by protracting the cause in the most expensive and vexatious manner, and the more the plaintiff is injured, the less he will be relieved."(k) Where money is paid into Court on a security carrying interest, interest must be paid not merely to the commencement of the action, but to the time of payment into Court, () or the plaintiff may proceed in the action for the difference.(m) But in trover the rule formerly was that the plaintiff is entitled to damages equal to the value of the article converted at the time of the conversion. And, therefore, in trover for bills or notes, interest was only calculated down to the time of conversion. But now by the 3 & 4 Wm. 4, c. 42, the jury may give damages over and above the value of the goods at the time of the conversion. Interest ceases to run after a tender. Lord Ellenborough: "I think interest ought to stop from the offer to pay."(n) A banker, in charging interest to a customer who has overdrawn his account, should compute it not from the date, but from the payment of the customer's checks.(0) [*243] *Though the principal have been paid, yet the plaintiff may proceed for interest, and the jury are bound to give it unless it have been incurred by the negligence of the plaintiff. (p) So where for the amount of the principal on an overdue bill, another bill was given, and afterwards paid, it was held that an action lay on the original bill for the interest.(q) We have already observed, that where interest is not payable by the terms of the instrument, it is in the nature of damages. Hence it has been held, that the owner of a bill is not necessarily and invariably entitled to interest, but that where the charge for interest has (k) Robinson v. Bland, 2 Bur. 1077. (n) Dent v. Dunn, 3 Camp. 296. (0) Goodbody v. Foster, Camb. Sum. Ass. 1831, Lyndhurst, C. B. (p) Laing v. Stone, M. & M. 229, n.; 2 M. & Ry. 561, S. C. (9) Lumley v. Musgrave, 4 Bing. N. C. 9; 5 Scott, 230, S. C.; but see the Chapter on Payment, and ante, p. 179. been incurred by his own negligence, a jury are justified in reducing or withholding it altogether.(r) An engagement to give a bill will create a liability to interest on a contract, which would not otherwise carry it. Thus, where goods are sold to be paid for by a bill which is not given, interest is recoverable as part of the price of the goods, and it has been held, that this interest may be recovered in an action for goods sold and delivered.(s) A party who guarantees the due payment of a bill is liable for interest.(t) Where the action goes on to trial the jury assess the interest, the plaintiff's counsel stating the sum which is claimed. Where judgment goes by default in debt, the plaintiff indorses on the writ of execution more than the exact sum due at his peril. In actions of assumpsit the Courts have the power of assessing the damages, but in order to inform the conscience of the Courts they usually issue a writ of inquiry. In actions on bills and notes, however, the amount of damages being matter of calculation, the writ of inquiry is supplied by a reference to the Master to compute principal and interest. The rate of interest allowed is five per cent., but we have *seen that under peculiar circumstances the jury may reduce the rate. The common indebitatus count for interest is good.(u) [*244] Until recently to contract for or take more than five per cent. interest on any transaction relating to bills or notes was usurious and illegal. Three recent statutes, however, (v) which will be considered in their order, have exempted so large a proportion of the bills and notes in circulation from the operation of the Usury Law, that in a treatise on negotiable instruments the subject of usury is no longer of the same practical importance as formerly. But as the latitude (r) Cameron v. Smith, 2 B. & Ald. 308; Du Belloix v. Lord Waterpark, 1 D. & R. 16; and see Dent v. Dunn, 3 Camp. 296. (s) Marshall v. Poole, 13 East, 98; Farr v. Ward, 3 M. & W. 26; 6 Dowl. 163, S. C. (f) Ackerman v. Ehrensperger, 16 M. & W. 99. (u) Nordenstrom v. Pitt, 13 M. & W. 723. (v) 3 & 4 Wm. 4, c. 98, s. 7; 1 Vict. c. 80, and 2 & 3 Vict. c. 37. hitherto conceded by the Legislature has its limits, and may be but temporary, it will still be necessary to treat of the law of usury in its operation on bills and notes. Usury is said to be an indictable misdemeanor at common law. (w) The stat. 37 Hen. 8, s. 89, repeals all former enactments on this subject, and restrains the legal rate of interest to ten per cent. per annum, imposing a penalty on such as take more. This statute was itself repealed in the next reign, by the 5 & 6 Edw. 6, c. 20, which prohibited the taking of any interest whatever. The stat. 13 Eliz. c. 8, repeals the 5 & 6 Edw. 6, c. 20, thereby reviving the firstmentioned statute, and avoids all contracts on which more than eight or ten per cent. is reserved, as usurious. The 21 Jac. 1, reduces the legal rate of interest to eight per cent.; the 12 Car. 2, c. 13, further diminishes it to six per cent.; and, lastly, the 12 Anne, st. 2, c. 16, reduces it to five per cent. The two last statutes of Anne and Charles are copied almost verbatim from the statute of James, and the statute of James contains substantially the same provisions as the two statutes of Elizabeth and Henry 8, taken together; so that all the cases on ùsury since 13 Eliz. are applicable to the present law. These statutes are to be construed most strongly for the suppression of usury, and the Courts will look through the apparent form of a contract and the artifice of parties, at the substance and real nature of the transaction. "Where," says *Lord Mansfield, “the real truth is a loan of money, the wit of man cannot find a shift to take it out of the statute."(x) [*245] The statute 12 Anne, st. 2, c. 16 (as well as the former enactments,) contains two distinct provisions: 1. That no person, upon any contract, shall take, accept, or receive for the loan of money or other commodities, above the rate of five per cent. per annum, under penalty of forfeiture of treble the money lent; one-half to the crown, and the other moiety to him that will sue for the same. 2. That all bonds, contracts, or assurances, whereby there shall be reserved or taken above the rate of five per cent. per annum, shall be utterly void. Hence it appears, that to make at once the assurance void and to (w) Com. Dig. Usury. (x) Floyer v. Edwards, Cowp. 114. incur the penalty, the contract must be for usurious interest, and usurious interest must be taken; but that, on the one hand, the penalty may be incurred without avoiding the contract, and that, on the other, the contract may be avoided without incurring the penalty. Thus, if a bond be given for the payment of a just debt, and it is afterwards agreed that the money secured by the bond shall remain. in the hands of the obligor at usurious interest, and such interest be taken, the penalty is incurred, but the bond is still good.(y) But if a man contracts for usurious, yet takes no more than legal interest, the assurance is void, though the penalty is not incurred.(z) To make a contract void for usury, there must have been a loan.(a)(1) Therefore, if an acceptor discounts his own acceptances, at a premium beyond legal interest, that is not usury; for the acceptor does not advance his own money to another, but merely pays a debt to another before it is due. "It is," says Lord Ellenborough, "an improper practice, but not usury."(b)(2) (y) Ferral v. Shaen, 1 Saun. 294. (z) Fisher v. Beasley, 1 Doug. 235. See Serjeant Williams's note to Ferral v. Shaen, 1 W. Saun. 295, where the cases are collected. (a) Harvey v. Archbold, 3 B. & C. 626; 5 D. & Ry. 500, S. C. (b) Barclay v. Walmsley, 4 East, 55. (1) A contract to take a loan of money at more than legal interest is usurious, though no illegal interest is actually taken upon it. Clark v. Badgely, 3 Halsted, 233. (2) Manhattan Co. v. Osgood, 15 Johns. 162. King v. Johnson, 3 M'Cord, 365. Churchill v. Suter, 4 Mass. 156. Bridge v. Hubbard, 15 Ibid. 96. Wycoff v. Loughead, 2 Dall. 92. Musgrove v. Gibbs, 1 Ibid. 216. Lloyd v. Keach, 2 Conn. 175. Powell v. Waters, 8 Cowen, 669. Nichols v. Fearson, 7 Peters, 103. Cram v. Hendricks, 7 Wendell, 569. French v. Grindle, 3 Shepl. 163. Freeman v. Brittin, 2 Harrison, 191. Mazuran v. Mead, 21 Wend. 285. Ballinger v. Edwards, 4 Iredell's Eq. 449. Haleman v. Hobson, 8 Humph. 127. The purchase of a bill at any price is not usurious; but the purchase must be complete so as to enable the purchaser to bring suit on it. A bill not accepted is not of this character. M'Lean v. Lafayette Bank, 3 M'Lean, 587. Where an indorsee takes a bill or note with the indorsement or guaranty of the indorser, and advances thereupon less than the real value of the bill or note, the transaction is, in effect, a loan between the indorser and indorsee, and usurious. M'Elwee v. Collins, 4 Dev. & Batt. 209. If a note, made for the purpose of raising money, is discounted at a higher premium than the legal rate of interest, and none of the parties whose names are on it can, as between themselves, maintain a suit on the note, when it becomes due, provided it had not been discounted, then such discounting of the note is usurious, for it is then that it first exists But the ordinary transaction of discounting a bill or note is a lending within the statute. (1) The party discounting does, in fact, lend money on interest to be repaid either by the person receiving or by some other party to the bill, at a certain fixed period. The general rule of law is, that if the interest be retained at the time of the loan, or be stipulated to be paid *before it falls regularly due, [*246] the contract is usurious. (c) But, in favour of trade an exception is allowed in the case of discount of bills. The interest is then allowed to be retained at the time of the loan, or, in other words, interest may be and is always charged, not on the sum actually advanced, but on the sum for which the bill is made payable.(2) Thus, if a bill for 1007. at twelve months' date is discounted at five per cent., the sum actually paid is 957., and the 57. discount received is, in fact, interest at the rate of more than 51. 5s. 3d. on the loan. It is evident that, the longer the date of the bill, the greater the amount of the interest retained, the less the actual advance, and the higher the rate of interest on the advance; so that, if a bill at twenty years' date were discounted at five per cent., the interest would annihilate the principal. This exception is, therefore, restrained to discounts in the ordinary course of trade, where the excess of charge above the legal rate is fairly referable to the trouble and expense to which the (c) Barnes v. Worlich, Noy, 41; Cro. Jac. 25; Yelv. 30; Moore, 644, S. C. as a contract. Knights v. Putnam, 3 It is otherwise, however, if the purchaser is ignorant of the character of the note. Whitworth v. Adams, 5 Rand. 333. Ramsey v. Clark, 4 Humph. 244. Creed v. Stevens, 4 Whart. 223. Long v. Gantley, 4 Dev. & Batt. 313. Hays v. Walker, 7 Blackford, 540. May v. Campbell, 7 Humph. 450. The taking of interest in advance upon the discount of a note is not usury. Bank of Utica v. Phillips, 3 Wendell, 408. Thornton v. Bank of Washington, 3 Peters, 40. State Bank v. Hunter, 1 Devereux, 100. M'Gill v. Ware, 4 Scam. 21. Parker v. Cousins, 2 Gratt. 372. Nor taking interest for both the first and last day. Crump v. Nicholas, 5 Leigh, 251. State Bank v. Cowan, 8 Leigh, 238. As to the use of Rowlett's tables of interest, which consider three hundred and sixty days as a year, see State Bank v. Cowan, 8 Leigh, 238. Planters' Bank v. Snodgrass, 4 Howard (Miss.) 573. Parker v. Cousins, 2 Grattan, 372. Bank of Utica v. Wager, 8 Cowen, 398. (1) Contra; Young v. Miller, 7 B. Monroe, 540. (2) The day on which a note is discounted is to be excluded, in the computation of interest; but a day's interest has accrued at any time of the next day. Bank of Burlington v. Durkee, 1 Vermont, 403. |