trientes, or one-third of the as or centesima, 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, (n) that in Holland the rate of interest was then eight per cent in common loans, but twelve to merchants. And Lord [*463] 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 not 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 eredit, 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. (25) But yet, if a conof interest permitted, they called usura centesimæ, amounting yearly to twelve per cent. Now as the as or Roman pound, was commonly used to express any integral sum, and was divisible into twelve parts or uncia, therefore these twelve monthly payments or unciae were held to amount annually to one pound, or as usurarius: and so the usura asses were synonymous to the usura centesima. And all lower rates of interest were denominated according to the relation they bore to this centesimal usury, or usuræ asses; for the several multiples of the uncia, or duodecimal parts of the as, were known by different names ac cording to their different combinations; sextans quadrans, triens, quincunx. semis, seplunx, bes dodrans, dextans, deunx, containing respectively 2, 3, 4, 5, 6, 7, 8. 9, 10, 11. unciæ, or duodecimal parts of au as. Ff. 28, 5, 50. 2. Garvin. 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:

(25) [If the usury arise from error in computation, it will not vititate. Cro. Car. 501; 2 Bla. Rep. 792; 1 Camp. 149. Exorbitant 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 loan or forbearance. 4 East, 55; 5 Esp. 11; Peake, 200; 1 B. and P. 144; 4 Taunt. 810. Nor if the charge alleged to be usurious is fairly referable to the trouble, expense, &c., in the transaction. 3 B. and P. 154; 4 M. and S. 192; 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. 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 principle with legal interest is to be returned it will. 3 B. and P. 151; 3 B. and A. 666. And if part of the advance be in goods, it must be shown 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 interest, the intention of the parties being the criterion in all cases. If money be lent on risk at more than legal interest, and the casualty affects the interest only, it is usury, not so if it affects the principal Cro. J. 508; 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. and 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. 1 H. B. 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 interest has been actually received; and the action must be brought within one year afterwards. 2 Bla. Rep. 792; 2 B. and P. 381; 1 Saund. 295, a.]

also.

Chap. 30.]

CHOSES IN ACTION.

tract which carries interest 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 Indian interest, [*464] have been allowed in our courts to the amount of even twelve per local cent: for the moderation or exorbitance of interest depends upon circumstances; and the refusal to enforce such contracts would put a stop to all foreign trade. (26) 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. (27)

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 money, is mutually acquired and lost. (q) 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 him for any special purpose, he becomes indebted to the bailor in the same numerical sum, upon his implied contract, that he should execute the trust 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 usually divided into debts of record, debts by [*465] special, and debts by simple contract.

A debt of record (28) 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

(p) 1 Eq. Ca. Abr. 289. 1P. Wms. 395,

(q) F. N. B. 119.

(26) [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. C. 2; 2 Vern. 395; 3 Atk. 727; 1 Ves. 427; Comyn on Usury, 152.]

(27) The law of usury in England has undergone radical alteration since these Commentaries were published. By statute 5 and 6 William IV, c. 41, bills and other securities are not to be totally void because a higher rate of interest is reserved than was allowed by the statute of 12 Anne. By statute 3 and 4 William IV, c. 98, and 1 Vic. c. 80, bills and notes payable within twelve months are exempted from the laws for the prevention of usury. The statute 2 and 3 Vic. c. 37, provides that no bill of exchange or promissory note made payable at or within twelve months after date, or having not more than twelve months to run, nor any contract of loan for more than 10l., shall, by reason of any interest taken thereon or secured thereby, or any agreement to buy or receive, or allow interest in discounting, or negotiating any such bill or note, be void, nor any person so lending be liable to the penalties of the usury laws; but this relaxation of the law was not to extend to loans on the security of lands. And still later the statute 17 and 18 Vic. c. 90, reciting that it is "expedient to repeal the laws at present in force relating to usury," proceeds to repeal the statutory penalties for usury, with a saving, however, of the rights, remedies or liabilities of any person in respect to previous transactions.

There is very little uniformity in the interest and usury laws of the states of the American Union. In some of them the rate of interest is fixed for all cases in which it is allowed at all: in others it is prescribed, but with permission to the parties to agree upon a higher rate, not to exceed a certain percentage mentioned; in some, a reservation of usurious interest renders the contract void, in others, it makes the lender liable to a penalty only, and in still others, the lender is only precluded from recovering the usurious interest.

(28) [Debts or contracts of record, being 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 plead641 ing be impeached or affected by any supposed defect or illegality in the transaction on

VOL. I.--81

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, duc by deed or instrument 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 showed that it is a creation or acknowledgment of a debt from the obligor to the obligee, unless the obligor performs a condition thereunto usually annexed, as the payment of rent or money borrowed, the observance of a covenant, and the like; on failure of which the bond becomes forfeited and the debt becomes due in law. These are looked upon as the next class of debts after those of record, being confirmed by special evidence, under seal.

Debts by simple contract are such, where the contract upon which the obligation arises is neither ascertained by matter of record, nor yet by deed or special instrument, but by mere oral evidence, the most simple of any; or by notes *unsealed, which are capable of a more easy proof, and (therefore [ *466 ] only) better, than a verbal promise. It is easy to see into what a vast variety of obligations this last class may be branched out, through the numerous contracts for money, which are not only expressed by the parties, but virtually implied in law. Some of these we have already occasionally hinted at; and the rest, to avoid repetition, must be referred to those particular heads in the third book of these Commentaries, where the breach of such contracts will be considered. I shall only observe at present, that by the statute 29 Car. II, c. 3, no executor or administrator shall be charged upon any special promise to answer damages, out of his own estate, and no person shall be charged upon any promise to answer for the debt or default of another, or upon any agreement in con

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. and T. 109; Gilb. Debt, 412; Yelv. 155; Tidd. 6th ed. 1152. And though third persons, who have been defrauded by a collusive judgment, may show such fraud, so as to prevent themselves from being prejudiced by it, 13 Eliz. c. 5; 2 Marsh. 392; 7 Taunt. 97, the parties to such judgment are estopped at law for 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 judgment 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. 721; 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 ed. 797, 798. But notwithstanding, since the act of union, an Irish judgment is a record, yet it is only provable 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 docketed binds the land as against subsequent purchasers: Tidd. 6th ed. 966, 967; and such a judgment 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 judicatum, 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. 3 East, 258.]

sideration of marriage, or upon any contract or sale of any real estate, or upon any agreement that is not to be performed within one year from the making; unless the agreement or some memorandum thereof be in writing, and signed by the party himself, or by his authority. (29)

But there is one species of debts upon simple contract, which, being a transaction now introduced into all sorts of civil life, under the name of paper credit, deserves a more particular regard. These are debts by bills of exchange, and promissory notes.

A bill of exchange is a security, originally invented among merchants in different countries, for the more easy remittance of money from the one to the other, which has since spread itself into almost all pecuniary transactions. It is an open letter of request from one man to another, desiring him to pay a sum named therein to a third person on his account; by which means a man at the most distant part of the world may have money remitted to him from any trading country. If A lives in Jamaica, and owes B, who lives in England, 10007., now if C be going from England to Jamaica, he may pay B this 10007., and take a bill of exchange drawn by B in England upon A in Jamaica, and receive it when he comes thither. Thus does B receive his debt, at any distance of place, by transferring it to C; who carries over his money *in paper credit, without danger of robbery or loss. This method is said to have [*467] been brought into general use by the Jews and Lombards, when banished for their usury and other vices; in order the more easily to draw their effects out of France and England into those countries in which they had chosen to reside. But the invention of it was a little earlier; for the Jews were banished out of Guienne in 1287, and out of England in 1290; (r) and in 1236 the use of paper credit was introduced into the Mogul empire in China. (8) In common speech such a bill is frequently called a draft, but a bill of exchange is the more legal as well as mercantile expression. The person, however, who writes this letter, is called in law the drawer, and he to whom it is written the drawee; and the third person, or negotiator, to whom it is payable (whether especially named, or the bearer generally) is called the payee.

These bills are either foreign or inland; foreign, when drawn by a merchant residing abroad upon his correspondent in England, or vice versa; and inland, when both the drawer and drawee reside within the kingdom. Formerly foreign bills of exchange were much more regarded in the eye of the law than inland ones, as being thought of more public concern in the advancement of trade and commerce. But now by two statutes, the one 9 and 10 Wm. III, c. 17, the other 3 and 4 Ann. c. 9, inland bills of exchange are put upon the same footing as foreign ones; what was the law and custom of merchants with regard to the one, and taken notice of merely as such, (t) being by those statutes expressly enacted with regard to the other. So that now there is not in law any manner of difference between them. (30)

Promissory notes, or notes of hand, are a plain and direct engagement in writing, to pay a sum specified at the time therein limited to a person therein named, or sometimes to his order, or often to the bearer at large. These also,

(r) 2 Carte. Hist. Eng. 203, 206,

(8) Mod. Un. Hist. iv, 499.

(t) Roll. Abr. 6.

(23) Upon this subject in general, see Browne on the Statute of Frauds; a valuable and reliable treatise. Also the treatises on contracts.

(30) There is this very important difference, that in the case of a foreign bill, in order to bind the drawer and indorsers it is necessary that it be protested if dishonored, while in the case of an inland bill, although there may be a protest, it is not essential, and the liability of the drawer and indorsers will be fixed by due notice of dishonor without it. Burroughs v. Perkins, Holt, 121; Harris v. Benson, 2 Stra. 910; Windle v. Andrews, 2 Barn. and Ald. 696. The same difference is recognized in this country. Edw. on Bills, 584, 585.

The several states of the American Union are so far foreign in respect to each other, that a bill drawn in one upon another is to be considered a foreign bill. Buckner v. Finley, 2 Pet. 586; Hartridge v. Wesson, 4 Geo. 101; Atwater v. Streets, 1 Doug. Mich. 455; Carter v. Union Bank, 7 Humph 548; Chenowith v. Chamberlain, 6 B. Monr. 60; Wells v. Whitehead, 15 Wend. 527; Halliday v. McDougall, 20 Wend. 81.

by the same statute, 3 and 4 Ann. c. 9, are made assignable and indorsable in like manner as bills of exchange. But, by statute 15 Geo. III, c. 51, all promissory or other notes, *bills of exchange, drafts, and undertakings in [*468] writing, being negotiable or transferable, for the payment of less than twenty shillings, are declared to be null and void; and it is made penal to utter or publish any such; they being deemed prejudicial to trade and public credit. And by 17 Geo. III, c. 30, all such notes, bills, drafts and undertakings, to the amount of twenty shillings, and less than five pounds, are subjected to many other regulations and formalities; the omission of any one of which vacates the security, and is penal to him that utters it. (31)

The payee, we may observe, either of a bill of exchange or promissory note, has clearly a property vested in him (not indeed in possession but in action) by the express contract of the drawer in the case of a promissory note, and, in the case of a bill of exchange, by his implied contract, viz.: that, provided the drawee does not pay the bill, the drawer will: for which reason it is usual in bills of exchange to express that the value thereof hath been received by the drawer; (u) in order to show the consideration, upon which the implied contract of repayment arises. And this property, so vested, may be transferred and assigned from the payee to any other man; contrary to the general rule of the common law, that no chose in action is assignable: which assignment is the life of paper credit. It may therefore be of some use to mention a few of the principal incidents attending this transfer or assignment, in order to make it regular, and thereby to charge the drawer with the payment of the debt to other persons than those with whom he originally contracted.

In the first place, then, the payee, or person to whom or whose order such bill of exchange or promissory note is payable, may by indorsement, or writing his name in dorso, or on the back of it, assign over his whole property to the bearer, or else to another person by name, either of whom is then called the indorsee; and he may assign the same to another, and so on in infinitum. And a promissory note, payable to A, or bearer, is negotiable without any indorse[*469 ] ment, and payment thereof may be demanded by any bearer *of it. (v) But, in case of a bill of exchange, the payee, or the indorsee (whether it be a general or particular indorsement), is to go to the drawee, and offer his bill for acceptance; which acceptance (so as to charge the drawer with costs) must be in writing, under or on the back of the bill. If the drawee accepts the bill, either verbally or in writing, (w) he then makes himself liable to pay it; this being now a contract on his side, grounded on an acknowledgment that the drawer has effects in his hands, or at least credit sufficient to warrant the payment. If the drawee refuses to accept the bill, and it be of the value of 201. or upwards, and expressed to be for value received, the payee or indorsee may protest it for non-acceptance; which protest must be made in writing, under a copy of such bill of exchange, by some notary public; or, if no such notary be resident in the place, then by any other substantial inhabitant in the presence of two credible witnesses; and notice of such protest must, within fourteen days after, be given to the drawer. (32)

(u) Stra. 1212.

(v) 2 Show. 235. Grant v. Vaughan, T. 4 Geo. III, B. R.

(0) Stra. 1000.

(31) A promissory note under 51. payable to the bearer on demand is illegal in England, by statute 26 and 27 Vic. c. 105, and previous acts.

(32) [With respect to acceptance and protest, the law now is, in several material points, different from the statement of it in the text. Acceptance is not necessary, though usual and desirable, on bills payable at a certain time: but when the bill is payable at a certain distance of time after sight, then acceptance is essential and should not be delayed, because (as the time for payment of the bill does not begin to run till it is accepted: 6 T. R. 212; Bayl. 112; Chitty on Bills, 268), the responsibility of the drawer would be thereby protracted. Acceptance of an inland bill can now be in writing only on the face of the bill itself, by 1 and 2 Geo. IV, c. 78; though formerly, as is the case still with foreign bills, it might have been verbal, or in writing on any other paper. 4 East, 67; 5 id, 514. But in all cases, whether of an inland or foreign bill, if it be presented and acceptance is refused, prompt notice (within fourteen days