usury

A profit made, or loss imposed on the necessities of the borrower, whatever form, shape, or disguise it may assume where the treaty is for a loan, and the capital is to be returned at all events; has always been adjudged to be so much profit taken upon a loan; and to be a violation of those laws which limit the lender to a specified rate of interest.

An Illegal profit required and received by a lender of a sum of money from the borrower; something exacted for the use of money in excess of and in addition to the interest allowed by law; a loan or forbearance of money for a greater rate of interest than that allowed by law. 234 111. 229. Originally, the word was applied to all interest reserved for the use of money, and in the early ages, taking such interest was not allowed. USUS (Lat.)

In Roman law. A precarious enjoyment of land, corresponding with the right of habitatio of houses, and being closely analogous to the tenancy at sufferance or at will of English law. The uauariua {i, e., tenant by msws) could only hold on so long as the owner found him convenient, and had to go so soon as ever he was in the owner's way (moleatua). The usuarius could not have a friend to share the produce. It was scarcely permitted to him (Justinian says) to have even his wife with him on the land; and he could not let or sell, the right being strictly personal to himself. Brown. USUS BELLICI (Lat.)

In international law. Warlike uses or objects. It is the uaua bellici which determine an article to be contraband. 1 Kent, Comm. 141.

The excess over the legal rate charged to a borrower for the use of money. Taking an illegal profit for the use of money. Mae Kaekan v. Bank, 164 N. C. 24, 80 S. E. 184, 49 L. R. A. (N. S.) 1043. Originally, the word was applied to all interest reserved for the use of money; and in the early ages taking such interest was not allowed. In the later Roman law, usury was sanctioned; and it is said that taking usury was not an offence at common law; Tyler, Usury 64; but see Ord. Usury 17. Unless there is a law limiting the rate of interest that can be charged for money, there can be no usury; Newton v. Wilson, 31 Ark. 484; Reynolds v. Neal, 91 Ga. 609, 18 S. E. 530; Lamprey v. Mason, 148 Mass. 231, 19 N. E. 350. The enactment of a usury law canndt affect prior contracts; Swint v. Carr, 76 Ga. 322, 2 Am. St. Rep. 44; Richardson v. Camptom can legalize it; Harmon v. Lehman, Durr & Co., 85 Ala. 379, 5 South. 197, 2 L. R. A. 589. A note void for usury in its inception cannot be enforced by an innocent purchaser for value; Littauer v. Rodecker, 59 Fed. 857, 8 C. C. A. 320, 19 U. S. App. 455. “The shifts and devices of usurers to evade the statutes against usury have taken every shape and form that the wit of man could devise, but none have been allowed to prevail. Courts have been astute in getting at the true intent of the parties and giving effect to the statute.” Quackenbos v. Sayer, 62 N. Y. 346. There must be a loan in contemplation of the parties; Nichols v. Fearson, 7 Pet. (U. S.) 109, 8 L. Ed. 623; Schermerhorn v. Talman, 14 N. Y. 93; and if there be a loan, however disguised, the contract will be usurious, if it be so in other respects. Where a loan was made of depreciated bank-notes, to be repaid in sound funds, to enable the borrower to pay a debt he owed, dollar for dollar, it was considered as not being usurious; Burton v. School Com’rs, 1 Meigs (Tenn.) 585. The bona fide sale of a note, bond, or other security at a greater discount than would amount to legal interest is not per se a loan, although the note may be indorsed by the seller and he remains responsible; Corcoran v. Powers, 6 Ohio St. 19; Newman v. Williams, 29 Miss. 212. But if a note, bond, or other security be made with a view to evade the laws of usury, and afterwards sold for a less amount than the interest, the transaction will be considered a loan; Munn v. Commission Co., 15 Johns. (N. Y.) 44, 8 Am. Dec. 219; Turner v. Calvert, 12 S. & R. (Pa.) 46; Corcoran v. Powers, 6 Ohio St. 19; and a sale of a man’s own note indorsed by himself will be considered a loan. Usury cannot arise from the purchase from brokers of a note at a discount; Chase Nat. Bank v. Faurot, 72 Hun 373, 25 N. Y. Supp. 447. Nor is there usury in a transaction for the sale and repurchase of securities, where there is no loan; Struthers v. Drexel, 122 U. S. 487, 7 Sup. Ct. 1293, 30 L. Ed. 1216. It is a general rule that a contract which in its inception is unaffected by usury can never be invalidated by any subsequent usurious transaction; Nichols v. Fearson, 7 Pet. (U. S.) 109, 8 L. Ed. 623; Williams v. Reynolds, 10 Md. 57. On the other hand, when the contract was originally usurious, and there is a substitution by a new contract, the latter will generally be considered usurious; Bridge v. Hubbard, 15 Mass. 96, 8 Am. Dec. 86; but a note or other contract for the payment of money is not usurious and void for providing for the payment of more than the statutory interest after maturity; Green v. Brown, 22 Misc. 279, 49 N. Y. Supp. 163. There must be a contract for the return of pal only, depend upon a contingency, there can be no usury; Spain v. Brent, 1 Wall. (U. S.) 604, 17 L. Ed. 619; but if the contingency extend only to interest, and the principal be beyond the reach of hazard, the lender will be guilty of usury if he receive interest beyond the amount allowed by law. Where the principal is put to hazard in insurances, annuities, and bottomry, the parties may charge and receive greater interest than is allowed by law in common cases, and the transaction will not be usurious; U. S. Bank v. Owens, 2 Pet. (U. S.) 537, 7 L. Ed. 508. See Tiffany v. Boatman’s Institution, 18 Wall. (U. S.) 375, 21 L. Ed. 868. To constitute usury, the borrower must not only be obliged to return the principal at all events, but more than lawful interest; this part of the agreement must be made with full consent and knowledge of the contracting parties; 3 B. & P. 154. The fact that the usurious interest is paid in notes of another party, instead of money, is immaterial; Pritchard v. Meekins, 98 N. C. 244, 3 S. E. 4S4; Savannah Sav. Bank v. Logan, 99 Ga. 291, 25 S. E. 692. When the contract is made in a foreign country, the rate of interest allowed by the laws of that country may be charged, and it will not be usurious, although greater than the amount fixed by law in this; Story, Confl. of Laws § 292. Parties may contract for interest according to the place of the contract or the place of performance; Miller v. Tiffany, 1 Wall. (U. S.) 298, 17 L. Ed. 540; Houston v. Potts, 64 N. C. 33. Where there is no agreement made, the law of the place of the contract governs, in the absence of any intent to evade the usury laws; Merchants’ Bank v. Griswold, 72 N. Y. 472, 28 Am. Rep. 159. A note made, dated, and payable in New York, without intent of maker that it should be elsewhere discounted, if negotiated in another state at a rate of interest lawful there, but excessive in New York, is usurious; Rorer, Int. St. Law 112; Dickinson v. Edwards, 77 N. Y. 573, 33 Am. Rep. 671. See Conflict of LAW'S. To constitute usury both parties must be cognizant of the facts which make the transaction usurious; Powell v. Jones, 44 Barb. (N. Y.) 521; but a mistake in law will not protect the parties; Maine Bank v. Butts, 9 Mass. 49; though a miscalculation will, it seems; Bank of Utica v. Smalley, 2 Cow. (N.- Y.) 770, 14 Am. Dec. 526. If a contract be usurious in itself it must be taken to have been so intended; Burwell v. Burgwyn, 100 N. C. 389, 6 S. E. 409. An agreement by a mortgagor to pay taxes on the mortgage debt is not necessarily usurious; Banks v. Mc Clellan, 24 Md. 62, 87 Am. Dec. 594; nor is a clause in a bill of exchange, providing attorney fees for Dorsey v. Wolff, 142 111. 589, 32 N. E. 495, 18

In old English law. Interest of money; increase for the loan of money; a reward for the use of money. 2 Bl. Comm. 454.

In modern law. Unlawful interest; a premium or compensation paid or stipulated to be paid for the use of money borrowed or returned, beyond the rate of interest established by law. Webster. An unlawful contract upon the loan of money, to receive the same again with exorbitent increase. 4 Bl. Comm. 156. Usury is the reserving and inking, or contracting to reserve and take, either directly or by indirection, a greater sum for the use of money than the lawful interest Code Ga. 1882, § 2051. See Henry v. Bank of Salina, 5 Hill (N. Y.) 528; Parham v. Pulliam, 5 Co.ld. (Tenn.) 501; New England Mortg. Sec. Co. v. Gay (C. C.) 33 Fed. 640; Lee v. Peckham, 17 Wis. 386; Rosenstein v. Fox, 150 N. Y. 354, 44 N. E. 1027.

Unlawful interest; a premium or compensation paid or stipulated to be paid for the use of money beyond the rate of interest established by law.

In old English law. A reward for the use of money; interest

4 Originally, a premium or reward for the use of money, a commodity or other thing.s Taking more than the lawful rate of interest for the loan or forbearance of money. 6 The taking of more than legal interest for the forbearance of a debt or sum of money due.7 Lending money on a contract to receive again the principal sum and an increase by way of compensation for the use is called lending on " interest " by those who think it lawful, and '* usury " by those who do not think so... The Mosaical precept was political, not moral: while it prohibited the Jews from taking usury from their brethren, it expressly permitted them to take it from strangers. This proves that taking a moderate reward for the use is not malum in se. To demand an exorbitant price for the loan of a horse, or a loan of a sum of money, is equally contrary to conscience; but a reasonable equivalent for the inconvenience the owner may feel by the want of the thing, and for the hazard of losing it entirely, is ijot more immoral in one case than in the other... To a moderate profit we give the name of " interest," and to an exorbitant profit the odious name of " usury." ^ XTsurious. Pertaining to, or of the nature of, usury: as, usurious interest, a usurious contract. Whence usuriousness. Tliere must be an intention knowingly to contract for or to take usurious interest.. Where a contract imports usury upon its face, as, b.y an express reservation of more than legal interest, inquiry is at ^ L. usu-rapere, to seize to one's own use. 2 Mc Craw v. WUliams, 33 Gratt. 613-14 (1880), cases. Christian, J. See also Hooper v. Goodwin, 48 Me. 80 (1861); 14 La. An. 607; 21 Wend. 370. s Commonwealth v. Cross Cut E. Co., 63 Pa. 62, 70 (1866). * F. usxtre: L. usura, use, interest. » [Henry v. Bank; of Salina, 5 Hill, 528 (1843). « Turner v. Turner, 80 Va. 381 (1885). ' Hogg V. Euf Ener, 1 Black, 118 (1861), Grier, J. See also 11 Conn. 487; 11 Bush, 180; 3 Johns. Cas. 206; 41 an end. But where the contract on its face is for legal interest only, proof is necessary that there was some corrupt agreement to cover up usury.* "Where the promise to pay a sum above legal interest depends upon a contingency, the loan is not usurious.^ Sale at a discount greater than legal interest, of a note made and indorsed in blank for the purpose of raising money by a broker, to a purchaser ignorant of the pui'pose, is not usury. ^ Where the promisor in a usurious contract makes it the consideration of a new contract with a person not a party to the original contract, or to the usury paid or received upon it, and the new contract is not a contrivance to evade the statutes against usury, the latter contract is not usurious.* But payment of illegal interest, after the maturity of a note, for forbearance, is usury.* In a usurious transaction, the borrower acts somewhat under duress; he is not wholly a free agent. The maxim in pari delicto does not apply.* When an agent who is authorized to lend nloney for lawful interest exacts for his own benefit more than the lawful rate, without the knowledge of his principal, the loan is not thereby rendered usurious.* But authority to make a usurious loan may be inferred from a general agency, pertaining to an extensive business.' A national bank may take interest at the rate allowed by the laws of the State, territory, or district where the bank is located; and if no rate is fixed, then seven per centum, and it may take it in advance. ^ Taking a greater rate of interest than that allowed by the preceding section, when knowingly done, shall be deemed a forfeiture of the entire interest which the evidence of debt carries with it, or which has been agreed to be paid thereon. The person by whom the greater rate has been paid, or his legal representative, may recover back, in an action of debt, twice the amount of interest paid, provided action is commenced within two years from the time the usurious transaction occurred." The suit may be had in any circuit, district, or Ter- 1 United States Bank V. Waggener, 9 Pet. 309 (1835), cases. Story, J.; Call v. Palmer, 116 U. S. 101 (1886), cases. ' Spain V. Hamilton, 1 WaU. 625-26 (1863). 'Mosley v. Brown, 76 Va. 419 (1883); Siewert v. Hamel, 91 N. Y. 201 (1883). < Call V. Palmer, 116 U. S. 103 (1885), cases; Palmer v. Call, 2 4l<;Crary, 528 (1881), cases. * Philanthropic Building Association v. Mc Knight, 35 Pa. 472 (1860X cases; Mosley v. Brown, 76 Va. 425-26 (1888). « Call V. Palmer, 116 U. S. 102 (1835), cases; Palmeri). Call, 2 Mc Crary, 525 (1881), cases; Philips v. Maokellar, 93 N. T. 34 (1883), cases; Anonymous, 40 N. J. E. 507-10 (1885), cases. ' Sherwood v. Eoundtree, 33 F. E. 113 (1887). « K. S. S 5197: Act 3 June, 1864, c. 106, s. 30. "R. S. § 5198: Act 3 June, 1864, c. 106, s. 30. See Farmers', &c. Nat. Bank v. Bearing, 91 U. S. 29, 32 ritorial court of the United States held within the district in which such association is located, having jurisdiction in similar cases,^ or in a State court.^ A national bank may take the rate of interest allowed to natural persons generally, and a higher rate, if State banks of issue are authorized to take it.^ Usurious interest paid a national bank on renewing a series of notes cannot, in an action by the bank on the last of the renewals, be applied in satisfaction of the principal of the debt.* In most of the States it is provided that, as a penalty, the person who receives more than the legal rate of interest shall forfeit a sum equal to all interest so taken, and that this sum may be withheld from the principal at the time of payment, when that is due as a loan, or be recoverable by an action within a specified period afterpayment.* In England, all restrictions upon rates of interest were abolished by 17 and 18 Vict. (1854), c. 90, See Bonus; Inteeest, 2(3); Uses, Utile, etc.; Void.

1. Interest. 2. Unlawful

In old English, signified any compensation paid by a borrower for the use of money; but in modern language, and since precise limits have been set by the laws of most jurisdictions to distinguish lawful from unlawful compensation for loans, permitted or lawful compensation is called interest; and usury is applied only to prohibited or unlawful payment for the use of money. Usury is money given for the use of money; it is particularly defined to be the gain of any thing by contract above the principal, or that which was lent, exacted in consideration of loan thereof, whether it be of money or any other thing. Some make usury to he the profit exacted for a loan made to a person in want and distress; but properly it consists in extorting an unreasonable rate for money, beyond what is allowed by positive law. The letting money out at interest, or upon usury, was against the common law; and in former times, if any one, after his death, had been found to be a usurer, all his goods and chattels were forfeited to the king, &c. And, according to several ancient statutes, all usury is unlawful; but at this time neither the common nor statute law absolutely prohibit usury. By this is meant interest for money lent, not exceeding the settled rate; interest being the lawful gain, usury the extortion of unlawful gain. Jacob. Usury is an unlawful contract on the loan of money to receive the same again with exorbitant increase; that is, not only to receive the principal sum again, but also an exorbitant interest by way of compensahowever, abolished by Stat. 17 & 18 Vict, ch. 90. Brown. Usury originally meant any premium or reward for the use of money or other commodities or things. Henry v. Bank of Salina, 6 Hill, 523, 528. It now signifies extorting or taking a rate of interest for money beyond what is allowed by law. Wilkie v. Roosevelt, 3 Johns. Cas 206. Usury is the taking of more for the use of money than the law allows. Gaar v. Louisville B. Co., 11 Bush, 180. Usury consists in taking or reserving, corruptly, a greater sum than at the rate allowed by the statute for the forbearance of a debt or demand. Camp v. Bates, 11 Conn. 487. To constitute usury, within the prohibitions of the law, there must be an Intention knowingly to contract for and to take usurious interest; for, if neither party intend It, and act bona fide and innocently, the law will not infer a corrupt agreement. Where, indeed, the contract Imports usury upon its very face, as by an express reservation of more than legal interest, inquiry is at an end. But where the contract is, on its face, for legal interest only, then proof is necessary that there was some corrupt agreement to cover usury. Bank of the United States V. Waggener, 9 Pet. 378. Two things arc! necessary to constitute usury, — a loan, and the taking of more interest than the law allows. Wherever these two facts are shown to exist, the law pronounces the intent with which they were done to be corrupt; and this presumption cannot be rebutted by any proof of honesty of purpose. Reed v. Coale, 4 Ind. 28.3. Nothing short of a corrupt and illegal contract in violation of the statute will constitute usury. It must be a contract or agreement for the loan or forbearance of money, goods, or things in action, by which Illegal interest is reserved, or agreed to be reserved or taken; otherwise, usury does not exist. Lesley v. Johnson, 41 Barb. 359; Woodruff V. Hurson, 32 Id. 557. UT. That; as. This Latin particle properly introduces a final cause or object. In conveyancing, in old English practice, ut was appropriated to the expression of a qualification or modus (q. v.), as si was adopted to express a condition, and quia a consideration. Ut currere solebat. As it was wont to run. See Aqua currit et debet currere, ut currere solebat. Ut res magis valeat qnam pereat. That the subject-matter may rather have effect than be destroyed. See Benignoe faciendm sunt interpretationes, &c. Uti possedetis. As you possess. ciple of a treaty of peace by which, each: belligerent is to retain aE the territory of which it holds possessioa, including ■what it has acquired by force during the war. Utile per inutile non vitiatur. The useful is not vitiated by the useless. Surplusage does not vitiate othei good, and valid matter. This maxim applies more particularly to pleading, the rule being that immaterial matter in a declaration, or plea is mere surplusage-, and does not vitiate it. The rule is the same as to indictments, except where the obnoxious, averment is part of the description of tiie of Eence, ini which case it will be fatal'. In conveyancing, where words of known signification, are so placed in a deed as to make it repugnant, they are to be rejected in the' same manner as they would' be if they were meaningless. So, if a grant be express and certain, a repugnant, habendum, will not vitiate it; but, if the estate granted is not express, but only arises by implication of law, then a, hahendum differing materially from the- grant may defeat it.

contracts, is the illegal profit which is required and received by the lender of a sum of money from the borrower, for it use. Ina more extended and improper sense, it is the receipt of any profit whatever for the use of money: it is only in the first of these senses that usury will be here considered. To constitute a usurious contract the following are the requisites: 1. A loan express or implied; 2, an agreement that the money lent shall be returned at all events; 3, not only that the money lent shall be returned, but that for such loan a greater interest than that fixed by law shall be paid. 1. There must be a loan in contemplation of the parties, 7 Pet. S. C. Rep. 109; and, if there be a loan, however disguised, the contract will be usurious, if it be so in other respects. The bona fide sale of a note, bond or other security at a greater discount than would amount to legal interest, is not, per se, a loan, although the note may be indorsed by the seller, aud he remains responsible, 9 Pet. 8S. C. Rep. 103. But if a note, bond or other security _ be made with a view to evade the laws of usury, and afterwards sold loan, 2 Johns. Cas. 60; 3 Johns. Cas. 66; 15 Johns. Rep. 44; 2 Dall. 92; 12 Serg. & Rawle, 46; and a sale of a man’s own note, indorsed by himself, will be considered aloan. It is a general rule that a contract, which, in its inception, is unaffected by usury, can never be invalidated by any subsequent usurious transaction. 7 Pet.S. C. Rep. 109. On the contrary, when the contract was originally usurious, and there is a substitution by a new contract, the latter will generally be considered usurious. 15 Mass. Rep. 96. 2. There must be a contract for the return of the money at all events; for if the return of the principal with interest, or of the principal only, depend upon a contingency, there can be no usury; but if the contingency extend only to interest, and the principal be beyond the reach of hazard, the lender will be guilty of usury, if he receive interest beyond the amount allowed by law. As the principal is put to hazard in insurances, annuities and bottomry, the parties may charge and receive greater interest than is allowed by law in common cases, and the transaction will not be usurious. 3. To constitute usury the borrower must not only be obliged to return the principal at all events, but more than lawful interest: this part of the agreement must be made with full consent and knowledge of the contracting parties. 3 Bos. & Pull. 154. When the contract is made in a foreign country the rate of interest allowed by the laws of that country may be charged, and it will not be usurious although greater than the amount fixed by law in this. Story, Confl of Laws, § 292. Vide, generally, Com. Dig. h. t.; 7 Bac. Ab. h. t.; 8 Com. Dig. h. t.; Lilly’s Regist. h. t.; Dane’s Ab. h. Usury, passim; 1 Pet. S. C. Rep. Index, h. t.; 1 Supp. to Ves. Jr. 807, 337; Yelv. 47; 1 Ves. Jr. 527; 1 Saund. 295, note 1; and the article Interest.