an indefeasible estate in fee simple from all incumbrances, and that each party pay their own costs. An appeal was prosecuted by the defendant Ferguson.
The principal question arising on this record is, whether the contract between the parties was usurious. The law against usury is founded in principles of public policy, principles that have been for ages recognized, and almost universally adopted. Without inquiring into the policy or justice of the statutes for the prevention of usury, it is the imperative duty of the judicial tribunals faithfully to execute them. If there is any injustice or impolicy in these enactments, the fault rests with the Legislature, and it must provide the proper corrective, and not the Courts. Whenever the injured party invokes the aid of the Courts, and presents a case clearly within the statute, there should not be the least hesitation in applying the appropriate remedy. The only effectual mode of discouraging and preventing the practice of usury, is by a rigid enforcement of the provisions of the statute. If a case comes within the mischief of the statute, it should be held to be within the remedy. And this seems to be the principle on which these statutes have everywhere been construed and administered. The real inquiry in every case is, whether there has been a borrowing and lending at a greater rate of interest than the law allows; and this becomes purely a question of fact, to be determined from all the circumstances of the particular case. The law looks at the nature and substance of the transaction, and not to the color or form which the parties in their ingenuity have given it. No imaginable act or contrivance to cover up and conceal the usury, will avail the parties. They will not be permitted successfully to evade the provisions of the statute by any conceivable scheme or expedient. The Courts will follow them through all their shifts and devices, and ascertain the true character and design of the transaction. And if upon such investigation, it appears that there was in substance a loan at an illegal rate of interest, no matter what form or shape the contract has been made to assume, it will be declared to be usurious, and the proper remedy applied. Floyer v. Edwards, Cowp. 112; Lowe v. Waller, Doug. 736; Dunham v. Dey, 13 Johns. 40; The Bank v. Owens, 2 Peters, 527; Lloyd v. Scott, 4 do. 205; Scott v. Lloyd, 9 do. 418; Dunham v. Gould, 16 Johns. 367; Barker v. Vansemer, 1 Brown’s Ch. R. 149; Richards v. Brown, Cowp. 770; Colton v. Dunham, 2 Paige, 267; Morgan v. Schermerhorn, 1 do. 445; Crippen v. Heermance, 9 do, 211; Delano v. Rood, 1 Gilm. 690. Our statute, so far as it has any hearing on this case, is substantially like the statutes under which these decisions have been made. After prescribing the rate of interest, it declares that “no person or corporation shall, directly or indirectly, accept or receive in money, goods, discounts or things in action, or in any other way, any greater sum or greater value, for the loan, forbearance or discount of any money, goods or things in action, than as above described.” In the opinion of the Court, this case comes clearly within the provisions of the statute, and the principles of the foregoing authorities. All of the facts and circumstances tend irresistibly to the conclusion, that there was in fact a loan of money at an unlawful rate of interest, and that it was so intended and understood by the parties. Sutphen and Ballard were in the occupancy of public lands, on which they had made extensive and valuable improvements. The lands were proclaimed for sale, and being without .the means of purchasing them, their improvements were about to be swept away. In this extremity, they made application to Taylor for a loan of money, with which to save their possessions. Taylor was a money lender, and in the habit of loaning money to settlers at an exorbitant rate of interest. In consequence of the extent of their improvements, and the large amount they wished to borrow, he offered to let them have the money at thirty per cent, interest. Sutphen endeavored to procure the money at a less rate, but finding that he could not obtain it elsewhere, and that Taylor was inflexible in his demands, he acceded to the proposal. It was then expressly agreed that Taylor should advance them $1,100, to be returned at the end of four years, and to bear an interest of thirty per cent, per annum. For the purpose of securing Taylor, the land was to be bid off in his name, and he was to execute a bond for the conveyance of the land, upon full payment of the amount borrowed and the stipulated interest. This agreement was carried into effect. Sutphen caused the land to be bid off in the name of Taylor, and Taylor paid the purchase money. A written agreement was then entered into, by which Sutphen and Ballard agreed to pay the gross amount of the money advanced and the illegal interest; and Taylor agreed to convey them the land on full payment being made. These facts appear from the testimony of two credible witnesses familiar with all the circumstances of the case. There is nothing in the case to contradict their statements, or give any different coloring to the transaction. We cannot entertain the slightest doubt but that the contract was usurious. There were all the ingredients which constitute usury. There was a treaty concerning a loan of money, and the negotiation resulted in an agreement for a loan. The amount of the loan was to be repaid with unlawful interest. All this was designed by the parties. The agreement was executed. There was an express understanding on the part of the borrowers to pay to the lender, at all events, the amount of money borrowed and the illegal interest. It is perfectly idle to say that there was a bona fide sale of the land. Taylor disclaimed all idea of purchasing the land for his own benefit; he would only-take it as security. The bidding off of the land in his name, and the execution of the written agreement, was only a device to put the contract in the form of a sale, and thereby conceal the usury. It was one of those contrivances to which usurers constantly have recourse, to evade the provisions of the statute. If there was a sale of the land, why was the $100, paid to Sutphen and not included in the purchase money, carried into the written agreement and made to bear an interest of thirty per cent.
The Statute of Frauds is set up by the answer. There is a written contract. The only question is, can this contract be varied by parol, and specific performance be had of it in its varied form. We were referred to the cases of Flint v. Sheldon, 13 Mass. 443, and Hale v. Jewell, 7 Greenl. 435, as establishing the rule, that a deed absolute on its face cannot be impeached by parol proof that the consideration was usurious. It is true, it was so decided in those cases, but the actions were at Law, and the Courts place their decisions on the ground, that parol evidence was inadmissible to show that the deeds were only intended as.mortgages. But whatever may be the correct rule at Law on this last question, in Equity the doctrine is firmly settled that a conveyance, absolute in its terms, may by parol evidence be shown to have been designed by the parties as a mortgage. 4 Kent’s Com. 142; 2 Story’s Eq. Jur. § 1018. On this principle the complainant would be permitted to show that the legal estate was vested in Taylor only for the purpose of securing him in the payment of the money loaned and.the interest. But the case stands on higher ground. In Equity, no form which can be given to a particular contract will preclude the borrower from the introduction of evidence to impeach it on the ground of usury. It is not the form, but the nature and substance of the contract, which must determine whether the instrument be not a mere device to obtain more than legal interest, and colorable only to evade the provisions of the statute. Where usury is alleged, it may be proved by parol, and as a consequence, the written contracts of the parties may by the same kind of evidence be varied and contradicted; such evidence is competent to show that a contract in the form of an absolute sale, was, in truth, but a security for an usurious loan. 3 Phillips’ Ev. 1447, note 968; Lindley v. Sharpe, 7 Monroe, 248; Fenwick v. Ratliff, 6 do. 164; Murphy v. Trigg, 1 do. 72. If this were not the rule, the statute might be easily evaded. The transaction might be made to assume the form of a sale, and the lender would thereby bex enabled to receive exorbitant gains against the express prohibitions of the statute.
The complain'ant has pursued the proper course to obtain relief against the illegal contract. The borrower of money on an usurious contract, may tender to the lender; or bring into Court for his use, the amount actually advanced with the legal interest, and then file his bill for relief; and the Court will relieve him from the payment of the excess, and declare .the securities to be void, and when necessary, direct them to be delivered up and cancelled; thus discriminating between the sound and vicious parts of the contract, preserving the. former, and repudiating the latter. Rogers v. Rathbone, 1 Johns. Ch. R. 367; Fanning v. Dunham, 5 do. 122; 1 Story’s Eq. Jur. § 301. Such a disposition of the contract does ample justice to the parties. The lender is relieved from the penalties imposed by the statute, and allowed to receive back the money loaned with legal interest. The application of the borrower for relief, under such restrictions, ought not to be regarded with disfavor by the Court. Sutphen may setup usury as to the entire contract. Although a purchaser of the interest of Ballard, he was originally liable to pay the whole amount of the loan and interest. Having covenanted to pay the whole, he has the right to be relieved against the payment of all of the illegal interest.
It is insisted that the proceedings against the unkown heirs of Taylor were not in pursuance of the statute. We do not deem it necessary to examine this question. The case as against the heirs of Taylor, as unknown persons, was virtually abandoned on the coming in of the answer of Ferguson. A supplemental bill was then filed, making, “the heirs and devisees of Taylor, defendants,” by their respective names; and they were regularly brought before the Court by notice of the pendency of the suit, and the bill taken for confessed against them for the want of an answer. This superseded the necessity for any proceeding against them as unknown persons.
It is also insisted that the decree was unauthorized as to the heirs and devisees of Taylor, the proofs having been taken before they were made parties to the suit. Failing to answer the bill and put its allegations in issue, no proof was necessary as to them. It was purely a matter of discretion with the Court, whether it would require the complainant to make proof against the defendants in default.
It is further insisted that the decree, as to James Duncan, is erroneous. The answer stated the death of Duncan, and the complainant, thereupon, obtained an order of publication against his heirs, but they were never made parties to the case, nor were any proceedings had under the order. Subsequently, Duncan was made a defendant, as one of the devisees of Taylor, and the suit properly proceeded to a decree against him. There was no proof of the death of Duncan, which the complainant was bound to regard. For aught appearing in the case, he is still living. The statement in the answer, of the death of Duncan, was not evidence, the answer not being sworn to. Willis v. Henderson, 4 Scam. 13.
The decree is objected to, because it does not direct the money to be paid to the defendants. The Court, no doubt, omitted to make any order respecting the money, because it was not satisfied which of the defendants was entitled to receive it. The Court has still the entire control of the fund, and will allow it to be withdrawn by the party showing that he is entitled to it. If it belongs to the appellant, he has only to apply to the Circuit Court, and make satisfactory proof, and obtain an order directing the receiver to pay it over to him.
It is contended, by the counsel for the appellant, that the contract between the parties, as shown by the proof, is in direct violation of the Act of Congress referred to in the answer, and that the only relief, if any, which the Court can give the complainant is, to declare the written agreement to be void. The fourth section of the Act prohibits, under severe penalties, all agreements and acts to prevent persons from bidding on or purchasing land at the public sales. This section does not embrace the present case, for the contract was not calculated to prevent competition at the sale, and thereby injure and defraud the Government. The fifth section provides, “that if any person or persons shall, before or at the time of the public sale of any of the lands of the United States, enter into any contract, bargain, agreement, or secret understanding, with any other person, or persons, proposing to purchase such land, to pay or give to such purchasers, for such land, a sum of money, or other article of property, over and above the price at which the land may or shall be bid off by such purchasers, every such contract, bargain, agreement, or secret understanding, and every bond, obligation, or writing of any kind whatsoever, founded upon, or growing out of the same, shall be utterly null and void. And "any person, or persons, being a party to such contract, bargain, agreement, or secret understanding, who shall or may pay to such purchasers any sum of money, or other article of property, as aforesaid, over and above the purchase money of such land, may sue for and recover such excess from such purchasers in any Court having jurisdiction of the same. And if the party aggrieved have no legal evidence of such contract, bargain, agreement, or secret understanding, or of the payment of the excess aforesaid, he may, by bill in Equity, compel such purchasers to make discovery thereof; and if, in such case, the complainant shall ask for relief, the Court in which the bill is pending may proceed to final decree between the parties to the same: provided, every such suit, either in Law or Equity, shall be commenced within six years next after the sale of said land by the United States.” Story’s Laws, 2187.
If the contract comes within the provisions of this section, we are inclined to the opinion, that the representatives of Taylor cannot set up the Act of Congress as a bar to the relief sought by the bill. As the counsel for the complainant truly remarked,&t does not follow because a statute declares a certain contract to be void, that either of the contracting parties can take advantage of it. A statute may declare a contract to be void, and still but one of the parties be guilty of its violation. Enactments of this character are often made for the purpose of protecting one class of men from the oppression and impositions of another class of men; and in such cases, the really guilty party is never allowed any relief under the statute, or permitted to set up the statute as a defence to relief sought by the other party. Such is the case with all laws, which declare usurious contracts to be null and void. The lender is never allowed to take advantage of the statute, because he is the guilty party; the borrower may do so, because he is not a particeps criminis. He is regarded as the victim of the usurer, and not in pari delicto. This principle applies to every contract declared to be void by the statute, in the making of which but one of the parties is in pari delicto. Browning v. Morris, Cowper, 790; Williams v. Headley, 8 East, 378; A Story’s Eq. Jur. § 298 to 305. The object of this section was not to prevent fraudulent practices at the land sales, for they are provided against in the preceding section. The real design evidently was, to protect men in the condition of the complainant from the exactions of the speculator and money lender. It was to prevent the latter from taking undue advantage of the situation and necessities of the former. This seems to be the aim of all the provisions of the section. If the purchaser has made payment, he may recover back the excess. He may file a bill in Equity and obtain relief. He is described as “the aggrieved party.” The remedies are all directed against the seller of the land, and given to the purchaser. This seems to be conclusive of the view, that Congress only considered the seller as the guilty party. If the purchaser was regarded as a particcps criminis, why allow him relief both at Law and in Equity? It is contrary to all precedent to give a guilty party relief in Equity. The remedies are given to the purchaser on the ground that he is not in pari delicto. It is the opinion of the Court, that the provisions of. this section must receive the same construction as laws for the prevention of usury; and that if the complainant was not entitled under our statute to the relief claimed'by the bill, he would be under the Act of Congress in question.
The decree of the Circuit Court is affirmed with costs.
Decree affirmed.