the whole country, according to these figures, there was an average of $308,000,000 accumulated per annum during ten years of the most prosperous season, arising from the influence of gold discoveries upon prices of all kinds. In that period nearly $300,000,000 of capital was imported from abroad for railroad construction. 2,800,000 immigrants arrived, with more or less property, and located soil; and the one thousand millions or one hundred millions per annum was invested in railroad construction. We shall continue the examination of the subject further in our next number.

COMMERCIAL LAW.-NO. 16.

INTEREST AND USURY.

WHAT INTEREST IS, AND WHEN IT IS DUE.

INTEREST means a payment of money for the use of money. In most civilized countries the law regulates this; that is, it declares how much money may be paid or received for the use of money; and this is called legal interest; and if more is paid or agreed to be paid than is thus allowed, it is called usurious interest. By interest is commonly meant legal interest; and by usury, usurious interest.

Interest may be due, and may be demanded by a creditor, on either of two grounds. One, a bargain to that effect; the other, by way of damages for withholding money that is due. Indeed, it may be considered as now the settled rule, that wherever money is withheld which is certainly due, the debtor is to be regarded as having promised legal interest for the delay. And upon this implication, as on most others, the usage of trade, and the customary course of dealings between the parties, would have great influence.

Thus, in New York, A sued B for the transportation of a quantity of flour from Rochester to New York, and claimed interest upon the same. He offered to prove that it was the uniform custom of all those engaged in the same business to charge interest upon their accounts; and that the defendant knew this. This evidence having been rejected in the court below, it was held by the Supreme Court, on appeal, that, such usage being proved, the plaintiff was entitled to interest, and that the evidence should have been received. And in another case in that State, where it was known to one party that it was the uniform custom of the other to charge interest upon articles sold or manufactured by him after a certain time, the latter was allowed to charge interest accordingly.

In general, we may say that interest is allowed by law as follows: On a debt due by judgment of court, it is allowed from the rendition of judg ment; and on an account that has been liquidated, or settled, from the day of the liquidation; for goods sold, from the time of the sale, if there be no credit, and if there be, then from the day when the crodit expires; for rent, from the time that it is due, and this even if the rent is payable

otherwise than in money, but is not so paid; for money paid for another or lent to another, from the payment or loan.

In New York it was held, in an action on a contract to recover damages for the non-delivery of merchandise, that the plaintiff was entitled to recover the difference between the contract price and the market value of the article at the time and place specified for its delivery, with interest thereon; and that it was not within the discretion of the jury to allow interest or not; the plaintiff being legally entitled to interest.

Interest is not generally recoverable upon claims for unliquidated damages, nor in actions founded on tort. By unliquidated damages is meant damages not agreed on, and of an uncertain amount, and which the jury must determine. By torts is meant wrongs, or injuries inflicted. But although interest cannot be given under that name, in actions of this sort, juries are sometimes at liberty to consider it in estimating the damages.

It sometimes happens that money is due, but not now payable; and then the interest does not begin until the money is payable. As if a note be on demand, the money is always due, but it is not payable until demand; and therefore is not on interest until demand. But a note payable at a certain time, or after a certain period, carries interest from that time, whether it be demanded or not.

MONEY.

The laws which regulate interest and prohibit usury are very various, and are not perhaps precisely the same in any two of our States. Formerly, usury was looked upon as so great an offence, that the whole debt was forfeited thereby. The law now, however, is-generally, at least-much more lenient. The theory that money is like any merchandise, worth what it will bring and no more, and that its value should be left to fix itself in a free market, is certainly gaining ground. In many States there are frequent efforts so to change the statutes of usury that parties may make any bargain for the use of money which suits them; but when they make no bargain, the law shall say what is legal interest. And, generally, the forfeiture is now much less than the whole debt.

In Maine, the excess above the legal rate of interest, six per cent, is not recoverable, and, if paid, may be recovered back at any time within a year. In New Hampshire, the legal rate of interest being six per cent, the party taking the usury is subjected to a penalty of three times the amount of the usury taken, to be deducted from the debt. In Vermont, lawful interest only (six per cent) is recoverable, and a party paying more than legal interest may recover it back. Seven per cent, however, may be charged upon railway bonds. In Massachusetts, a party receiving more than legal interest, six per cent, forfeits three times the amount of the unlawful interest taken. And where a party has paid more than legal interest, he may recover of the person receiving it three times the amount of the unlawful interest paid. In Rhode Island, upon an usurious contract, legal interest only is recoverable; and where more than legal interest (six per cent) has been paid, it may be recovered back. In Connecticut, upon usurious contracts, the legal rate of interest being six per cent, the whole interest is forfeited. In New York, all usurious contracts are void, and where more than the legal rate of interest, seven per cent, has been paid, it may be recovered back. In New Jersey, the legal rate of interest

being six per cent, usury avoids the whole contract. However, in the township of Hoboken and in Jersey City, seven per cent may be charged. In Pennsylvania, the party taking the usury forfeits the amount of the money or other thing lent, one-half to the State, the other to the party suing for the same. The legal rate of interest is six per cent. It has been decided under this act, that the contract itself is not void; and a party is entitled to recover the sum actually lent, together with lawful interest; otherwise, the State might be deprived of its share of the penalty by the borrower's refusing to enforce the statute. In Delaware, the party taking the usury forfeits the amount of the whole debt, one-half to the State, the other to the informer. The legal rate is six per cent.

In Maryland, the excess paid above the legal rate of interest, six per cent, is recoverable back. In Virginia, the party taking more than the legal rate of interest, six per cent, forfeits the whole debt. In North Carolina the taking of unlawful interest renders the whole contract void. The legal rate is six per cent. In South Carolina, the party taking the usury forfeits the whole interest. The legal rate is six per cent. In Georgia, where the legal rate of interest is seven per cent. by the taking of usury the party forfeits the whole interest. In Alabama, the interest only is forfeited where usury is taken. The legal rate is eight per cent. In Arkansas, the legal rate is six per cent, and the taking of usury avoids the contract; but parties may agree in writing for ten per cent interest. Florida, usury avoids the contract. The legal rate is six per cent.

In

In Illinois, in all actions brought upon usurious contracts, the defendant shall recover his costs, and the plaintiff shall forfeit three times the amount of the whole interest. And a party paying more than the legal rate of interest, six per cent, may recover of the party receiving the same three times the amount so paid. But banks may charge seven per cent, and individuals may make special contracts for ten per cent. In Indiana, the taking of usury causes a forfeiture of five times the amount of the whole interest. Six per cent is the legal rate. In Iowa, where the legal rate of interest is six per cent, the taking of usury forfeits the whole interest; but ten per cent is allowed on special contracts. In Kentucky, usury subjects the party to a forfeiture of the whole interest. The legal rate is six per cent. In Louisiana, the legal rate being five per cent, usury causes the forfeiture of the whole interest; but eight per cent may be agreed upon by the parties. In Michigan, seven per cent is the legal rate of interest. Ten per cent may be charged upon special contracts. There is no penalty for taking usury. In Mississippi, the legal rate is six per cent, and the receipt of usury forfeits the whole interest. Eight per cent, however, may be charged on special contracts. In Missouri, the legal rate is six per cent, and the receipt of usury forfeits the whole interest. In Ohio, where the legal rate is six per cent, the receipt of usury causes a forfeiture of the whole interest; but eight per cent is chargeable upon special contracts. In Tennessee, six per cent is the legal rate, and an excess avoids the whole interest. In Texas, the taking of usury avoids the whole interest. The legal rate is eight per cent, but on special contracts twelve per cent is chargeable. In Wisconsin, the legal rate is seven per cent, but special contracts may be made for twelve per cent. In California, the legal rate is ten per cent, and there is no penalty for taking usury.

There is no especial form or expression necessary to make a bargain

usurious. It is enough for this purpose if there be a substantial payment, or promise of payment, of more than the law allows, either for the use of money lent, or for the forbearance of money due and payable. One thing, however, is certain there must be a usurious intention, or there is no usury. That is, if one miscalculates, and so receives a promise for more than legal interest, the error may be corrected, the excess waived, and the whole legal interest claimed. But if one makes a bargain for more than legal interest, believing that he has a right to make such a bargain, or that the law gives him all that he claims, this is a mistake of law, and does not save the party from the effect of usury.

Thus, in a case in Massachusetts, where the defendant agreed to pay the plaintiffs more than the legal rate of interest, but the excess was owing to the mode of computation adopted by the plaintiffs, and which was usual among banks, the court said: "It is probable that in this case there was no intentional deviation on the part of the bank; but a mistake of their right. An excess of interest was intentionally taken, upon a mistaken supposition that banks were privileged in this respect to a certain extent. This was, therefore, in the sense of the law, a corrupt agreement; for ignorance of the law will not excuse." It may be well to remark, that the law makes a very wide distinction between a mistake of fact and a mistake of law. Generally, it will not permit a party to be hurt by a mistake of fact; but it never suffers any one to excuse himself by a mistake of law, because it holds that everybody should know the law, and because it would be dangerous to permit ignorance of the law to operate for any one's benefit.

The question has been much discussed, whether the use of the common tables which are calculated on the supposition that a year consists of 360 days, is usurious. In New York it is held that it is. But in Massachusetts, and some other States, it is held that the use of such tables does not render the transaction usurious. We think this latter the better opinion.

It is also settled, that only the contract which is itself usurious can be affected by the usury. If by one contract, or by one completed transaction, as the payment of a debt for another, a party acquires a valid claim for a certain amount, and lawful interest, and then by a new contract, as a new note, for instance, the debtor agrees to pay him usurious interest, this new note, it has been held, will be affected by the usury, but the original claim will not be. So, if a borrower promises to pay a certain sum, and then more than interest as a penalty, if he does not pay the first sum, this is not usurious; first, because by paying the first sum he can escape the penalty; and secondly, because all penalties will be reduced by the court to the sum originally due and lawful interest.

So, if a debtor requests time, and promises to pay for the forbearance legal interest, and as much more as the creditor shall be obliged to pay for the same money, this is not a usurious contract. And even if usurious

interest be actually taken, this, although strong evidence of an original usurious bargain and intent, is not conclusive, but may be rebutted by adequate proof or explanation.

When a statute provides that a usurious contract is wholly void, such a contract cannot become good afterwards; and therefore a note which is usurious, if it be therefore void by law in its inception, is not valid in the

hands of an innocent indorsee. But it is otherwise where the statute does not declare the contract void on account of the usury. If a note, or any securities for a usurious bargain, be delivered up by the creditor and cancelled, and the debtor thereupon promises to pay the original debt and lawful interest, this promise is valid.

New securities for old ones which are tainted with usury, are equally void with the old ones, or subject to the same defence. Not so, however, if the usurious part of the original securities be expunged, and not included in the new; or if the new ones are given to third parties, who were wholly innocent of the original usurious transaction. And if a debtor suffers his usurious debt to be sued, and a judgment recovered against him for the whole amount, it is then too late for him to take any advantage of the usury.

So, if lands or goods be mortgaged to secure a usurious debt, and afterwards conveyed to an innocent party, subject to such mortgage, the latter cannot set up the defence of usury and thereby defeat an action to enforce the mortgage. And if A owes B a usurious debt, against which A could make a complete or partial defence, but pays the debt, usury and all, by transferring to B a valid note or debt of C, then, when C is called upon to pay this debt to B, C cannot make the defence that A's debt to B was usurious; for the debt due from C is not affected by the usurious taint of the original debt from A to B.

Usurers resort to many devices to conceal their usury; and sometimes it is very difficult for the law to reach and punish this offence. A common method is for the lender of money to sell some chattel, or a parcel of goods, at a high price, the lender paying this price in part as a premium for the loan. In England it would seem from the reports to be quite common for one who discounts a note, to do this nominally at legal rates, but to furnish a part of the amount in goods at a very high valua tion. In all cases of this kind, or rather in all cases where questions of this kind arise, the court endeavors to ascertain the real character of the transaction. Such a transaction is always suspicious, for the obvious reason that one who wants to borrow money is not very likely to desire at the same time to buy goods at a high price. But the jury decide all questions of this kind; and it is their duty to judge of the actual intention of the parties, from all the evidence offered. If that intention is substantially that one should loan his money to another, who shall therefor, in any manner whatever, pay to the lender more than legal interest, it is a case of usury. "Where the real truth is a loan of money," said

Lord MANSFIELD, "the wit of man cannot find a shift to take it out of the statute." If this great judge meant only that, whenever legal evidence shows the transaction to be a usurious loan, the law pays no respect whatever to any pretence or disguise, this is certainly true. But the wit of man does undoubtedly contrive some "shifts," which the law cannot detect. There seems to be a general rule in these cases in reference to the burden of proof; the borrower must first show that he took the goods on compulsion; and then it is for the lender to prove that no more than their actual value was received or charged for them.

If one should borrow stock at a valuation much above the market rate, and agree to pay interest on this value for the use of the stock to sell or pledge, this would be usurious. Whether it would be sufficient to dis