Jones v. Watkins
Opinion
LIPSCOMB, Chief Justice.
These cases were argued at last term with much zeal and ability. The time consumed by the argument had so encroached on the term, and so much exhausted the members of the Court, that it was thought best to retain them under advisement. By this course we have lost much of the advantage that would have been derived from the argument ; many of the impressions of the moment have been erased or impaired by the action of mind and feeling on other subjects. If, however, it be true that Judges ■should be all head and no heart, the delay is not to be regretted, as more than an equivalent has been obtained by [84] the opportunity which it has afforded for patient investigation and cool reflection.
The character of the cases, and the many points presented, opened a fine field for the imagination, and for enlisting some of the finest and best feelings of the human heart; and the opportunity was not left unimproved.
When the strong are seen arrayed against the weak, the rich and influential against the poor and necessitous, Judges are apt to lose the high distinction of abstract intellectual beings, and to be found embodied in soul and feeling with the mass of the human family.
The statute of 1818, under which these cases are said to have'originated, has been assailed as weak and unsound in policy, and most ruinous in its effects. The motives of those who were active in procuring its passage, have not been left unimpeached. I was a member of the Legislature, and voted in favor of it. I now believe that it was a rash experiment by an infant government, in the hands of young and inexperienced politicians. My conclusions are however drawn from its practical effecls, not from any defect which 1 have been able to detect in its theory. Some of the ablest men in the science of jurisprudence of whom this age can boast, have maintained, that any restriction on contracts for interest is unsound in policy, and produces the evil intended to be guarded against. "We cannot justly charge them with impure motives in maintaining this doctrine. As little ground is there for impugning the motives of those who voted for the statute of 1818. As to the policy of this measure, honest men then and now, and perhaps always may, very sincerely differ in opinion. I will here take occasion to say, that the man who penned the so much abused act of 1 818, is now gone where comments on its policy or its results, can never reach or disturb him. I knew him well. His rich intellectual endowments commanded my admiration, and the pure incorruptible principles of his heart, my warmest esteem and friendship. That such a mind might err, is possible, for’perfection ¡s not the attribute of human judgement. But that his spotless integrity could ever permit him, in the discharge of a high and honorable trust, to be influenced by personal or factious considerations, not even ids bitterest enemy, not the vilest slanderer who ever feasted on all mat is estimable in character, can for one moment believe.
[85] But to return to the subject under cove..deration: The act of 1818 provides, “that any rate oi interest or premium for the loan or use of money, wares, merchandize, or olher commodity, fairly and bona fide stipulated and agreed upon by the parties to such contract, expressed in writing, and signed by the party to be charged therewith, shall be legal and recoverable.”
This act was an experiment and an innovation on the laws and usages of most of the civilized and commercial communities of the world; and as such, it should receive a rigid literal construction. Its sense should not be so enlarged as to embrace a case not within its letter. The words '■‘■loan or use” have in common p.dance, a distinct appropriate meaning, and are never used for giving day of paj ment on an absolute sale. It is true that the English statute, fixing the rate of interest expressed in similar terms, has be>m construed to mean giving day of payment on money due. either for a loan, or for an absolute sale of goods, wares, merchandize, &c. and it will be readily admitted, that whatever construction may have been heretofore given by. the Courts to the words and phrases used in a statute, should be sustained, if the reason for such construction still exists. It is not denied that where public policy or substantial justice obviously requires it, Courts should strongly incline to such liberal construction of the statute as will effect the object. That a creditor, giving farther indulgence to his debtor after payment had become due, is entitled to some compensación for such delay of payment, is so obvious to common sense, that it is not at all surprising that courts of justice should have endeavored, by a liberal construction, to bring this case within the statute regulating the rate of interest for money lent; and accordingly, by resorting to some subtlety of reasoning, the English Courts determined, that after the debt became due, the debtor should be considered as a borrower from his creditor. At common law the creditor is entitled to recover damages for the detention of money due. If a case occurred where no interest, by the strict letter of the statute, could be allowed, is it not probable that the Court would decide that the legal rate of interest on money lent afforded an easy and certain measure of damages ? I am not certain hut this has been the origin of allowing int rest in the English Courts, on the giving farther day after payment due on an abso-[86] late sale, as contradistinguished from a loan. Again, by a liberal construction of the statute, those who had taken interest in cases not of loan, were, exempted from the heavy penalties of usury. A liberal construction was then invoked, by that humanity which governs every court of common law. But if none of these objects are. to be achieved, I cannot believe that we are bound by the same rule of construction. On the contrary, -to guard against the results of any new experiment, we should adopt the most rigid and literal construction, as that which the Legislature intended to give to the expressions used.
If I am correct in the principles láid down, the act of 1818, authorised interest to be stipulated at a higher rate than eight per cent, only on a contract of loan, and not on one giving day on an absolute sale or other debt already due. In most of these cases, the' consideration was not a,loan, and the payment of interest above eight per cent, could have been avoided at law. The complainants either paid the excessive interest voluntarily, or failing to make defence in the actions at common law, judgements were rendered against them for the whole amount of the interest claimed. ' They have satisfied these judgements, and now seek relief, alleging that they were, ignorant that any defence could be made at law, until it was too'late to avail themselves of it.
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LIPSCOMB, Chief Justice.
These cases were argued at last term with much zeal and ability. The time consumed by the argument had so encroached on the term, and so much exhausted the members of the Court, that it was thought best to retain them under advisement. By this course we have lost much of the advantage that would have been derived from the argument ; many of the impressions of the moment have been erased or impaired by the action of mind and feeling on other subjects. If, however, it be true that Judges ■should be all head and no heart, the delay is not to be regretted, as more than an equivalent has been obtained by [84] the opportunity which it has afforded for patient investigation and cool reflection.
The character of the cases, and the many points presented, opened a fine field for the imagination, and for enlisting some of the finest and best feelings of the human heart; and the opportunity was not left unimproved.
When the strong are seen arrayed against the weak, the rich and influential against the poor and necessitous, Judges are apt to lose the high distinction of abstract intellectual beings, and to be found embodied in soul and feeling with the mass of the human family.
The statute of 1818, under which these cases are said to have'originated, has been assailed as weak and unsound in policy, and most ruinous in its effects. The motives of those who were active in procuring its passage, have not been left unimpeached. I was a member of the Legislature, and voted in favor of it. I now believe that it was a rash experiment by an infant government, in the hands of young and inexperienced politicians. My conclusions are however drawn from its practical effecls, not from any defect which 1 have been able to detect in its theory. Some of the ablest men in the science of jurisprudence of whom this age can boast, have maintained, that any restriction on contracts for interest is unsound in policy, and produces the evil intended to be guarded against. "We cannot justly charge them with impure motives in maintaining this doctrine. As little ground is there for impugning the motives of those who voted for the statute of 1818. As to the policy of this measure, honest men then and now, and perhaps always may, very sincerely differ in opinion. I will here take occasion to say, that the man who penned the so much abused act of 1 818, is now gone where comments on its policy or its results, can never reach or disturb him. I knew him well. His rich intellectual endowments commanded my admiration, and the pure incorruptible principles of his heart, my warmest esteem and friendship. That such a mind might err, is possible, for’perfection ¡s not the attribute of human judgement. But that his spotless integrity could ever permit him, in the discharge of a high and honorable trust, to be influenced by personal or factious considerations, not even ids bitterest enemy, not the vilest slanderer who ever feasted on all mat is estimable in character, can for one moment believe.
[85] But to return to the subject under cove..deration: The act of 1818 provides, “that any rate oi interest or premium for the loan or use of money, wares, merchandize, or olher commodity, fairly and bona fide stipulated and agreed upon by the parties to such contract, expressed in writing, and signed by the party to be charged therewith, shall be legal and recoverable.”
This act was an experiment and an innovation on the laws and usages of most of the civilized and commercial communities of the world; and as such, it should receive a rigid literal construction. Its sense should not be so enlarged as to embrace a case not within its letter. The words '■‘■loan or use” have in common p.dance, a distinct appropriate meaning, and are never used for giving day of paj ment on an absolute sale. It is true that the English statute, fixing the rate of interest expressed in similar terms, has be>m construed to mean giving day of payment on money due. either for a loan, or for an absolute sale of goods, wares, merchandize, &c. and it will be readily admitted, that whatever construction may have been heretofore given by. the Courts to the words and phrases used in a statute, should be sustained, if the reason for such construction still exists. It is not denied that where public policy or substantial justice obviously requires it, Courts should strongly incline to such liberal construction of the statute as will effect the object. That a creditor, giving farther indulgence to his debtor after payment had become due, is entitled to some compensación for such delay of payment, is so obvious to common sense, that it is not at all surprising that courts of justice should have endeavored, by a liberal construction, to bring this case within the statute regulating the rate of interest for money lent; and accordingly, by resorting to some subtlety of reasoning, the English Courts determined, that after the debt became due, the debtor should be considered as a borrower from his creditor. At common law the creditor is entitled to recover damages for the detention of money due. If a case occurred where no interest, by the strict letter of the statute, could be allowed, is it not probable that the Court would decide that the legal rate of interest on money lent afforded an easy and certain measure of damages ? I am not certain hut this has been the origin of allowing int rest in the English Courts, on the giving farther day after payment due on an abso-[86] late sale, as contradistinguished from a loan. Again, by a liberal construction of the statute, those who had taken interest in cases not of loan, were, exempted from the heavy penalties of usury. A liberal construction was then invoked, by that humanity which governs every court of common law. But if none of these objects are. to be achieved, I cannot believe that we are bound by the same rule of construction. On the contrary, -to guard against the results of any new experiment, we should adopt the most rigid and literal construction, as that which the Legislature intended to give to the expressions used.
If I am correct in the principles láid down, the act of 1818, authorised interest to be stipulated at a higher rate than eight per cent, only on a contract of loan, and not on one giving day on an absolute sale or other debt already due. In most of these cases, the' consideration was not a,loan, and the payment of interest above eight per cent, could have been avoided at law. The complainants either paid the excessive interest voluntarily, or failing to make defence in the actions at common law, judgements were rendered against them for the whole amount of the interest claimed. ' They have satisfied these judgements, and now seek relief, alleging that they were, ignorant that any defence could be made at law, until it was too'late to avail themselves of it.
As to the cases of voluntary payment without suit, if money has been paid under a mistake as to facts, relief can be had by a suit at law. As if a security should pay a debt which his principal had already paid, or if a debtor should pay a greater amount than was due by the contract, the money so paid by mistake, can be recovered back in an action for money, had and,received'. .A variety of other cases might be put bj? way of illustration. But if A. enters into so hard and unconscientious a contract with B. that a Court of Chancery would relieve him from its performance, yet after having performed it, Chancery will not afford him relief, or decree that what he has so voluntarily paid shall be refunded '• for the contract has been extinguished, and will not be revived for the purpose of giving relief. I believe that no case can be found where money paid voluntarily on a contract, no fraud being practised by the creditor on the debtor, and where there is nothing objectionable in the contract but its naked [87] hardship, has been decreed to be refunded; no matter how hard and unconscientious the contract may have been. If fraud has been practised, under whatever specious garb, Chancery will expose it to view, and relieve against its effects. But where a settlement has been made by ¡he parties in interest, knowing at the time all the material facts, a Court of Chancery will not disturb it, however hardly it may operate.
The case of Butlers against Haskell,
In the cases now under consideration, the payments were made in I strict accordance with the intention of the parties when they entered into the contracts, and although most of the notes were not for money lent, both the makers and payees believed that the act of 1818, authorized the receipt of the interest stipulated. The complainants allege no fraud, nor do they deny that it was their bona fide intention to pay the interest expressed in the notes. If they have voluntarily paid it, I know not on what principle they can expect relief. Courts of Chancery have often been invoked to carry a contract into effect according to the bona fife intention of the- parties; but now for the first time,'we are called on to control by our decree, the honest intention of the parties to the contract, after it has been fülly executed. It has however been urged that the enormous rate of interest stipulated, is an evidence of fraud, and that payment was made under the influence of the same fraud.- It is true that a glaring disproportion between the price given, and the value of the thing purchased, has been held to be the livery of fraud, and where the vendor’s situation has been in any wise influenced by the purchaser, a Court of Chancery will consider the .sale fraudulent. But in no case I believe, has it been settled, that naked inadequacy of price per se constitutes fraud. The cases going most -sts ongly towards the support of this doctrine, are cases in which the disproportion between the price given, and the value of the thing sold, is such as to startle the conscience at the first blush. In most of them, from one third [89] to one sixth of the real value. All these cases too, tie-rived aid from other circumstances; such as the xelative situation of the parties. In the case already noticed, where less than one fourth of the real value had been given, Chancellor Desaussure thought it necessary to couple the inadequacy of price with the facts that the vendee was the agent of the vendors, and that they were ignorant of the value and amount of the property sold. If, however, it were admitted that mere inadequacy of price would constitute fraud, it would be extremely difficult, if not impossible, to apply the principle to the cases under consideration. There is no great difficulty in ascertaining the real value or market price of any named article of property. If it is sold by a person in very indigent circumstances, at a price greatly below what it would command in market, fraud might naturally enough be presumed. But it is not so with money; it is impossible even for those engaged in commerce and stock exchange, to fix any thing like a standard value of money. To the miser it affords none other than the pleasure of looking on his hoarded treasure, and his fear of losing it would restrain him from lending at any rate of premium that could be offered. The free liver would put no other value on his money than as the means of purchasing the comforts and enjoyments of life ; while the enterprising merchant would fix its value by various and complex calculations, depending much on his talents for speculation; and would often hesitate to limit the gain on a particular sum to any rate of premium, however extravagant. One of the most distinguished political economists, after acknowledging the difficulty in forming a correct estimate of the value of money, fixes it at half the amount that could be made by trading on it, and assumes that twelve per cent per annum is a fair profit in trade, but admits that this rate would vary in different countries. In Bengal, from 40 to 50, and in Turkev 25 per cent would not be thought unreasonable interest. In old countries subject to but little change, every branch of trade (unless monopolies prevent it,) will soon be so stocked and regulated, that the fair gain in any one, cannot long remain disproportionate to the rest. When the government is unstable, and does not afford sufficient protection to property and persons, few will venture into market; there will be little competition, and great profits may often be [90] made by-the few who so venture. This seems to be the true reason for the high rate of interest in Bengal and Turkey. In new countries, where new channels of trade and commerce are continually opening, and the staple commodity frequently changing, great profits will be realized and high rates of interest given. The history of our own country ard times shews, that the two extremes of prosperity and adversity approximate so closely, that it is difficult to define the boundary. Suppose that on the eve of one of these great changes in the prices of property, A. sells a slave to B. for $500, (the full estimated value of the slave at the time,) on a credit of sixty days. Before the expiration of the sixty days property of this description has been enhanced 100 per cent. A. calls for payment, it is not convenient for B. to pay, and A. proposes a recision of the contract. B. objects, that the slave is now worth double what he had agreed to give, but he is unwilling to sell him, because his services for the year in the cotton field will be worth 4 or $500. But as an honest man, he is willing to pay to A. a fair equivalent for the delay, and promises him 50 per cent for one year. Now if B. makes 4 or $500 by the slave’s labour for the year, and then sells him for $1000, no one would say that the high rate of interest made the contract fraudulent on the part of A. But if B. should be disappointed in his calculations, and at the end of the year the prices of slaves and of cotton should be reduced to what they were at the time he made the purchase, according to some casuists, the contract for 50 per cent interest would be fraudulent. Thus making a contract fraudulent or honest, according to the times, or changes in the market, and not according to the circumstances under which it was made. Such a principle, no rule of ethics can bring my mind to assent to. The case put is supposed to be between two honest and conscientious men. Ifthe50percent has been paid, I cannot see how a Court of Chancery, doing justice between man and man, can decree restitution, although the-rate of interest for prolonging the time of credit was very high.
Where the actual consideration was the loan of money, how far can the high rate of interest paid, be a just ground from which fraud should be inferred ? Loans are not often made to the indigent and necessitous man, hard pressed to provide a subsistence for his family. He may sell [91] his last cow, or his last bed, at an inadequate price, to prevent his child from suffering for bread, but be cannot give such security as the money lender would require. It is the man of property, and the speculator, who can bargain with the money lender. He believes that by speculation, he can make great- profit, and that by giving a high premium for money, he can increase his already ample fortune. The man having extensive property in possession, moving in splendor, and indulging in all the luxuries of life, prefers giving a high rate of interest to the curtailment of his expenses. Such contracts are often between persons who are under no obligation to be generous, from the relation in which they stand to each other. They frequently occur without confidence being abused, or necessity taken advantage of. A Shylock on the one hand, practising every dirty trick which his cunning can suggest, and on the other, the cold-blooded heartless speculator, who after having separated husband and wife, parent and child, severed the dearest ties of nature and violated all the obligations of religion in his thirst for gain, can repose undisturbed by any other reflection than the calculation of his per centage on his traffic in human beings, human misery and tears. It would be much more satisfactory, and much more consonant to equity and good conscience, could both parties in such transaction? be punished. But as that cannot be done, the maxim, in pari delicto possidentis melior est, must prevail.
From every view which I have been able to take, my mind is brought to the conclusion, that the high rate of interest stipulated, is not per se sufficient to sustain the inference, that the contract was fraudulent, and that where there has been no fraud or mistake as to facts, the complainants are not entitled to relief.
In these cases, defence as to the excessive interest, mivht have been successfully made at law. The reason assigned by the complainants for not making such'defence is, that they were mistaken as to the law; that according to the then prevailing construction of the act of 1818, the interest was recoverable; that the error in the judgement at law had been cured by the statute of limitations, before a judicial construction had been given to the statute of 1818. The respondents rely on the grounds, that defence might have been made at law; that ignorance of law is no ground of relief,and on the statute of limitations.
[92] Strictly speaking, the statute of limitations does not govern a Court of Chancery ; but it is adopted as a convenient rule, to be so applied as not to protect a wrong, This rule, though, is more applicable to cases where Chancery had exclusive original jurisdiction. In cases of trust, the statute will not be applied until the expiration of a limited trust. The trustee will not be permitted to plead it against his cestui que trust. In cases of fraud, it will run only from the discovery of the fraud. But it has never been held that a Court of Chancery should set this rule aside, in order to restore a stale remedy at law, in a case where the complainant had not been induced by the defendant, to forego" his legal defence or remedy If the respondents had practised on the complainants, and induced them to submit to the judgements at law until the time which will bar a writ of error had elapsed, Chancery for such fraudulent practices, would grant the same relief that could and would have been obtained at law. But if there has been no fraud, and a defence clearly legal has been neglected, the Court of Chancery will not open the judgement to let iti such defence.
The case of Lewis and Otey against Ewing and Clemens, has been relied on by the complainants, to shew that this Court has granted relief in Chancery after a de-fence at common law had been waived. That case was decided without much reflection. It was not argued, but was submitted with cases which had been argued on the common law side of the Court, and it is probable that a decree was made without sufficient attention to the fact, that a defence good at common law had been neglected. This must account for the superficial reasoning of the decree. The case too exhibited many badges of fraud, deceitful practices and combination against the complainants, The note was procured through the intervention of a third person, pretending that he had an interest when he had none; and súch combinations were continued up to the closing scene, procuring the judgement at law to be affirmed in the Supreme Court by consent.
It was further contended, that when a defence at law is doubtful or difficult, Chancer} will grant relief. This applies only to cases of doubtful jurisdiction, where there is clearly a remedy before one tribunal or the other, and it is doubtful whether a full defence can be made at law; but it does not apply to a case in which it is doubtful
[93] whether a defence can be made at all in either Court, But admitting the rule to the fullest extent contended for by the counsel for complainants, it admits of no excuse for not resorting to a Court of Chancery, as soon as that doubt and difficulty appealed. If the delusion as to the correct construction of the act of 1818 had been produced by a fraudulent combination of the respondents, inducing the members of the bar to lose sight of their high character, and join in .supporting a construction which they knew to be erroneous, if relief had been asked in time, it would have been granted. Time it is true, cannot purify what was corrupt in its inception, but if one, after knowing his injuries, sleeps over them until the time has elapsed which the Legislative wisdom has fixed as a limitation to bringing a suit at law, or to proceedings to reverse an erroneous judgement, his complaint would appear in a Court of Chancery under a very unfavorable aspect.
I believe that I have examined every principle embraced by the arguments of the solicitors for the complainants. It remains to apply the principles to the several cases held under advisement.
In the bill Harris against Jones’ executors, two distinct complaints are embodied. The first has no connexion with the statute of 1818. The complainant alleges that as far back as 1814, being indebted to one Ward, and Ward being indebted to the testator of respondents, by an arrangement between them, complainant gave his note to testator for the amount which he owed to Ward, and gave a separate note for usurious interest; that he continued to settle with the testator until 1818, when the whole transaction was closed; that usury was always exacted. In the last note forty per cent.
The settlement made in 1818 was voluntary. The complainant assigns no reason for not having resisted the exaction of usury, other than that through the influence of the money holders on public opmion, it was thought disgraceful to resist the payment of any rate of inte-- est which had been stipulated. Mistaken notions of the law appear to be the grounds on which relief is sought in some of the cases, but in this case mistaken notions of honor and morals seem to be relied on, and it is not pretended that the complainant was ignorant of his rights at law. He declares that when he gave his last note, and stipulated for the payment of interest at forty per cent, he [94] considered it a choice of evils, and did so rather than submit to a greater sacrifice. If we are to understand by submitting to a greater sacrifice, letting his property go for the payment of the debt, there is no evidence that the respondent’s testator in any way influenced his choice of evils.- The complainant voluntarily complied with the hard .terms of his contract, according to his then notions of good faith, whether orthodox or not. For it is very clear that he did not believe himself bound by law to such compliance. If he paid usury, he had ample remedy at law to recover it back. The statute of 1805 expressly gives this remedy.
His second ground of complaint is, that one Bradford was indebted to respondent’s testator in a considerable sum; that when the note became due, the testator through the agency of his son, one of the respondents, demanded a new note, with twenty per cent added to the principal; this being the amount of interest stipulated by the first note, and offered to lend $500 in addition to the existing debt and interest, on condition that Bradford would give a new note with security, consolidating the whole amount with interest from the date until paid, at the rate of twenty per cent; that Bradford being an imprudent man, embraced the proposition, and gave his note with the complainant as his security: that judgement at law has been recovered against complainant for the whole amount, with interest as stipulated, and satisfied by sale of his property; that he did not discover his mistake as to the law, until three years after the judgement, and had neglected to make defence at law, or to take out a writ of error, until it was too late; and further, that, relief could not have been complete at law.
In argument it was insisted, that a court of law could have relieved only against the interest stipulated in the note, and not against the usury embodied in it. There is no testimony, and the respondents in their answer, traverse the consideration of the note. If there had been any taint attached to , the contract that could not have been reached in a court of law, it should have been shewn by proof. The testimony of Mr Mead, the clerk, taken for the respondents, shews that a, writ of error was sued out within three years from the rendition of the judgement. What.has become of this writ of error, we are not informed. If still pending in the court of law, [95] that Court will best know bow to dispose of it. Until this has been done, Chancery could not decree restitution of the money paid in submission to the judgement. From the bill, answer, and testimony, it does not'appear but that complete relief might have been had by timely resort to a court of law, and no sufficient reason is shewn why this coui’se was not taken.
The case of Freeman Pettus against Robert Thomson, is one of voluntary payment. There is no evidence of fraud, or that any fact material to the complainant’s interest, was concealed from him, nor does any thing appear to authorize a Court of Chancery to rip up the transaction, after it has been settled by the parties.
All the other cases can be disposed of on the principles as decided in these.
JUDGE SAFFOLD.
The very able and protracted argument of these cases, the many authorities cited, the importance of the controversy, and the variety of the questions presented, combine to render me fully sensible of the difficulty and responsibility of the decision to be now made. I must content myself with a faithful endeavor to arrive at a correct conclusion, without attempting a full elucidation of it by reference to many authorities; the authorities cited are too numerous to receive special notice, and to several of them I have been unable to obtain access since the ar~ •gument.
Most of the questions involved, apply alike to all the cases, and it will be unnecessary to notice their separate •application to each.
These controversies originated under different constructions of the statute of 1818, to repeal an act against usury.” Regarding this statute as conferring a new, important, and delicate power, derogatory to the protection which the common law, and the policy of every commer- . cial country appears to have considered necessary for the security of the inexperienced and necessitous part of the community, I think that the statute should receive a strict, literal and beneficial construction, so far.as its language, reason and spirit will admit. Some notice seems necessary to be taken of the two first points made in the argument. As to the first, I entertain the same opinion, which I gave in the case of Henry and Winston against [96] Thompson,
As to tbe argument drawn from tbe decisions on the fourth section of the English statute of frauds, (tbe leading case among which is Wain-against Warlters,
I think it also worthy of consideration, as contended on tbe part of tbe appellees, that though the word “agreement” in tbe fourth section of the English statute of frauds, was construed to include the consideration, yet the word “bargain,” in the seventeenth section of the same statute, was held not necessarily to include it.
If by the legal-construction of the contract, the stipulated premium cannot attach at any time, or should begin to run at a later, or cease at an earlier period, than was expected by either or both of the parties, such construction would not impair, but would preserve the contract in full force according to its legal effect. Thus, in a note for the payment of interest from the date, if the principal be not punctually paid, the back interest is to be rejected a$ penalty. So where the agreement is absolute to pay interest from the date, accompanied with a stipulation that if the debt be not punctually paid, the rate of interest after maturity shall be increased, such additional interest will be rejected as .penalty. These rules of construction have been, adopted on the principle that such rigorous stipulations were inserted merely to induce punctuality, that it cannot be unreasonable to suppose that the parties, (expressing fairly and bona fide the terms of the-contract,) intended that payment should be made at the time appointed This was the primary obligation ; the other terms were only secondary or accessional. In thus viewing the subject I may add, that according to the only strictly legal notion of a loan which I can form, there must be an agreement for forbearance during the whole term of the loan. It will be recollected that the statute in question contains no provision for continuing the stipulated interest, after the maturity of the debt, either until judgement recovered or payment made. Unconsci-entious bargains and contracts on grossly inadequate considerations, whether claiming the protection of a statute conferr^S new powers or not, are subject to judicial control.
But if more interest than the debtor was legally liable tQ pay has been paid, collected or recovered by a judge[99] ment which remains in full force, can Chancery afford relief?
For the appellants it is contended, that from the hardship, oppression and fraud of these contracts, the maxim volenti non Jit injuria does not apply to prevent i-elief against mistakes, either as to the law or the facts ; that the payments were made, or judgements permitted to be recovered, from the ignorance of the appellants as to their leg'd liability; that as to the concealed premiums, (not distinguished in the notes from the principal,) Chancery has exclusive jurisdiction, and that its jurisdiction is concurrent as to the other classes of contracts.
That a mistake as to the law, (with a knowledge of which every one must be charged,) is no ground for equitable relief, is confessedly correct as a general principle ; but relief may be, and has often been decreed in cases of mistakes in law, induced by the fraud or circumvention of the party profiting by it: or where the principles of natural justice and good conscience strongly demand relief. In the exercise of this equitable power, Courts have strict regard to the extent of the injustice, and particularly to the relative situation of the parties. Fraud may be presumed in equity from circumstances, (in the absence of anv evidence to the contrary,) as the weakness and necessity of one party, and the extortion and oppression of the other ; or fraud may be inferred in some cases from the extreme unconscionableness of the bargain.
But in the cases under consideration, from the circumstances as developed by the bills, answers, exhibits and depositions, I do not discover any suppression or misrepresentation of facts sufficient to establish fraud in the contracts. Of their hardship, oppression and inadequacy, there can be no doubt. The unreasonable premiums may well warrant the conclusion, that the appellants were necessitous, or greatly infatuated with the spirit of speculation, and that the appellees availed themselves of this necessity and delusion. I entertain no doubt that a certain degree of hardship and inadequacy, under peculiar circumstances, is a ground for equitable relief. It is true such relief is more appropriately due to heirs, unaided females,, sailors and weak minded individuals in distr- ss, disposing of their rights in expectancy; but I think the authorities shew that such relief is not confined to persons of this description. ■ Where extraordinary circum,-[100] stances have given to one party, in an unconscientious bargain, a commanding influence over the other, if re-inedy cannot be had at law, equity may afford relief if S0Ught in due time, and before a subsequent confirmation of the contract.
Before the voluntary performance or judicial adjustment of these contracts, it might not have been irrelevant to consider what view should be taken of a contract for the pajunent of a premium for the use of money of five or ten fold its value, according to the usual estimate: At least this view might not have been irrelevant as to such portions of the premiums as were not explicitly and unconditionally expressed in- writing. Although at the date of these contracts, interest at the rate of sixty or one hundred and twenty per cent per annum may have been rendered familiar to the people in some parts of this State, I presume the time has been when such rate would have-excited surprise, and perhaps exclamation there, as it would now, and at all other times in most parts of the United States,
But the appellants had in these contracts, the sanction of the celebrated statute of 1818. The contracts appear to have been made between persons capable of any calculation involved in them, and in all probability, when made, were fully understood by the parties ; then fraud cannot be presumed from the mere enormity of the premiums.
The bills charge that the defendants participated in forming a system to monopolize the money of the country, to control its market, dictate the rate of interest, and to inculcate the opinion that the recovery of the premiums was inevitable according to the laws of the country. The answers however deny any fraudulent combination, and aver that the contracts were made in good faith. Whether any thing in the nature of fraud can be inferred, from the creditors having inculcated the doctrine that the recovery of the premiums could not be resisted, depends on their having in this matter represented their views of this question truly or falsely. No judicial decision on it had at that time been made, and it is not to be inferred that they expressed any other than their real opinions. The sole ground on which the appellants endeavor to avoid the effect of their delay in seeking relief, and of their having made voluntary payment in some of the cases, [101] •and suffered judgements at law to be rendered in others, is their mistake as to their legal liability. I am of opinion that so far as relief at any time could have been obtained in any of these cases, courts of common law and of chancery, were alike competent to afford it. It has not escaped me, that in some of the cases premium, or premium on premium, has been incorporated in the notes, undistinguished from the principal: but as th- debtors voluntarily converted such premiums into principal, and in accordance with the statute, bound themselves absolutely for its payment, I discover no authority on which they can be rejected, if premiums at the same rate, can be recovered under any circumstances whatever; and as I think that such as depended on no contingency, were recoverable under the statute, I can view these in no osher light.
Iholcl it as a principle, well founded in reason and authority,that the voluntary performance of a contract, or suffering judgement to be rendered on it, without attempting such defence as might have been available, (the defendant then having knowledge of all the material facts,) renders subsequent relief extremely rare and difficult; and I consider that there is little or no difference, so far as these cases are concerned, whether the adjustment has been made in one way or the other. These adjustments were made some time after the original contracts; the debtors must have had full time to reflect and obtain advice. By their voluntary performance after this, they shewed their confirmation of the terms. In the cases in which judge-ments have been rendered and satisfied, settlements have been made by tribunals of competent jurisdiction. As to some of these judgements, writs of error were barred by the statute of limitations befpre the institution of these suits. As to all of them, one tribunal is unnecessarily abandoned to resort to another. But every tribunal should shew respect and comity to every other of equal or superior jurisdiction, so that the boundaries of' their respective jurisdictions may be preserved, and toat litigation may terminate according to some established rule. If these appellants can now obtain the relief sought, it must be on the ground of their mistakes as to their remedy at law, mistakes not produced by any fraud in the other parties ; and the effect of the statute of limitations, of the confession of judgement in some of the cases, and [102] of express releases of errors in others, must be disregarded.
The counsel for the appellants have referred to some extraordinary cases, where Chancery has interposed to correct errors of Courts of competent jurisdiction, and to many were the relief sought could not be obtained at law.
But in all such cases, the equitable relief must be sought m due time, and if a party sued at law would obtain a discovery, and avail himself of facts which he cannot prove in the ordinary way, he must seek the discovery while the action at law is depending, and if he suffer judgement, he cannot be relieved without shewing Sufficient reasons for the delay.
Without entering into a particular examination of the many cases cited as to the effects of mistakes in law, (for comment on them in detail would fill a volume,) I think it must be conceded that there has been considerable conflict of decision as to this matter, and that the relief has depended much on the peculiar circumstances of each case. With all the aid, however, which I have been enabled to derive from the’unusual exhibition of learning, res- arch and ingenuity in the argument, and from my subsequent researches, I have been led to the conclusion that the preponderance of authorities is unfavorable to re^ef in c.ases similar to these under consideration.
In this conclusion I am considerably influenced by the consideration, that it may be deemed certain that when the contracts were made, the debtors expected to pay the stipulated interest, at least, until the maturity of the debts ; that as the principles of relief had not been established by any judicial decision, they may have preferred to make voluntary payments, rather than litigate the question ; and if now on the authority of a subsequent decision, we were to rip up former settlements and judge-ments, it would be a precedent tending to render private rights fluctuating to an alarming extent.
In some of these cases, judgements were rendered on confession, which by statute, amounts to a release of errors; in others, formal releases of errors have been * given, which are conclusive if there be no other objection to them than the want of considei ation and ignorance of the law as to the benefits surrendered. I cannot consider the regular prosecution of any legal process, or the ordinary pressure of an execution, as sufficient ground of relief against any act voluntarily done to avert it,
[103] As to the question raised in the argument, whether the statute of limitations applies to suits in equity ? In the ease of Murray against Castor,
In the case of Radcliff against Warrentou,
These authorities do not however, impugn the doctrine maintained in other cases, cited in the argument, that where fraud is the ground of complaint, if the statute can attach at all, the time can be computed only from the discovery of the fraud; but in the absence of fraud or trust, Chancery will refuse relief after the expiration of the time limited by the statute for remedy at law in analogous cases.
Then if the maxim ignorantia juris non exe»sat. and the other objections made, presented no barrier to relief in these cases, it would remain to be inquired, if relief was not barred by the statute of limitations; but as I [104] consider the other objections insuperable, it is unnecessary now to inquire whether the limitation to actions on open account, or to actions on simple contracts, applies to these cases'.
I am not satisfied that the case of Harris against Jones’ executors isnot distinguishable from the others, and a case in which Chancery may afford relief; but as in vacation, I had hot the means of fully examining the facts, and as a majority have formed an opinion against the appellant, I decline expressing any opinion in this case. As to all the other cases, I am óf opinion that the decrees of the Circuit Court should be affirmed.
By JUDGE CRENSHAW.
Many of the positions taken in the argument of these cases were cdhsidered and settled in the celebrated cases at June term, 1854, on the construction of the statute of 1818.
On that occasion it was my conclusion, that all the contracts on which the judgements had been rendered, which were then sought to be reversed, were in strict conformity with the requisitions of the act of 1818; that the object in the enactment of that statute was to remove some of the restrictions on usury, and permit men to agree on their own rate of interest, provided the rate agreed upon was expressed in'writing and signed by the party to be charged; that the statute required nothing more to be so expressed than the rate of interest, and that fid' was required in order to prevent doubt and uncertainty and to close the door against fraud and perjury ; and I now add that an expression of the rate of interest to [105] make the stipulation and agreement intelligible, necessarily involves or draws along with it, an expression of a promise or contract to pay the principal debt as well as the stipulated interest. I further contend “that the statute did not require the consideration, or .the words fair and bonajide, or that the stipulation or agreement was for the loan or use of money, &c. to be expressed in writing and that the Court had no right to require that more should be expressed in writing than was required by the statute.” “That from the second section of the act taken in connexion with the first, and in reference to the old law intended to be repealed, the inference was clear, that the Legislature intended to permit the parties in all contracts which wbuld carry interest by legal operation, to stipulate their own rate of interest without any regard to the nature of the consideration.” I also insisted “that it was not material to inquire whether the rate of interest agreed upon by the parties should be denominated penalty or stipulated damages, and that whether penalty or stipulated damages, it was also a rate of interest agreed upon by the parties and within the provisions of the statute. That it could not be material at what time interest was to accrue, whether from the date, or from the maturity of the contract; whether it was to be conditional or absolute; in every case it was yet. a rate of interest stipulated by the parties, find within both the letter and the spirit of the statute.” I also maintained, “that if at common law no more than a reasonable rate of interest was allowed, the statute made that lawful, which otherwise would have been unlawful; that the record furnished no evidence of the value or price of money at the timé the contracts were made, and consequently the Court could not know whether they were unconscionable, or whether the consideration was grossly inadequate, and that inadequacy of consideration unconnected with any badge of fraud, mistakes, or unfair advantage taken of the weakness, ignorance or necessity of .a party, would not of itself warrant the interference of a court of justice.
If we resort to the letter, to the spirit, or the grammatical construction of the statute, and carefully examine and apply the authorities adduced in the argument of the present question, they fully and satisfactorilestablish all .these positions ; at least to my understanding.
As far therefore as relates tb my own opinion, I have [106] said enough to dispose of the cases under consideration and here my inquiries might stop. But as other grounds were relied on, which were deemed by the counsel of vital importance, I conceive it to be my duty to notice some, if not all of them.
It has been ably urged, that from an analogy to the construction given to. the English statute of frauds and perjuries, no contract can be brought ydthin the operation of the first section of the statute of 1818, and carry an extraordinary rate of interest, unless the contract and its consideration as well as the rate of interest, be expressed in writing. I have already stated my opinion that this, which is an enabling statute, requires nothing to be expressed in writing but the rate of interest, and that an expression of this necessarily draws along with it the expression of the sum lent, ,or principal debt due. The statute does not require the contract or its consideration tó be expressed in writing, nor, as I humbly cbnceive,has this Court any right to require it. But the English sta* tute, which is restrictive of the common law in so many words, requires that the agreement shall be in writing, and the consideration which is a substantive part of the agreement, must as a necessary consequence, also be in writing. I am not scrupulous as to the nice distinction contended for between the words contract and agreement; as far as the present question is affected, I am willing to consider them synonymous, and as signifying a promise or undertaking on a sufficient consideration ; and willing to admit, that if the act of 1818 had required the contract or agreement to be expressed in writing, the analogy to the English statute would hold good; and it would he necessary to, express in writing the consideration as well as the promis.e or undertaking, as an essential part of the contract or agreement.
It was with much ingenuity contended, that ignorance of the law under the circumstances of these cases, furnished sufficient ground for equitable relief.
Laws are said to be prescribed tb operate on every member of the cpmmunity, and every one is presumed and bound to know them. In this respect, I can find no good reason for any distinction between what may be-termed the civil and the criminal law of the country, or in other words, between the laws for the regulation of contracts, &c. and the laws defining and 'prescribing the [107] punishment of crimes. If ignorance cannot excuse the guilt of a crime, it can have as little effect in creating or destroying legal liabilities, or private rights in the trans•actions of men with each other. No adjudication which in my opinion ought to be recognized as authority, has been, and I presume none can be produced, shewing that ignorance of the law not connected with mistake as to facts, nor induced by fraud, and where no undue advantage has been taken of the party’s ignorance, is a sufficient ground of relief from the obligations of a contract. Indeed the very authorities relied on to shew that ignorance of the law has been considered a sufficient ground of equitable relief, go to establish the contrary doctrine. In most of them, and these of the best reputation, independent of ignorance of the larv, there were other sufficient grounds to warrant the decisions which were made. I do not recollect that in any one of them, ignorance of the law was considered of itself a sufficient ground for relief. In my view, such doctrine would be as much against sound policy as against clear law. I cannot divine how the fact of ignorance could be established. I know of no means bv which it could be proved in a court of justice, unless by the oath of the party, which would hold out such temptation to fraud and perjury, as to create far greater evils than that intended to be remedied.
But what kind of ignorance is alleged in these cases as a sufficient ground to recover back the excess of interest above eight per cent? In the cases of voluntary payment, it is substantially this : that the debtor paid the money according to the terms of his contract, and as he believed, according to the requisitions of law; but he was ignorant that on a contract like his, the law would afterwards be differently construed. In the cases where payments were enforced by judgements, the debtors were ignorant that these judgements might have been reversed. In both classes of cases, the debtors allege that they were igno-raht that it would afterwards be declared by this Court, that the extraordinary rate of interest could not be recovered, because the contracts had not been expressed irr writing according to some of the requisites of the statute. In the cases of voluntary payment, if there had been no written contract, the money could not be recovered back. For the voluntary payment was an admission of a sufficient contract, and the debtor of his own accord, per* [108] formed .what the law would have compelled him to perform, if there had been a sufficient contract in writing. A contract intended to be made according to the statute, and fully executed, cannot afterwards be rescinded because some of the matters required by the statute to be expressed in writing were not so expressed.- It can not then be material, whether the debtor, when he made voluntary payment, was, or was not ignorant of his legal liability. to pay.
Nor is it material, in the cases in which the payment .was enforced by legal process, whether the debtors were, or were not ignorant that the judgements could have been reversed. The argument is, that being ignorant of the law in. this particular, until it was declared by the decision of this Court at June term, 1824, and writs of error on these judgements being then barred by the statute of limitations, the parties against whom they were rendered, are consequently entitled to relief in equity.
As a genera] rule, this I presume would bé dangerous in its consequences. It might disturb and set aside more than half the judgements recorded in the State. It would be a virtual repeal of the law limiting the time for taking cut a writ of error, and subversive of many important rights.
I readily concede that an oppressive oriniquitous judgement, obtained by fraud, mistake, or surprise, may be relieved against in equity, and that the statute, of limitations does not begin to operate until the complainant has discovered the fraud, mistake or surprise. But if these facts exist in these cases, from their nature and history, they can be no better known now than when the judgements were rendered. Nothing has since occurred to shed new light, unless it be the decision of this Court in June 1824, and a knowledge of fraud, mistake, or surprise, could not be derived from that decision, .but from the nature of these matters, must have been known at, or immediately after the rendition of the judgements. From that period therefore, the limitation to the writs of error began to operate, and if the evil could have been reached by a writ of error, a Court of Equity cannot entertain jurisdiction, although the parties who complain of the judgements, may have been ignorant that they might have been reversed.
But, in some of the cases, it is said that new notes had [109] been given embracing usury on usury ; that this was sot apparent on their faces, and at most, was only a partial failure of consideration, not available at law.
To this, the unavoidable reply is, that if unlawful interest be embraced in the note, whether apparent on its face or not, it was an available and proper defence at law ; and therefore, is not a subject of relief in equity. It is true, that damages cannot be stipulated for the failure to pay a sum of money, and that Courts of Chancery have concurrent jurisdiction with courts of law. in relieving against penalties ; but if the court of law has also ample jurisdiction, and a judgement on the matter has there been rendered, and remains in full force, it is conclusive between the same parties, on the same subject of controversy in all Courts ; and equity cannot impeach it, unless it \vas obtained by fraud, mistake, or surprise, and these matters could not be available in the court of law.
This doctrine is also a sufficient answer to the claim of the complainants to relief, because they were induced to renew their notes, and to make payment in the cases not coerced by legal process, by their ignorance of their rights, and of the law, and without their fault or negligence.
It has been strongly alleged, that these are cases where an undue advantage has been taken of the distress of the complainants, and that hardship, inadequacy, oppression, and fraud, are so manifest as to call aloud for the interposition of a Court of Equity. The record does not establish to my satisfaction, the existence of these facts ; and if it did, yet the court of law had ample jurisdiction. The cases have been there adjudicated, and all these circumstances were there available as a matter of defence; and equity cannot now interfere, unless the judgements were fraudulently, or surreptitiously obtained. Nor can equity interpose merely on the ground of fraud in obtaining the notes originally, or in their renewals, (and such fraud is not shewn,) because this was a matter equally available in the trials at law.
It was further alleged, that no statute of limitations could bar relief in equity, and that if the claims of the complainants are subject to the statute, they were in as-sumpsit, which could not be barred until the expiration of six years, and that the bills were filed within that period.
The statute of limitations was intended to be general in itjs operation. A claim once barred, is foreyer barred in [110] aH Courts. Any other construction would defeat tbe provisions of a law made on great consideration. If there was any ground for equitable relief, the statute began operate even against the claim to relief in equity, from the time that it might have been probably discovered, and in the- present cases, it must have been discovered at the time of paying the money'. I think that the Legislature, by the expression in our statute of limitations, u money due by open account,” intended to embrace all cases where money was due on any contract, express, or implied, and not reduced to writing, or where the account had not been liquidated. The demand of the complainants must be considered in the light of money due by open account, raised on the implied liability of the defendants to refund, and was consequently barred by the expiration of more than three years from the payment of the money until the institution of these suits. But if the complainants were entitled to a remedy, it was for their money, of which defendants had gained possesion, and in good conscience, ought not to retain, and if recoverable in any form of proceeding, might have been recovered in an action for money had and received, a plain and adequate remedy at law.
The statute of non-claim has been cited as applicable to the casé of Harris against Jones’ executors, and this statute is express and unconditional, that if the claim be not presented within eighteen months, it shall be forever barred.
As to the charge that there was a combination between the defendants and the monied men of the country, (perhaps the only substantial ground of exclusive equitable jurisdiction, set forth in the bills,) it is denied by the answers, and no proof has been adduced to sustain it.
In conclusion, it was eloquently contended, that in equity eveiy case stands on its own intrinsic merits, and that it hath power to control what is harsh in the application of general rules, and will supply the defects of the law; that justice is a constant and fixed rule in the minds of all good men, to give to every one his due ; that it teaches moderation, reclaims the wicked to virtue, and ought to be cherished as life as itself; that equity is as infinite as natuial ju-uiee, and is what the law does not exactly define, hut what the judgements of good men permit
These are indeed excellent sentiments, beautifully ex.-* [111] pressed, and shew great moral goodness in tbe author who originally conceit ed them. They were oi vast utility in the despotic ages of England, when the Court of Chancery began its encroachments on the courts of com-moil law, and to assume form and svrometry. On these principles, and to relieve in cases of fraud, accident, and trust, the equitable jurisdiction of the Court of Chancery originated ; and there has been built a system s.o complete, that at this enlightened day, the bounds of its jurisdiction are as well settled and defined, and it is as much eovern-ed by laws, rules, and precedents, as courts of common law. This extraordinary power is not to be exercised according to the arbitrary or capricious notions of the Chancellor, but must be governed by law and precedent, peculiar to its own jurisdiction. It is a strange idea, and would be a most dangerous doctrine, that a Court of Equity possesses an undefined power, coextensive with the boundaries of natural justice, unrestrained by rule and uncontroled by law or precedent; or that it can form new precedents, suitable to the exigencies of new cases as they may arise, when by the rules already established, relief cannot be afforded. Such a doctrine would set the Chancellor above the Legislative power, and might ultimately subvert the jurisdiction of courts of common law. In fact the only material difference between courts of char eery and courts of common law, is in the mode of proceeding of trial and of relief.
The conclusions at which I have arrived in these cases are.
1st. That the contracts were within the spirit and meaning of the first section of the act of 1818.
2nd. That the matters alleged as grounds of equitable relief were available at law, and that the complainants must be concluded by the judgíments at law, in which they acquiesced, or by their voluntary performance of their contracts.
3rd. That the right of the complainants to actions at law, or to writs of error being barred by the statute of limitations, they are also barred in equity.
4th. That ignorance or mistake of the law, unconnected with mistake or igtiorance of facts, or not induced by fraud, is no ground of relief.
And that the decrees of the Circuit Courts should be affirnfed.
.In attaining these conclusions, I have proceeded with [112] diffidence of my own ability ; and while I acknowledge the lights shed upon the subject by the counsel for the defendants, I must in candour say, that an equal tribute Qf respect js due to the talents and legal learning displayed bv the counsel on the other side; and while I am gratified to find my brethren of the bénch concurring with me on arty one material point, I avail myself of the occasion to express the ■ most profound respect for their opinions on all points on which it is my misfortune to differ from, them. . ' •
By JUDGE WHITE.
As to the construction of the statute of ISf 8, to amend “an act against usury,”
I acknowledge that I cannot perceive the necessity for this, for although the statute uses the words, it does not require them to be inserted. If the contracts were fair and 'bona fide, they were good without the use of these words in the declaration or in the contract; and if unfair and fraudulent, they would have been bad with them. I cannot perceive that the insertion or omission of these words could have enlarged or narrowed the right of the defendants to the actions to avail themselves, by their pleas and evidence, of any fraud or want of good faith, which there may have been in their stipulations for interest.
It has been argued that these notes were defective in not shewing on their face, that the interest agreed upon was for the actual loan or use of money, wares, &c.
With the most respectful deference for those who may differ from me on this subject, it seems to me that when the language of a statute is plain, it should be understood according to its plain and obvious meaning. It is evident from the very title of this act, that the Legislature intended to amend the former law against usury. They designed to make legal, at least in some cases, a contract fo> any rate of interest or premium ; but they also intended to restrict this privilege, by requiring that the rate stipulated and agreed upon should be expressed in writing. Let us examine particularly the expressions of the statute, “that any rate of interest or premium for the loan or use [113] of money, wares,” &c. “fairlv and bona fide stipulated and agreed upon.” What is to be stipulated and agreed upon? The rate of interest or premium “by the parties to such contract expressed in writing.” What is to be expressed in writing? Surely the rate of interest agreed upon; “and signed by the party to be charged therewith.” What is required to be signed ? Evidently the rate of interest agreed upon and expressed in writing “shall be legal and recoverable.” What shall be legal and recoverable? “Any rate of interest so stipulated and agreed upon, expressed in writing, and signed by the party to be charged therewith.” But the statute requires that this agreement should be made by the parties to such contract, and it is asked what contract is here meant, and who are the parties ? Let it be admitted that the contract of loan, and the parties referred to, are the lender and borrower; who necessarily must be the persons who stipulate and-agree about the interest. Does it follow that because the stipulation for interest is to be between the parties to the loan, and the rate stipulated is to be expressed in writing, that the statute therefore requires that it should also be expressed in writing, that the interest ’was for the actual loan of money, wares, &c.? It seems to me that the one could be, and is required to be done without expressly requiring the other. True, it is unusual to take a note for the interest separate from a note for the payment of the principal, but this does not prove that the statute requires that any thing more should be expressed in writing than what it has named, much less does it shew that it should appear on the face of thé note, that it; was for the actual loan of money, &c. The Legislature in wording the statute, no doubt had an eye to the ordinary course of business; and in the ordinary course of business, the interest agreed upon would be expressed in writing in the note for the payment of the principal. And what, in legal contemplation and in the sense of the statute, is a note for the payment of money with a stipulation for interest for its use, but a contract of loan ? If so, the parties are the parties to the contract ©f loan referred to by the statute, and where they express in writing the agreement for interest thus annexed to the agreement for the payment of the principal, and the party who is to pay the principal and interest, (the party “to be charged therewith,”) has signed the note, it would seem. [114] that all has been done which the" statute requires, and that according to the statute, the interest is “legal and recoverable.”
The latter part of the same section, “and. no bona fide contract shall be vacated, or in any manner impaired, by reason of any premium, or rate of interest, so stipulated and expressed,” sustains this position. What is here referred to as being so stipulated and expressed l 'Most clearly the rate of interest.
'Again, by the second section it is provided, “that on ■all contracts, written or verbal, ascertaining the sum due where no specific premium or rate of interest is expressed, interest shall be taken, &c. at the rate of eight per centum.” There is another unequivocal reference to the stipulated interest, as the matter which must be expressed in writing. If the Legislature intended that any thing more should ■be so expressed, it is strange that in a statute comprised in a very few words, they should three times expressly, or by clear allusion, say that the interest stipulated and agreed upon should be expressed in writing, and not once say that it should be expressed in writing that the contract was for a loan.
It was, however, further contended, that the Legislature did not intend to extend the privilege of contracting for any rate of interest to cases of sales of property on credit, or contracts for forbearance in the collection of pre-existing debts. If this were-admitted, I doubt much whether the fact of an actual loan might not have been shewn by proper averments. But some of the contracts, in the cases under consideration, were on sales, &c. and not on the actual loan of money, and it is therefore necessary to examine this view of the question.
It is sáid that this statute being deleterious in its effects on society, ought to be restrained in its operations to the narrowest possible limits; and that the Court have power to mould it according to reason and conscience to the best and truest use. This is certainly a rule of law, and no one not "devoid of the best feelings pf our nature, who looks at these cases as a fair exhibit of the desolating effect of this short lived statute, can help feeling the strongest desire to repress the evils and alleviate the sufferings produced by it. But courts of justice are not permitted tó feel, they are required to think. The rule of law referred to, surely does not mean, that Courts when called on to construe a statute passed upon mista-[115] Sen views of policy, found to be inconvenient or mischievous, and soon repealed by the proper authority, are so to mould and direct its bearing, as to give it a different operation from that which was intended by the Legislature who passed it. This would be an usurpation of powers allotted to another department of the government. It would be legislating instead of adjudicating. In the same compilation from which the above rule has been cited,
But this statute of 1805, with the legislative expositions of its extent, must have been in the contemplation of the Legislature, when they passed the act of 1818, to amend it, and by adopting the phraseology of the act of 1805, they must have intended to include the same descriptions of contracts. The statute of 1818, does not Contain similar provisions and explanations to that of 1805. They were necessary to enforce the prohibitions of this act, but cease to be so with the repeal of the prohibitions which they were intended to enforce.
Again, as the words and phrases in the statute of 1818, descriptive of the contracts on which any rate of interest might be stipulated, are the same (in some instances verbatim and in all substantially,) with those used in other statutes, to describe the contracts on which usury was prohibited, we must conclude that the Legislature, by-adopting them, designed to use them according to the precise and settled meaning which they had already [117] acquired from their use in previous statutes; and according to this, they compsehend all contracts on which interest is usually reserved, and we cannot attach to the same words different ideas, when used in different statutes, merely because we may believe one statute to be salutary, and the other to be hurtful in its operation.
The meaning of a statute is the intention of the Legislature therein expressed; to ascertain this intention, we look back to the history of the time in which it was passed. The framers of this law, however much they may have been mistaken, expected good to result from it. It will be remembered that the opinions which produced it, were then prevalent in many of the United States, and were vindicated by elaborate publications in Europe; that the statute passed without a dissenting voice, and that eyen now after it has palsied much of the energies of the country, as with the very blast of death, the principles on which it originated are considered by some as beautiful in theory. Then we must suppose that the Legislature intended this law for good, and calculated not merely to benefit the monied capitalist, but to keep in the country and bring into circulation, all the money that was here, and expected that its value, like that of other things, would by competition be reduced to its proper level. If we could be deceived now, as the Legislature were then, by these and similar views, we might think this a good law, and then I presume, according to the argument used, we ought to be disposed to enlarge its operation. But if we are to regard the intention of the Legislature, we must view this statute now, as they did then, and construe it now, as they would then have construed it; otherwise the same statute will import one thing to-day and another thing to-morrow, according to the various and fluctuating opinions of its salutary or unsalutary operation. It is obvious that this would render all private rights uncertain and insecure.
But in construing one part of the statute, every other part should be taken into consideration. The second section of this statute provides, that on all contracts, written or verbal, ascertaining the sum due, where no special premium or rate of interest is expressed, interest shall be taken, &c. at the rate of eight per centum per annum ; thereby clearlv implying, that on all contracts where a specific premium or rate of interest is expressed, [118] (jn writing,) it shall be recoverable. Here is no restriction to loans merely, or to any other particular class of contracts, but all are spoken of and all are intended.
Again, a loan implies forbearance, and one cannot be conceived without the other. As regards the interest reserved, it does not matter whether it be on a pre-exist-ing debt, or on handing over the money from the lender to the borrower. If the owner of the money lets another man keep it for a specific time, he sustains as much inconvenience in the one case as in the other, and he who obtains further forbearance of the debt which he was bound to pay, is as much benefitted as if he had obtained a loan of the money to discharge it. To my mind, neither reason nor law makes any distinction between the two cases.
It has been urged that there is a strong analogy between this statute and the fourth section of the English statute against frauds and perjuries, and that as the decisions on the constructions of this statute are, that the consideration as well as the promise constitute the agreement, and both must be in writing; so to bring a contract within the first section of the statute of 1818, the consideration, and that consideration a loan, as well as the interest agreed to be paid, must be expressed in writing.
Without adverting to the well known fact, that this construction of the English statute has been much shaken by late adjudications, both in England and in the United States, the decisions shew that they turned upon the legal import of the word “agreement,” taken in connexion with the consideration of the mischiefs intended to be remedied by the statute. The English statute requires that the agreement shall be in writing, and the consideration is an integral and indispensable part of it. But our statute of 1818, only requires that the interest stipulated and agreed upon, shall be exn-essed in writing. One statute requies the whole agreement, as to which it originated, and established a new rulé of evidence, to be in writing; the other statute altered the existing law of the contract as to a part, and not the whole matter to bo agreed on ; as to the interest, a mere incident to the principal, and has required only this new matter, the rate of interest to be expressed in writing. In the decisions on the statute of frauds and prejuries, it was considered that there was as strong a temptation to swear falsely to ifere [119] .consideration as to the promise. But our Legislature do not seem to have apprehended that one man would attempt to charge another with interest, and extraordinary interest too, without the consideration of the loan or use of the principal, a circumstance which perhaps nev< r did, and never will occur. But they feared that there might be misunderstandings and uncertainty of testimony, as to the rate of interest agreed upon, and therefore required that the rate should be expressed in writing. If we could possibly suppose a case where a man had promised to pay interest, without having in any manner, had the use of the principal, this would be a promise without consideration ; but none of these cases present so strange a feature.
On a full consideration of this part of the subject, I cannot but think that it was the intention of the Legislature in the statute of 1818, to include all contracts on which interest ordinarily accrues. It is stated in these bills, that much of the money paid by the complainants as interest, is on a proper construction of the contracts, to be considered as penalty; and that thus far they ought to he relieved. Some of these notes were payable at a certain time from the date, and if not punctually paid, were to bear interest at a stated high rate from the date. The parties having used the word interest. which has a definite meaning : we should not entirely disregard this circumstance. Yet, if from the whole tenor of the contract, it is evident that they merely intended to provide a penalty, we must view it in that light. Interest is always supposed to be given for the use of the principal. But parties sometimes make their calculations and bargains so as to give day for the payment of the principal without interest, and the creditor provides for the inconvenience of lying out of the use of his money, by an increase of the price of the thing sold. But in such case, if the note be for the payment of interest from the date, if the debt be not punctually paid, this interest from the date, is not as compensation for the use of the principal, for the time between the date and maturity ; for this was already included in the price for which the article was sold, and if interest for this time was paid, the creditor would be doubly compensated. Such a provision then, must have been inserted merely to enforce punctuality; and is to be considered as a penalty. This has been the uniform view which Courts have taken of such contracts? when made-[120] mK|er jaws which restrained, or fixed the rate of interest; and I cannot perceive why a different principle should ap« ply to contracts within the operation of the act of 1818. .phe }ncreased amount of such interest does not lessen its resemblance to a penalty.
The other notes in these cases may be classed under the following heads :
First, To pay the principal at a future day, with interest from the date, at a certain rate, until paid.
Second, To pay the principal at a future day, with interest at a certain rate thereafter, until paid.
Third, To pay the principal at a future day, with interest at a certain rate, without reference to time.
It was contended on the one hand, that these agreements for interest, are in the nature of stipulated damages for the use of the principal until actually paid, and that the whole was recoverable at the rate agreed on ; and on the other hand, that at least, the interest accruing after the maturity of the notes was a penalty.
Penalty is defined to be a forfeiture annexed to a corn-tract or agreement, either for better enforcing a prohibition, or by way of securing the doing of some collateral act agreed on by the parties. Stipulated damages is where there is a clear unequivocal agreement for the payment of a certain sum, as a liquidated satisfaction, fixed and agreed upon by the parties, for the doing, or not doing of certain acts, particularly expressed in the agreement.
Where it was agreed that the debt should carry interest before the day of payment, this interest, as admitted on all hands, was intended as satisfaction for the use of the principal, until the maturity of the note. If it was not designed for the same purpose afterwards, should the borrower retain the principal, then that which is interest [121] for to-day, would be considered penalty for to-morrow, although it is the same amount, at the same rate, given for the same consideration, and agreed for in precisely t-he same words. How can the deterring and enforcing principle, which is the very essence of the penalty, be viewed as attaching itself to the payment of a sum today, which on yesterday, all admit was nothing but interests? If A. were to contract with B. to pay him at: the end of the year, fS a month, for the use of his plantation, and then to deliver possession, and at the same rate until delivered, none could say that the money to be paid for the use after the expiration of the year, was penalty ; but all would agree that it was as much rent as that which arose before. What is'the difference between this case and a contract for the use of money, when the law-leaves such contract as unrestrained in its rate as any other contract ? It is true, when the rate of interest is fixed by law, the law cannot be evaded under the semblance of a contract for stipulated damages; and this is the true and avowed reason, why such stipulations annexed to monied contracts, have been adjudged penalties,
Again, a penalty is incurred in gross, and when once, incurred, cannot at law be saved in whole or in pari. But here the interest was not forfeited at once, but accumulated with the progress of time, and might at any time have been arrested by the payment of the principal. The parties use the very language of the statute, authorizing such contracts. They stipulated for interest to continue to run as compensation for the use of the principal, and it is not usual for men to call that interest which they intend as penalty.
But it is said that there is a great disproportion between the value of money and the price, by these notes agreed to be given for its use. This indeed would so appear to us now, but perhaps we are not capable of appreciating tbé value of money when these contracts were made. The number of cases now depending on this controversy, and the still greater number of contracts of a similar character, known to have been made about the same time with these, certainly tend to prove, that from some cause or other, the use of money’was then rated at a high price; or at least, that many persons, and not merely here and there a solitary oppressed and deluded, individual, must have placed a high estimate upon it, [122] admit tbis disproportion to its full extent, it cannot prove' that we should not carry the law into effect, or declare these contracts void. All now perceive that it was indiscreet for the appellants to make them. But we are nevertheless bound to construe them, as we understand them. Many other contracts for land, negroes, cotton, &c. as extravagant as these, were made about the same lime, in the same section of country, and have been, and must be enforced. In some of the cases under consideration, there is the same disproportion between the interest agreed to be given for the use of ‘he money, before and after the maturity of the notes, and if one be avoided for inadequacy of consideration, so must the other be. If these notes did not malte the makers liable for the interest accruing between the maturity and payment of the notes, I am at a loss to perceive by what means this could have been done. Indeed it seems to be contended, that no form of contract could have had this effect, and that the statute must be so construed as to coniine the right to agree for any rate of interest to the time anterior to the maturity of the note. In this view, the statute could have but little operation, unless in cases of long credit, which lenders would generally be unwilling to give to any but men of property and known prudence in the management of their affairs, and these are not often borrowers. The law would thus have been rendered almost entirely inoperative. This would be an effectual way of extracting the sting from the statute, but as it seems to me, would be in direct violation of the “ rule prescribed'’’ by the legislative power.
It is said that -this accumulating interest would ruin any one, whose misfortunes should render him unable for a considerable time, to discharge the debt. So in the-case of Fletcher against Dyche,
’Why should these contracts be so construed, as to throw the burthen of high interest on the punctual debtor only, while he who fails to perform his contracts, is to be ■held liable after the debt is due to an interest of only eight per cent ? He might withhold the money from his [123] creditor, and lend it to another at a much higher rate. What is this but allowing- a man to be benefited by his own wrong, and holding out to him a temptation to violate his contract ?
On a contract for interest, at less than eight per cent, it is clear that the interest would continue from the maturity of the note till the judgement, at the rate contracted for. The rate is different in the different States, it is the mere creature of the law. Our statute of 1818, permitted the parties to contract for any rate. Then if the ra'e as fixed by the contract, and within the limits prescribed by the law, must in the one case govern from the maturity of the note till the time of judgement, I cannot see why it should not in the other.
On these points, it is my misfortune to differ from those for whose opinions I entertain the highest respect, and it seemed necessary that I should thus in detail, shew the reason of my opinion. These questions on the construction of the statute of 1818, were decided by this Court at June term, 1824, and when I was nota member of the Court, and the opinions then given by a majority of the Judges, are in conflict with mine.
Before this decision was made, the complainants in the cases under consideration, had paid the amount of principal and interest expressed in their notes. In some cases voluntarily, and in others the payment had been enforced by legal process. They now allege, that interest at these high rates, was paid through ignorance and misappi-ehension of their rights, and of the true construction of the act of 1818 ; and pray that all that was paid above the principal and interest at eight per cent per annum, may be decreed to be refunded.
It cannot be denied but that by proper defence in a court of law, or by writs of error on the judgements, the complainants might successfully have resisted the payments of which they now complain. Can equity relieve when they have not sought their legal remedy ?
In the case of Murfree against Whiting,
As to the cases in which payments were made without suit, do they exhibit any peculiarity of feature exempting them from the operation of the maxim volenti non fit in-juria ? The complainants claim an exemption on the ground of their ignorance of the true construction of the act of 1S18. Into this principle I will hereafter examine.
The next question raised is, how far are courts of equity governed by the statute of limitations ? It is con-tenc^ec^ t^iat "'here writs of error were not prosecuted within the time limited by statute, Chancery will so far notice statute as not to take jurisdiction.
Reason and autt-ority appear to support the position, that courts of equity as well as courts of common law-are bound by the statute of limitations*
[125] By our statute,
But it is urged that these cases form exceptions from the general rule. First, on the grounds of fraud and trust. Secondly, because the special matters alleged in the bills are not specifically decreed. And thirdly, because the statute did not begin to run until the complainants were made acquainted with their rights, which was within the three years before the bills were filed.
It is true in cases of fraud, the statute of limitations begins to run only from the time the fraud is discovered.
Wherever there is a continuing subsisting trust, acknowledged and acted upon by the parties, the statute of limitations will not bar. But if the trustee denies the right of the cestui que trust and his possession becomes adverse, from that time the statute begins to run. Trusts which áre the grounds of an action at law, are not excepted [126] from the operation of the statute.
If the law were otherwise, the statute of limitations acknowledged by all Courts to be a salutary statute, might be evaded by changing the Court in which the remedy was sought.
As to such of these notes as had embodied the interest which first accrued as principal, the remedy at law might have been incomplete, without the aid of equity for the purpose of discovery. But still the doctrine already stated applies to them, for at most, the jurisdiction of a Court of Chancery was concurrent and not exclusive.
The other objections raised to the operation of the» statute, from the peculiar situation of these cases, depend much on the questipn, whether ignorance of the law will excuse? a question which has called out much of the strength of the argument on both sides. If it were now presented for the first time, and on first principles, it would be presumptuous for me to say that Í should entertain no doubt. In this interesting and much agitated question, the brightest ornaments of tne English bench, and the ablest jurists and civilians are found in opposing ranks. To apply the maxim indiscriminately, seems often to produce injustice; if it were destroyed as a general principle insurmountable difficulties would arise. Proof of mistakes of facts, can usually be made with l-easonable certainty. But proof as to mistakes of law can seldom or never be so attained as to be acted on with safety. Sound policy seems to require as a rule in the administration of justice, that ignorance of the law shall not excuse, although in particular cases it may be painful to apply it. If we resort to the authorities it will appear, that although there 1, 1 , r r i ° may nave been some douDts and formerly some respectable decisions to the contrary, yet it is now fully estab-hshed as a maxim, both iu law and equity.
Every one must at first glance see the strong and direct bearing of these principles on the main point in the cases under consideration. True it is, this decree was after-wards reversed by the court of errors, consisting of the Senate and the Judges of the Supreme Court of New-York; but this reversal was by a majority of but one, among the whole number present, and in this majority the name of Spencer alone, as a Judge, is to be found to weigh against Judges Thompson, Yates and Pratt, in reversing on its entire merits, a decree of the discriminating and justly celebrated Chancellor Kent. Without adverting to the fact that Livingston and Van Burén, of the Senate, were of the minority, the weight of judicial authority appears to be in favor of affirmance, and even Judge Spencer, and the twelve Senators who agreed with him in reversing this decree against the opinions of three Judges and nine Senators, did not disturb or contradict the principles laid down by Chancellor Kent, but decided the case upon different grounds. See 14 John. R. 525. It must then be conceded that although a few old, though respectable opinions, maybe adduced to the contrary, the decided weight of authority is in support of the maxim ignorantia juris non excusat.
[128] It would be tedious to comment on all the cases cited by the counsel for the complainants on this point; but I think that it would be found either that they have been overruled, or as to the main'point on which they turned, were decided upon other principles; and that some of the very strongest of them do not in principle reach the cases • at bar. Take for example, the case from Atkins, where it was decided that on a bond intended to be joint and several, but through misapprehension, made joint, the the obligee should be satisfied out of the estate of the deceased obligor, the survivor being insolvent. Suppose that the administrator of the deceased obligor in ignorance of the legal effect of a joint bond, but in pursuance, of the real intention of the parties to the contract, had satisfied the bond out of the assets; all will agree that equity would not afterwards have decreed that the money should be refunded because he was ignorant of the law when he paid it. Again, in the case cited from Cook’s Reports, Judge White says, if a man is clearly under a mistake of the law, which mistake is produced by the misrepresentations of the opposite party, he can be relieved as well as if the mistake were to a matter of fact. Here we have nothing to shew that the mistake of the complainants was induced by the defendants, or that the defendants knew what (as is urged as a main matter in the argument,) the rest of the community were ignorant of. Again, in all the cases cited where the Courts appear to have been in the least influenced by the parties having mistaken the law, or misapprehended his rights, the mistake was clearly shewn. But may we not with great respect for the opinions settling the construction of the act of 1818, say that there cannot be the same certainty here- Two out of the six Judges composing the Court by which the decision was made, continued then to entertain the opinion which had for several days before prevailed with almost all the legal characters whose attention had been called to the subject. An opinion then of but one of the other four, different from that which he then formed, would have produced an equal division of the Court. The Judges composing the majority differed very materially in their views of this statute. Might not the same point be otherwise decided by a different Court? We are it is true, as to all ordinary purposes, to take the law to be as it has been decided by the supreme [129] tribunal of the country; but is the construction of this statute under these peculiar circumstances, placed so far beyond controversy, as to require this Court to grant relief on the ground that the complainants certainly mistook the law. These complainants appear to have thought their notes legal when they gave them, and when they paid them, and can equity then set aside in part contracts which had been executed, and executed in pursuance of the intention of the parties, merely because the complainants did not in time find out that they could have evaded their own intentions, and their contracts ? It would seem to me not.
I then am of opinion that, first; where the debt was payable at a future day, and if not punctually paid to carry interest from the date; that the interest from the date till maturity, was a penalty. That with this exception, the interesfstipulated and agreed on was legal and recoverable, as wellfor the time after,as forthe time before the maturity of the notes. Second, That when the notes were renewed, and the interest incorporated with the principal, it was also recoverable; at all events the complainants by such renewals having bound themselves to pay what they originally contracted to pay, equity cannot interpose either in these cases, or in the other cases in which judgements at law were recovered, though the renewals may have been made, or the judgements suffered to pass, or the time for suing out writs of error has elapsed, while complainants were ignorant of their rights at law. Third, That where voluntary payments have been made, equity will not revive the contracts for the purpose of setting them aside. Fourth, That where releases of error have been given, they are obligatory.
The case of Harris against Jones’ executors, was submitted on bill, and an answer without proof. I am doubtful whether the statute of non claim is not available. But a part of the consideration was interest, which was usurious under the act of 1805 ; which gave a clear and specific remedy by action on the case. It is not shewn by the bill that it was necessary to resort to equity for the purpose of discovery ; the bill was therefore properly dismissed.
The principles which I have stated, I believe, meet all the points made in the cases under consideration.
[130] Let tbe decree of the Circuit Court in the several cases be affirmed.
Judge Gayle gave his opinion, that the appellants were entitled to the relief sought, and that the decrees of the Circuit Court should be reversed. The written opinion is not to be found in tbe files of the Court.
Footnotes
1 Stew. 81 (Jones v. Watkins) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.