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the lender, a man in good
health, should be alive at the
end of six months. This was
held to be an usurious con-

DAVISON tract; the contingency in fact
being scarcely any contin-
gency at all; and, therefore,
in the contemplation of the
parties, a mere shift to cover
usury. In the case of Ro-
berts v. Tremayne, Cro. Jac.
308. Dodderidge took these
distinctions in cases of con-
tingencies" First, if I lend
100% to have 120. at the
year's end upon a casualty;
if the casualty goes to the in-
terest only, and not to the
principal, it is usury: for the
party is sure to have the prin-
cipal again, come what will
come. But if the interest and
principal are both hazarded,
it is not then usury: and it
was, therefore adjudged in C.
B. in Dartmouth's case, where
one went to Newfoundland and
another lent him 100. for a
year, to victual his ship, and if
he returned with the ship he
would have so many thousand
of fish; and expresses at what
rate, which exceeded the inter-
est which the statute allows;
and, if he did not return, that
then he would lose his princi-
pal, it was adjudged to be no
usury. Secondly, if I secure
both interest and principal, if it
be at the will of the party who

is to pay it, it is no usury; as if I lend to one 1001. for two years, to pay for the loan thereof 301. and if he pay the prin cipal at the year's end, he shall pay nothing for interest, this is not usury, for the party hath his election, and may pay it at the first year's end, and so discharge himself."-See 3 Wil. 395. In the same man. ner, on account of their contingencies, contracts of bot tomry and respondentia are equally exempt from the imputation of usury.

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8. The usage and custom of merchants exempt a contract from the quality of usury, though, by such custom, the interest be deducted from the principal, on discounting a bill of exchange, without waiting for the bill becoming due. Marsh v. Martindale, 3 B. and P. 154. In such cases the additional sum seems to be considered in the nature of a compensation for the trouble to which the lender is exposed; and, without such indulgence, it would not be worth while for a merchant to discount a bill. But the rule must be strictly confined to transactions of this kind, within the usage of trade; for if discount be taken upon an advance of money, without the negociation of a bill of exchange, it

will be usury, Barnes v. Corledge, Noy 41. Yelv. 30. and Dalton's case, Noy 171. So the length of the date of a bill may afford a presumption that the discount is intended for the cover of a loan; and the strength of this presumption will be manifest, for if the practice be carried to any great length, the interest will annihilate the principal. Thus, suppose a bill for 10,000l., drawn at twenty years and discounted, the interest would absorb the whole sum, and the lender would have nothing to advance, though he would be entitled to 10,000l. at the expiration of the bill: therefore, if bills be drawn at

a longer date than is usual in the course of business, it ought to be construed a device, Hammett v. Yea, 1 B. and P. 151. But it is lawful for a banker to take the customary commission and exchange on bills or notes, and reasonable incidental expenses over and above the interest and discount, Winch v. Fenn, 2 T. R. 52. Barclay v. Walmsley, 4 East. 44. But an agreement in discounting a bill of exchange, that the plaintiff should take, in part payment, another bill, which had time to run, as cash, although the full discount was taken, was

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held to be usurious, Parr v. Eliason, 1 E. R. 92. See likewise Hammett v. Yea, 1 B. and P. 144, where such part discount in bills of thirty days (not being a term of the loan, but for the convenience of the borrower) was held not to be usury. And whether a commission of one and a half per cent. upon a banking account be usurious or not, is a question for the jury; depending upon whether it may be ascribed to a reasonable remuneration for trouble and expense, or whether it be a colour for the re-payment of interest above 51. per cent, for the loan of money. Carstairs v. Stein, 4 Maule and Selwyn, 193. See the cases cited in the argument, 196.

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9. Annuities purchased at ever so cheap a rate, if it were really a purchase, and not a loan, are not usurious: but, where the grantor of the annuity, having agreed with the grantee to redeem, drew a bill of exchange for 5000l. at three years, which the grantee discounted in the following manner: he took 40831. 6s. 8d. as the amount of the purchase money and arrears, advanced 166/. 13s. 4d. to the grantor in cash, and took 750l. as interest for three years, for 5000, the Court held that

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the contract was usurious, Marsh v. Martindale, 3 B. and. P. 151.

10. But beyond this usage and custom of trade, if a lender, having some function, of fice, or mere employ, with respect to the borrower, shall reserve to himself, at the time of such loan, a fair compensation for his discharge of duties, such compensation will not be usurious; subject, however, like all similar cases, to the judgment of the Court, whether such extra allowance be not a shift. Thus, if a man lend money to another, upon condition of being his receiver, and, in the contract of the loan, stipulates to receive over and above the interest a fair compensation for his trouble: this is not usury. But where the receiver of the rents and profits of an estate, under a deed, in order to secure himself the payment of interest on a loan of money, reserved to himself a payment of 40. per annum over and above the interest, it was held usurious. Scott v. Brest, 2 T. R. 238. In order to support a charge of usury, under such circumstances, it ought to appear clearly that the payment stipulated for, was either colourable and frivolous in its nature, or excessive in its

amount. With respect to the excess of compensation, it depends upon the nature of the employment: it is, of course, a question for the Court and Jury, whether it be a fair equivalent, or a cover for usury. See Carstairs v. Stein,

ante.

Thus, an indenture, assigning to the plaintiffs a contract for the purchase of timber, upon certain trusts, for securing to themselves out of the proceeds the repayment of the purchase money advanced by them, and also of a certain balance before due to them, together with interest thereon, at 5 per cent. up to the time of payment; and also the sum of 2007. as compensation for the trouble they might be put to; and also all cost, charges, &c. which they might incur on account of the premises, was held by K. B. not to be an usurious agreement upon the face of it; that it was not necessarily to be intended as a colourable reservation of further interest beyond the legal interest, but as a compensation for trouble, &c.; neither was it so excessive as to be intended usurious upon that account, Palmer v. Baker, 1 Maule and Selwyn, 56.

11. No inequality of price, though a ground for suspecting usury, and of relief in a Court

of Equity, in a very gross and flagrant case, is an offence within these statutes: as if land worth 60l. per annum be purchased at 201. per an

num.

12. With respect to the exorbitancy of price, another frequent shift of usury, it has been holden, that where, upon an application for a loan of money, the person applied to offered to advance part in money and part in goods, and the bargain was finally concluded by advancing the whole in goods, which were imposed upon the borrower at more than their value, such contract was a loan under colour of a sale of goods. Lowe v. Waller, 2 Doug. 735. In that case Lord Mansfield observes, "that the most usual form of usury was a pretended sale of goods; and that, if it was not the intention of the parties to buy and sell, but to borrow and lend; and if the contract was in truth for a loan of money, it would be usury, though under the mask of a treaty for the sale of goods." So it is in discounting a bill, if the party discounting gives goods in part which are charged beyond their value.

The loan of money produced by the sale of stock, on an agreement that the borrower VOL. I.

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shall replace the stock on a certain day, or repay the money on a subsequent day, with such interest in the mean time as the stock itself would have produced, is not usurious, though the interest exceed 5 per cent.;. unless the transaction be colourable, and a mere device to obtain more than legal interest, Tate v. Wellings, 3 T. R. 581. Sanders v. Kentish, 8 T. R. 162. See likewise Muddocks v. Rumball, 8 E. R. 304. But if the lender oblige the borrower to take stock at a rate exceeding the market price, it is usury, 1 Esp. N. P. 11. But, where 4. having a vested interest in stock, which he cannot transfer till a future day, sells his interest in the principal and accruing dividends, to B. at a rate much below the current price, this bargain is not usurious, 5 Esp. 164. Yet, where money was advanced upon the security of omnium, which was to be taken back by the borrower at a fixed advance of price at a day certain, and the difference in the price exceeded the rate of 5 per cent. for the period, during which the borrower was to retain the money, the transaction was deemed usurious. Smedley v. Roberts, 2 Campb.

607.

13. The discount of a bill

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But,

it (if there be no shift or decree to cover a discount) for any price which he can obtain for it; and though the price which he obtains bear no proportion to its value, (if it had been cashed upon the legal terms of discount) the purchaser, nevertheless, would not be guilty of usury: it might be otherwise if the seller indorsed the bill, and remained liable to be sued upon it. It would then be for the consideration of a Jury, whether the bargain and sale of the bill was not a shift for a loan for it cannot be too often repeated, that, to constitute usury, there must either be a direct loan, and a taking of more than legal interest for the forbearance of payment; or there must be some device for the purpose of concealing or evading the appearance of a loan and forbearance, when, in truth, the transaction was a loan, 4 E. R. 57.

of exchange is a frequent cover
for usury; and the rules with
respect to such dealings are
these-It is usurious, (as we
have pointed out,) to substitute
goods for money at an exces-
sive value, in discounting a bill
of exchange; but it is other-
wise where the goods are taken
at an ascertained price, 1 Esp.
N. P. 40. And, in such cases,
the borrower, who sets up the
defence of usury, need not
disprove the value; but it lies
upon the lender to shew that
the goods were reasonably
worth the price fixed upon
them, 2 Campb. 375. But,
where the plaintiff refused to
discount a bill unless the in-
dorser would take part in goods
at a given price, and the latter
readily acceded to the pro-
posal, saying, that he thought
he could make a profit of them,
it is to be presumed that the
goods were charged beneath
their value; and the defendant
must prove the contrary if he
would impeach the transaction
as usurious, 2 Campb. 553.
So, an exorbitant discount
paid to the acceptor, to induce
him to pay the bill before it is
due, is not usury. Barclay v.
Walmsley, 4 East 57. Ma-
thews v. Griffiths, 1 B. and P. commodation bills were drawn
153, n.

A man may take a bill of exchange to market, and sell

A charge of seven and sixpence per cent. for commission, by a discounter of bills, who is put to no expense, or considerable degree of trouble, is usurious, 1 Campb. 445; and see Carstairs v. Stein, 4 Maule and Selw. 194. But, where ac

and accepted, upon an understanding that a broker should be paid 10s. per cent. for raising

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