arises usually from the inability of the borrower to give the lender a permanent security for the return of the money borrowed, at any one period of time. He therefore stipulates (in effect) to repay annually, during his life, some part of the money borrowed; together with legal interest for so much of the principal as annually remains unpaid, and an additional compensation for the extraordinary hazard run, of losing that principal entirely by the contingency of the borrower's death: all which considerations, being calculated and blended together, will constitute the just proportion or quantum of the annuity which ought to be granted. The real value of that contingency must depend on the age, constitution, situation, and conduct of the borrower; and therefore the price of such annuities cannot, without the utmost difficulty, be reduced to any general rules. So that if, by the terms of the contract, the lender's principal is bonâ fide (and not colourably) () put in jeopardy, no inequality of price will make it an usurious bargain; though, under some circumstances of imposition, it may be relieved against in equity To throw however some check upon improvident transactions of this kind, which are usually carried on with great privacy, the statute 17 Geo. III. c. 26. has directed, that upon the sale of any life annuity of more than the value of ten pounds per annum (unless on a sufficient pledge of lands in fee-simple or stock in the public funds) the true consideration, which shall be in money only, shall be set forth and described in the security itself; and a memorial of the date of the security, of the names of the parties, cestuy que trusts, cestuy que vies, and witnesses, and of the consideration money, shall within twenty days after its execution be enrolled in the court of chancery; else the security shall be null and void (31); and, in case of collusive practices respecting the [462] consideration, the court, in which any action is brought or judg ment obtained upon such collusive security, may order the same to be cancelled, and the judgment (if any) to be vacated: and also all contracts for the purchase of annuities from infants shall remain utterly void, and be incapable of confirmation after such infants arrive to the age of maturity. But to return to the doctrine of common interest on loans: Upon the two principles of inconvenience and hazard, compared together, different nations have, at different times, established different rates of interest. The Romans at one time allowed centesimae, one per cent. monthly, or twelve per cent. per annum, to be taken for common loans; but Justinian. (m) reduced it to trientes, or one third of the as or centesimae, A short (1) Carth. 67. (m) Cod. 4. 32. 26. Nov. 33, 34, 35. explication of these terms, and of the division of the Roman as, will be useful to the student not only for understanding the civilians, but also the more classical writers, who perpetually refer to this distribution. Thus Ilorace, ad Prsones, 325 Romani pueri longis rationibus assem t is therefore to be observed, that in calculating the rate of interest, the Romans divided the principal sum into an hundred parts, one of which they allowed to be taken monthly; and this, which was no action can be brought for indemnity, where, upon the whole event, no damage has been sustained. 9 East, 72. (31) The statute cited in the text was repealed by the statute of 53 Geo. III. c. 141, the highest rate of interest permitted, they called usurae centesimae, amounting yearly to twelve per cent. Now as the as, or Roman pound, was com monly used to express any integral sum, and was which last-named act was explained by the subsequent one, of 3 Geo. IV. c. 92, and lastly by that of 7 Geo. IV c. 75: by these three acte the enrolments and forms of attestation of an nuity instruments are now regulated. that is, four per cent.; but allowed higher interest to be taken of merchants, because there the hazard was greater. So too Grotius informs us (2), that in Holland the rate of interest was then eight per cent. [*463} in common loans, but twelve to merchants. And lord Bacon was desirous of introducing a similar policy in England (0) but our law establishes one standard for all alike, where the pledge of security itself is no put in jeopardy; lest, under the general pretence of vague and indeterminate hazard, a door should be opened to fraud and usury: leaving specific hazards to be provided against by specific insurances, by annuities for lives, or by loans upon respondentia, or bottomry. But as to the rate of legal interest, it has varied and decreased for two hundred years past, according as the quantity of specie in the kingdom has increased by accessions of trade, the introduction of paper credit, and other circumstances. The statute 37 Hen. VIII. c. 9. confined interest to ten per cent., and so did the statute 13 Eliz. c. 8. But as, through the encouragements given in her reign to commerce, the nation grew more wealthy, so under her successor the statute 21 Jac. I. c. 17. reduced it to eight per cent.; as did the statute 12 Car. II. c. 13. to six and lastly by the statute 12 Ann. st. 2. c. 16. it was brought down to five per cent. yearly, which is now the extremity of legal interest that can be taken (32).56 But yet, if a contract divisible into twelve parts or unciae, therefore these twelve monthly payments or unciae were held to amount annually to one pound, or as usurarius ; and so the usurae asses were synonymous to the usurae centesimae. And all lower rates of interest were denominated according to the relation they bore to this centesimal usury, or usurae asses; for the several multiples of the unciae, or duodecimal parts of the as, were known by different names acUSURAE. Asses, sive centesimae Dextances, vel decunces Besses Septunces cording to their different combinations; sertans, quadrans, triens, quincunx, semis, septunz, bes dodrans, dextans, deunr, containing respectively 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, unciae, or doudecimal parts of an as. (Ff. 28. 5. 50, ◊ 2. Gravin. Orig. jur. civ. l. 2, 47.) This being premised, the following table will clearly exhibit at once the subdivisions of the as, and the denominations of the rate of interest. PARTES ASSIS. Integer 11-12ths 11 Semisses Quincunces Trientes Quadrantes Seztances Unciae (n) De jur. b. & p. 2. 12. 22. 1-12 (32) As to the law of usury in general, see 3 Chitty's Com. L. 87 to 91. 310 to 316. R. B. Comyn on Usury, Ord. on Usury, and Plowden on Usury. There must be an unlawful intent, and therefore if the usury arise from error in computation, it will not vitiate. Cro. Car. 501. 2 Bla. Rep. 792. 1 Camp. 149. Exor bitant discount to induce the acceptor to take up a bill before it is due is not usurious, because there must be a loan or forbearance of payment, or some devise for the purpose of concealing, or evading the appearance of a oan or forbearance. 4 East, 55. 5 Esp. 11. Deake, 200. 1 B. & P. 144. 4 Taunt. 810. Nor if the charge alleged to be usurious is airly referable to the trouble, expense, &c. in the transaction. 3 B. & P. 154. 4 M. & S. 92. 2 T. R. 238. 1 Mad. Rep. 112. 1 Camp. 177. 15 Ves. 120. Bankers may charge their usual commission beyond legal interest. 2 T. R..52. Under the direction of the court, it (0) Essays, c. 41. is the province of the jury to determine when there is usury in a transaction. 4 M. & S. 192. 1 Dowl. & R. 570. 3 B. & A. 664. 2 Bla. Rep. 864. The purchase of an annuity at ever so cheap a rate, will not prima facie be usurious, but if it be for years, or an express agreement to repurchase, and on calculation more than the principal with legal interest is to be returned, it will. 3 B. & P. 151. 3 B. & A. 666. And if part of the advance be in goods, it must be shewn that they were not overcharged in price. Doug. 735. 1 Esp 40. 2 Camp. 375. Holt, N. P. C. 256. A loan made returnable on a certain day, on payment of a sum beyond legal interest, on default thereof may be a penalty and not usurious in terest, the intention of the parties being the criterion in all cases. If money be lent on risk at more than legal interest, and the ca sualty affects the interest only, it is usury, not so, if it affects the principal also. Cro. J. 508 (55) See Hov. n. (55) at the end of the Vol. B. II. which carries nterest be made in a foreign country, our courts will direct the payment of interest according to the law of that country in which the contract was made (p). Thus, Irish, American, Turkish, and [*464] Indian interest, have been allowed in our courts to the amount of even twelve per cent. for the moderation or exorbitance of interest depends upon local circumstances; and the refusal to enforce such contracts would put a stop to all foreign trade (34). And, by statute 14 Geo. III. c. 79. all mortgages and other securities upon estates or other property in Ireland or the plantations, bearing interest not exceeding six per cent. shall be legal; though executed in the kingdom of Great Britain; unless the money lent shall be known at the time to exceed the value of the thing in pledge; in which case also, to prevent usurious contracts at home under colour of such foreign securities, the borrower shall forfeit treble the sum so borrowed (35). 4. The last general species of contracts, which I have to mention, is that of debt; whereby a chose in action, or right to a certain sum of mo ney, is mutually acquired and lost (9). This may be the counterpart of, and arise from any of the other species of contracts. As, in case of a sale, where the price is not paid in ready money, the vendee becomes indebted to the vendor for the sum agreed on; and the vendor has a property in this price, as a chose in action, by means of this contract of debt. In bailment, if the bailee loses or detains a sum of money bailed to hi (p) 1 Equ. Cas. Abr. 289. 1 P. Wms. 395. 3 Wils. 395. The usury must be part of the contract in its inception, and being void in its commencement, it is so in all its stages, Doug. 735. 1 Stark. 385. though bills of exchange so tainted, are by the 58 Geo. III. c. 93 rendered valid in the hands of a bona fide holder, unless he has actual notice of the usury, but if the drawer of a bill transfer it for a valuable consideration, he cannot set up antecedent usury with the acceptor as a defence. 4 Bar. & Ald. 215. A security with legal interest only, substituted for one that is usurious, is valid. 1 Camp. 165. n. 2 Taunt. 184. 2 Stark. 237. Taking usurious interest on a bona fide debt, does not destroy the debt. 1H В. 462. 1 T. R. 153. 2 Ves. 567. 1 Saund. 295. The penalty of three times the amount of the principal, is not incurred, till the usurious inteest has been actually received; and the action must be brought within one year afterwards. 2 Bla. Rep. 792. 2 B. & P. 381. 1 Saund. 295. a. The borrower is a competent witness in an action for the penalty. I 'Saund. 295. a. (33). (q) F. N. B. 119. take more than 12 per cent, for the loan of any money or merchandise for a year, and every contract for more is declared void; and he who receives more shall forfeit treble the value of the money or merchandise lent, with costs, one inc:ety to the East India company, and the other moiety to him who sues in the courts in India. If there be no such prosecution within three years, the party aggrieved may recover what he has paid above 12 per cent. If the informer shall compound the suit before the defendant's answer, or afterwards without leave of the court, he shall be liable upon con. viction to be fined and imprisoned at the dis cretion of the court. Sec. 21. Where foreign interest is to be taken or not, see in general 1 P. Wms. 395. 696. 2 T. R. 52 1 Bla R. 267. Burr 1094. 2 Bro. C. R. 2. 2 Vern. 395. 3 Atk. 727, 1 Ves. 427. Comyn on usury, 152. (35) To remove doubts which have arisen upon this statute, the 1 & 2 Geo. IV. e. 51. provides that bonds, &c. made in Great Bri tain, concerning lands, &c. in Ireland or the colonies, whether the interest be payable there or in this country, and bonds under similar circumstances given as a collateral security shall be good and valid to all intents and purposes, the same as if the parties had resided on the spot where the security exists. But this act and the 14 Geo. III c. 79, extend only to landed securities, and therefore where A, contracted with B. for the sale of an estate in the West I..dies, and part of the purchase money was secured by the bond of B. and C. which bond having been cancelled, another was executed in England reserving 61. per cent. it was held usurious, 3 T. R. 425. ́ This exception is taken away by the set of 1837 (33) In New-York interest is 7 per cent: all contracts or securities reserving more are void,excepttthe securities be promissory notes or bills of exchange payable to order or bearer in the hands of a holder or endorsee who shall have received them and paid a valuable consideration in good faith and without notice of the usury. The lender may be compelled in enancery to discover the usury; and on a bill for that purpose the borrower need not offer to pay any interes: whatever. 1 R. S. 771. &c. $1.38. (34) By the 13 Geo. III. c. 63. s. 30. no subiect of his majesty in the East Indies shall for any special purpose, he becomes indebted to the bailor in the same numerical sum, upon his implied contract, that he should execute the trus reposed in him, or repay the money to the bailor. Upon hiring or borrowing, the hirer or borrower, at the same time that he acquires a property in the thing lent, may also become indebted to the lender, upon his contract to restore the money borrowed, to pay the price or premium of the loan, the hire of the horse, or the like. Any contract in short whereby a determinate sum of money becomes due to any person, and is not paid, but remains in action merely, is a contract of debt. And, taken in this light, it comprehends a great variety of acquisition; being usu- [*465] ally divided into debts of record, debts by special, and debts by simple contract (36). (36) As the description in the text of the different kinds of contracts is too succinct, it may be useful to the student to state the distinctions between each, and give a compara. tive view of their relative effect. In point of form, contracts are three-fold; by parol, by specialty, and by matter of record. Those most in use in commercial affairs, are parol or simple contracts not under seal. All contracts are called parol, unless they be either specialties, that is, deeds under seal, or be matter of record. A written agreement not under seal, is classed as a parol or simple contract, and is usually considered as such, just as much as any agreement by mere word of mouth. For, as observed by chief baron Skynner, 7 Term Rep. 350. Plowd. 308. there is at common law no such class of contracts as contracts in writing, contradistinguished from those by parol or specialty. If they are merely written and not specialties, they are parol. There are, indeed, distinctions between the two kinds of simple contracts under the statute of frauds, which render it necessary that certain descriptions of simple contracts should be in writing, and sometimes signed. But though written, they still continue, like all other contracts not under seal nor of record, to be considered merely as in the nature of contracts by parol. The principal points in which a deed differs in effect from a parol contract are, 1st. That the want of consideration constitutes no defence at law to an action on such deed.* And though in equity relief may sometimes be had in cases of surprise, or catching bargains, or in favour of creditors, yet the mere circumstance of a bond or deed having been given voluntarily without consideration, constitutes no ground for relieving the party himself. Foubl. on Eq. 2d edit. 347. n. f. Toller, 1st. edit. 222, 3. Whereas in support of any proceeding on a simple contract, the creditor must prove, that it was founded on a sufficient consideration. 4 East, 403. 7 T. R. 350. 7 Bro. P. C. 550. 2 B. & P. 77. And though the defendant in an action on a deed is at liberty to avail himself of any illegality in the consideration or transaction, yet it is incumbent on him to state the objection with precision in pleading, whereas in an action on * In New-York, in case of a set-off, or an action on a sealed instrument, the seal is only mesumptive evidence of consideration. (2 R. S. 406, 77). † in New-York, the imple contract credi a simple contract, such ground of defence may be given in evidence under the general issue. 1 Saund. 295. 3 T. R. 538. 3 T. R. 424. 2 Wils. 347. 1 Bla. R. 445. 7T. R. 477. 2dly. That in pleading a deed it is not necessary to shew that it was founded on any consideration, except in setting forth conveyances operating under the statute of uses, 1 Hen. Bla. 261. 2 Stra. 1229; whereas a declaration on a simple contract will be bad in arrest of judg ment, unless it appear therefrom that there was a consideration co-extensive with the promise. 7 T. R. 348. 4 East, 455. 3dly. That the party to a deed is in most cases estopped or precluded from controverting any statement therein, or to shew that it was executed with a different intent or object to that which the deed itself imports, Hayne v. Maltby, 3 T. R. 9. 438. Com. Dig. Estoppel. 1 Saund. 216. n. 2. Willes, 9. except indeed in cases of duress, fraud, or illegality, which defences the law admits, notwithstanding the security has the appearance of having been deliberately framed. 3 T. R. 418. 4thly. That the efficacy of a stipulation by deed, cannot be affected or altered at law by any subsequent simple contract, nor can the party be discharg ed or released from the obligation of a deed by any subsequent contract, unless by a release under seal. Co. Litt. 222. b. 3 T. R. 590. 8 East, 346. 5thly. That a deed binds the heir when named, Bac. Ab. Heir and Ancestor, F. 2 Saund. 7. n. 4. 136. Plowd. 439. 441; and a devisee of real estate may be sued in debt, though not in covenant on such a deed. 3 & 4 W. & M. c. 14. Bac. Ab. Heir, F. 1 P. Wins. 99. 7 East, 128. Whereas a simple contract creditor has no remedy at law in any case against the real estate of his deceas ed debtort though in some cases by marshalling the assets, 3 Wooddes. 488; or where the debtor died a trader, relief may be obtained in equity; 47 Geo. III. sess. 2. c. 74. 6thly. That a deed is entitled to preference, except as to rent due on a parol demise, over simple contract debts, in the course of payment of a testator's debts, supra 465. Toller, 1st ed. 221. 5 T. R. 307; and though this rule does not obtain in case of bankruptcy, where all creditors receive a dividend pari tor has the same remedy against heirs and devisees as the specialty creditor; (2 R. S. 452, § 32): and is entitled to payment from executors, &c. pro rata with specialty credi tors. (Id. 87, § 27, 28). A deb of record is a sum of money, which appears to be due by the evidence of a court of record. Thus, when any specific sum is adjudged to be due from the defendant to the plaintiff, on an action or suit at law; this is a contract of the highest nature, being established by the sentence of a court of judicature. Debts upon recognizance are also a sum of money, recognized or acknowledged to be due to the crown or a subject, in the presence of some court or magistrate, with a condition that such acknowledgment shall be void upon the appearance of the party, his good behaviour, or the like: and these, together with statutes merchant and statutes staple, &c. if forfeited by non-performance of the condition, are also ranked among this first and principal class of debts, viz. debts of record; since the contract, on which they are founded, is witnessed by the highest kind of evidence, viz. by matter of record. Debts by specialty, or special contract, are such whereby a sum of money becomes, or is acknowledged to be, due by deed or instrunient under seal. Such as by deed of covenant, by deed of sale, by lease reserving rent, or by bond or obligation; which last we took occasion to explain in the twentieth chapter of the present book; and then shewed that it is a creapassu, yet by means of a mortgage and some other deeds, some specific security may fre quently be obtained, or right to prove acquir ed, which even in that event, places one creditor in a better situation than he would otherwise have been. 7thly. That a deed is not affected by the statute of limitations, which renders it necessary for a simple contract creditor to proceed within six years after his cause of action accrued. Cowp. 109. 1 Saund. 37, 8. 21 Jac. I. c. 16. Tidd, 6th edit. 19. 8thly. That in pleading a deed it is in general necessary to make a profert, as it is technically termed, of the deed, or to state upon the record some excuse for the omission. 10 Co. 92. b. 1 Chitty's Plead. 351. 3. T. R. 151. 4 East, 585. 9thly. That in case of a deed when a profert is necessary, the other party is entitled to qyer and copy, 1 Saund. 9. n. 1. a right which does not in general exist in case of simple contracts. Tidd. 6th edit. 618, 9. 10thly. That if a deed be given expressly to secure a pre-existing simple contract debt due from the obligor, it will at law merge the latter, and prevent him from suing upon the same, 3 East, 258.9. Cro. Car. 415; though if the deed be given as a collateral security or by a third party it will not have that operation. 3 East, 251. Com. Dig. Accord. 6 Term. Rep. 176, 7. 2 Leon. 110. Debts or contracts of record, being as we have seen, sanctioned in their creation, by some court or magistrate, having competent jurisdiction, have certain particular properties distinguishing them as well from simple contracts as from specialties. 1st. These debts or contracts cannot in pleading be impeached or affected by any supposed defect or illegality in the transaction on which they are founded, and if a judgment be erroneous, that circumstance will afford no answer to an action of debt upon it, and the only course for the defendant is to reverse it by writ of error, 2 Burr, 1005. 4 East, 311. 2 Lev. 161. Gilb. on U. & T. 109. Gilb. Debt, 412. Yelv. 155. Tidd, 6th ed. 1152; and though third persons, who have been defrauded by a collusive judgment, may shew such fraud, so as to prevent them selves from being prejudiced by it, 13 Eliz. c. 5. 2 Marsh. 392. 7 Taunt. 97. the parties to such judgment are estopped at law, from pleading such a plea, and must in general apply for relief to a court of equity. 13 Eliz. c. 5. 2 Marsh. 392. 7 Taunt. 97. 1 Anstr. 8. There is however one instance in which a party may apply to the common law court to set the judg ment aside, viz. where it has been signed upon a warrant of attorney, given upon an unlawful consideration, or obtained by fraud; in which case, as this is a peculiar instrument, affording the defendant no opportunity to resist the claim by pleading, and frequently given by persons in distressed circumstances, the court will afford relief upon a summary application, Dougl. 196. Cowp. 727. 1 Hen. Bla. 75. Semble; not so in Exchequer. 1 Anstr. 7, 8. Another peculiar property of a contract of record is, that its existence, if disputed, must be tried by inspection of the record, entry of recognizance, &c. and not by a jury of the country. Tidd, 6th edit. 797, 8. But notwithstanding, since the act of union, an Irish judgment is a record, yet it is only proveable by an examined copy on oath, and therefore it is only triable by a jury. 5 East, 473. Another quality, and one of the most important, is, that a judgment when docketted binds the land as against subsequent purchas ers, Tidd, 6th edit. 966, 7; and such a judg ment and recognizance is entitled to preference to a specialty and other debts of an inferior nature. 6 T. R. 384. Tidd, 6th edit. 967. Lastly, if a judgment be obtained expressly for a simple contract or specialty debt, and not as a collateral security, the inferior demand is merged, according to the rule transit in rem judicatam, but if the judgment were obtained merely as a collateral security, the creditor retains an election to proceed either on the judgment or inferior security East 258. * In New-York, recognizances do not bind lands, 2 R. S. 362 21 |