33 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) (1) 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 consi I Carth. 67. the name of the party in whose favour a warrant of attorney or collateral security was given, or for what penal sum it authorizes a confession of judgment, 3 B. & A. 206. 4 B. & A. 281.; and it suffices to state, that the annuity was granted for the lives of A. B. &c. (naming them) without stating their residence or adding that it was granted for their joint lives, or the life of the survivor, or for a term of years determinable on those lives. 4 B. & A. 281. Nor need it state that the annuity is redeemable. 3 B. & A. 206. As to the description of the security in the memorial; if an instrument be described as an assignment of certain leasehold premises, though in truth an under lease, that is sufficient. 2 B. & C. 251. Nor need a deed, assigning policies as collateral securities, be mentioned in memorial. 2 B. & C. 232. The 4th section of 17 Geo III. and 6th section of 53 Geo. III. c. 141. are not imperative on the court, and the court may refuse to vacate an annuity unless reasonable terms be acceded to by the applicant. 1 B. &C. 61. 4B & A. 281. The term pretence in the 6th sect. 53 Geo. III. means undue pretence, and therefore where part of the consideration money for an annuity had been deposited in the hands of the grantee's attorney till certain houses upon which the annuity was to be secured were completed, and it appeared that the money deposited had all been paid over to the grantor a short time after the date of the deeds, and there was no fraud in the transaction, the court refused to set aside the annuity. 4 B. & A. 281. If the grantee of an annuity be himself an attorney, and charge brokerage, or excessively for the deeds, and retain his charges, that will be a retention of a part of the consideration under the acts, 5 T. R. 597.; and if the person employed by the grantor to raise money, and by the grantee to pay the consideration, retain any part of it for a debt due to himself from the grantor, and for the expenses of deeds, the court will set aside the annuity on payment of principal and interest, though the grantee was not privy to the retainer. 2 Bing 370. Under the excepting clause it has been held, that where by the trusts of a marriage settlement a father agreed to settle 10,000l. upon his daughter in trust to pay the interest to the husband during life, and the father died without ever having paid the principal money to the trustees, and the husband having agreed with the executors to accept 5000). and an annuity of 1251. for life, in lieu of the 10,000., such annuity did not require enrolment, 2 B. & C. 875. 4 D. & R. 549.; so if the consideration be the relinquishment of a business, 4 T. R. 793. 5 T. R. 639.; or the bonâ fide sale of premises, whether leasehold or freehold, 2 B. & B. 702. 5 B. Moore, 479.; or in consideration of natural love and affection between relatives, though mixed with a valuable consideration, 5 B. Moore, 629.; or any other than a pecuniary consideration paid and received, 7 East, 529. 5 B. Moore, 635. 1 Taunt. 356. the annuity need not be enrolled. Chitty. (33) The grantee of an annuity usually insures the life of the grantor, and will not advance the money till he is certain some insurance office will insure the life, and he usually adds the amount of the annual insurance to the annual interest, and makes the grantor pay both in one entire sum of perhaps 151. per cent., so that in truth the grantee is, out of the pocket of the grantor, indemnified from all risk, and clears eleven or twelve per cent. [462] deration money, shall within twenty days after its execution be enrolled in the court of chancery; else the security shall be null and void: and, in case of collusive practices respecting the consideration, the court, in which any action is brought or judgment 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 or loans : Upon the two principles of inconvenience and hazard, compared together, different nations have, at different times, established different rates of interest.34 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, that is, four per cent.; but allowed higher interest to be taken [463] of merchants, because there the hazard was greater. So too Gro tius informs us, (n) that in Holland the rate of interest was then eight per cent. in common loans, but twelve to merchants. And Lord Bacan 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 hazards, 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 acces m Cod. 4. 32. 26. Nov. 33, 34, 35.—A short 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 Horace, ad Pisones, $25. Romani pueri longis rationibus assem It 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 the highest rate of interest permitted, they called usurae centesimae, 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 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 according to their different combinations; sextans, quadrans, triens, quincunx, semis, sep tunx, bes dodrans, dextans, deunx, containing respectively 2, 5, 4, 5, 6, 7, 8, 9, 10, 11, uncias, or duodecimal paris of an as. [Ff. 28. 5. 50. § 2 Gravin, orig. jur. civ. 1. 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. (34) As to interest and usury in general, see 3 Chitty's Commercial L. 310 to 316. 87 to 9r. sions 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. 35 But yet, if a contract 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, have been allowed in our courts to the amount of even twelve [464] 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. 36 And, by statute 14 Geo. III. c. 79. all mortgages and other securities upon estates or other property in Ireland or p 1 Equ. Cas. Abr. 289. 1 P. Wms. 395. (35) As to the law of usury in general, see 3 Chitty's Com. 87 to 91. 310 to 316. R. B. Com yn on Usury, Ord. on Usury, and Plowden on Usury. By the 12 Ann. c. 16. it is enacted, that no person shall take upon any contract, directly or indirectly, for loan of any monies or commodities, above the value of 51. for the forbearance of 100l. for a year; and so after that rate, for a greater or less sum, or a longer or shorter time; and that all contracts, &c. for a higher interest, shall be utterly void, and the party actually taking it shall forfeit treble the value of the sum, &c. so lent, &c. 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. 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 device for the purpose of concealing or evading the appearance of a loan or forbearance. 4 East, 55. 5 Esp. 11. Peake, 200. 1 B. & P. 144. 4 Taunt. 810. Nor if the charge alleged to be usurious is fairly referable to the trouble, expense, &c. in the transaction. S B. & P. 154. 4 M. & 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. Under the direction of the court, it 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 on 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. 9 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 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 also. 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 & 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. 1T. 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. & P.381 1 Saund. 295. a. The borrower is a competent witness in an action for the penalty. 1 Saund. 295. a. Chitty. (36) By the 13 Geo. III. c. 63. s. 30. no subject of his majesty in the East Indies shall 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 moiety 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 conviction to be fined and imprisoned at the discretion 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. Chitty 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. 37 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 the 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 [465] comprehends a great variety of acquisition; being usually divided into debts of record, debts by special, and debts by simple contract.TM q F. N. B. 119. (37) To remove doubts which had arisen upou this statute, the 1 & 2 Geo. IV. c. 51. provides that bonds, &c. made in Great Britain, 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 Indies, 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 6. per cent. it was held usurious. 3 T. R. 425. Chitty (38), 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 cach, and give a comparative 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, deeris 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. Bonds, deeds, and the other contracts under seal, which are called specialties, are less frequent, and of a higher order, than contracts by parol, and greater solemnity and accuracy are essential to their validity. Every specialty must, it is said, be either written or printed on paper or parchment, and not upon wood, leather, linen, cloth, stone, the bark of a tree, or the like; the materials selected being those which, if written upon, are the least subject to be vitiated, altered, or corrupted. Co. Lit. 171. b. 35. b. 229. a. Plowd. 308. b. (Vide as to printing, Schneider v. Norris, ante 2 Maule & Selw. 286, 88.) It seems that it may be in any language or character whatever, see ante, 4 Cruise Dig. 28. After the deed has been duly committed to writing, it must be sealed, but the signature of the name of the party at the foot is not in general material. It is necessary that the deed should be delivered, Co. Lit. 35. b. 171. b. except in the case of a Reed executed by a corporation, in which case the affixing of the common seal is sufficient, with A debt 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 out a formal delivery. Com. Dig. Fait, A. 3. 2 Rol. Abr. 23. 1. 50. 4 Cruise, 33. see also Cro. Eliz. 167. Reading over the deed is not essential to its validity, for if the party execute without hearing it, or desiring that it may be read to him, yet it binds him; but if a person, blind or illiterate, should execute a deed falsely read, or the sense of which was declared to be different to what it really was, it would not be binding. 2 Coke, 3. 9. 12 Coke, 90. Skinner, 158. 2 Atk. 327. 8 T. R. 147. 4 Cruise Dig. 31. No date is necessary, for the deed will take effect from the delivery; nor are witnesses essential, the attestation being rather to preserve the evidence than to constitute the essence of the deed, Com. Dig. Fait, Phil. on Ev. 413 to 421. 4th edit.; and even where the names of two fictitious persons have been subscribed by way of attestation, the judge permitted the plaintiff, who had received the deed from the defendant in the deceitful shape, to give evidence of the hand-writing of the defendant himself. Peake's Rep. 23, id. 146. 2 Camp. 635. The highest kind of contracts are those of record, such as judgments, recognizances of bail, statutes merchant and staple, and other securities of the same nature, entered into with the intervention of some public authority, as, for instance, before a court of record, or a judge thereof, the lord mayor, or other competent person. On account of which mode of authenticating the contract, it is invested with certain privileges and advantages not incident to other contracts. There are some important distinctions between these different descriptions of contracts, which have occasioned some to be considered higher and preferable securities to the others. These distinctions almost entirely depend on the more deliberate mode in which the superior contract is entered into. A simple or parol contract is considered as made without so much deliberation as a deed; and a contract of record is considered as still more cautiously and formally framed, as well as to have been sanctioned by the judge or magistrate before whom it was acknowledged. Simple contracts are often entered into by men unadvisedly, and without sufficient deliberation, and therefore the law has provided, that such a contract shall not bind without consideration; but where the agreeinent is by deed, there is more time for deliberation; and as it has been ob served with great simplicity, but at the same time with equal truth, "when a man passes a thing by deed, first, there is the determination of the mind to do it, and upon that he causes it to be written, which is one part of deliberation; and afterwards he puts his seal to it, which is another part of deliberation; and lastly, he delivers the writing as his deed, which is the consummation of his resolution, and by the delivery of the deed from him that makes it to him to whom it is made, he gives his assent to part with the thing contained in the deed to him to whom he delivers the deed, and this delivery is as a ceremony in law, signifying fully his good will that the thing in the deed should pass from him to the other. So that there is great deliberation used in the making of deeds, for which reason they are received as a lien final to the party, and are adjudged, to bind him without examining for what cause or consideration they were made." Plowd. 308, 9. 7 T. R. 477. 4 East, 200. Fonbl. on Eq. 2d edit. 347. n. f. Toller, 1st edit. 222, 3. It is competent to the parties to most stipulations, to secure the payment of the same money, or "performance of the same act, either by simple contract, by deed, or by record, and the differences between the legal effect of each node of contracting depends on the form, and not on the subject matter of the contract. We will now consider the principal legal distinctions between each of these modes of contracting. 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. Fonbl. 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 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. 7 T. 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 judgment, 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 imparts, Hayne v. Maltby, 3 T. R. 9. 438. Com. Dig. Estoppel. 1 Saund. 216. n. 2. Willes, 9. ex cept 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 discharged 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 covèVOL. I. 95 |