1. Although a loan of money may be usurious and the contract to
return it void, yet in the absence of statutory enactment, it does
not follow that the borrower, after he has once repaid the money,
nor even that his assignee in bankruptcy, whose rights are in some
respects greater than his own, can recover the principal and
illegal interest paid. Equity, however, in its discretion may
enable either to get back whatever money the borrower has paid in
excess of lawful interest, and in the present suit, it did enable
an assignee in bankruptcy to do so, both in a case
Page 85 U. S. 376
where before his bankruptcy, the money was lent directly to the
bankrupt, and in a case where the money had been given to brokers
upon endorsed notes which, the evidence made sufficiently plain,
were accommodation notes, drawn to enable the bankrupt to raise
money on them, and were understood by the lender of the money so to
be.
2. A man really insolvent, but not having yet openly failed and
hoping to overcome his difficulties and to carry on his business,
violates no provision of the Bankrupt Act by pledging his property
for money lent, the money being lent at the time when the pledge is
made and the lender having no reason to suppose otherwise than that
the purpose of the loan is to give effect to hope, such as above
described, of the party borrowing.
There was living in St. Louis in 1869 and for many years
previously a person named Darby, originally, as it seemed, a member
of the bar, but who afterwards entered into various sorts of
business, including as a chief one that of an exchange broker and a
so-called "banker." He had no capital worth speaking of when he
entered into them, nor any considerable cash means at any time. He
was always scheming, and as respected ready money always more or
less embarrassed. He was, however, regarded as a man of wonderful
energy and capacity for business, and though "suspending" in
seasons of fiscal embarrassment, would manage to get on his feet
again when the monetary crisis would be passed, and so go on anew.
In this way he managed to work along for many years, never at any
time being broken up. In 1868 he found himself with large property
and with large debts -- these being due to a considerable number of
creditors, not a few of them by deposit with him as a banker -- and
all the time needing ready money in order to keep up appearances
and to save himself from open failure. Whether he was at this time
in fact insolvent was a matter about which different people
differed. For the purposes of this case, he was conceded by the
court to have been so, though it seemed that he never so regarded
himself.
There existed at the same time in St. Louis, and in the later
part of Darby's career, a corporation called the Boatman's
Page 85 U. S. 377
Savings Institution, a company authorized by its charter to lend
money. The charter, however, forbade the institution to lend at
more than 8 percent for any loan, but prescribed no penalty, nor
declared what should otherwise follow as a consequence for lending
at higher rates.
The general statutes of Missouri concerning interest, declares
that no person shall receive more than 10 percent. [
Footnote 1] The act proceeds:
"SECTION 5. If any action or suit shall hereafter be commenced
upon any bond, note, mortgage, specialty, agreement, contract,
promise or assurance whatever, which shall be made within this
state, the defendant may in his answer show that a higher or
greater rate of interest than 10 percent per annum was therein or
thereby agreed for, or received or taken; and if the answer of the
defendant to any such suit shall be sustained by the verdict of a
jury, or the finding of the court, the court shall render judgment
on such verdict or finding for the real sum of money or price of
the commodity actually lent, advanced or sold, and interest on the
same at the rate of 10 percentum per annum, upon which judgment the
court shall cause an order to be made, setting apart the whole
interest for the use of the county in which such suit may be
brought, for the use of common schools, and the same, when
collected, shall be paid over accordingly and go to and form a part
of the common school fund of such county; and the defendant may
recover his costs."
With these provisions by way of penalty, the whole subject
seemed to end; and if the debtor voluntarily paid the money
borrowed no penalties were prescribed.
Among Darby's borrowings of money were two with the Boatman's
Institution.
The first was in this way. The County of St. Louis, wishing to
build a jail, issued proposals for sale of its bonds, which for
convenience were to be issued in sums of $1,000 each. Darby took
one hundred and fifty of them ($150,000), at rates considerably
below par, and borrowed the money to pay the county from the
National Bank of Missouri, pledging
Page 85 U. S. 378
the bonds as security collateral to his notes for the sum
borrowed. For some reason not specifically disclosed, Darby after a
certain time wished to pay his debt to this bank. In this condition
of things, one Hogeman, the cashier of the Boatman's Institution,
offered, in behalf of the institution, to lend him, at 10 percent
interest, $135,000 (with which sum he could withdraw the bonds then
in pledge with the national bank), and to take the bonds as
collateral security for a note which Darby should give, Darby to
have full power to sell the bonds from time to time at his own
price, the amount received to be credited on his note. This
arrangement was completed -- that is to say Darby gave his note for
$135,000 at 10 percent to the institution, withdrew the bonds from
the National Bank of Missouri, deposited them with the institution,
sold them at such rates as he saw good -- fair ones -- and by which
(throwing out of consideration the usurious rates that he paid for
money) he rather gained than lost, and with the proceeds paid his
note to the institution with the 10 percent interest.
Next, as to the other of the two transactions above-mentioned,
this other, however, being rather a series of transactions, six in
number, than a single one.
As already said, Darby was always embarrassed for ready money,
always borrowing, and always wanting to borrow. As a banker, his
creditors by deposit amounted to $170,000, while he seldom or never
had more than about $5,000 to meet their drafts. To meet these and
other claims, he was constantly raising money through street
brokers, especially through one named Stagg. Darby, generally
speaking, would come to him for money, proposing to draw notes
which should be endorsed by Messrs. Brotherton & Knox,
gentlemen of known character and means, for the amount wanted.
Stagg would then go to the Boatman's Institution, see the cashier,
and learn whether the institution was disposed to lend the amount
wanted. If the reply was in the affirmative, Darby would draw and
sign a note, Messrs. Brotherton & Knox would endorse it, Stagg
would take it and get the money, deduct his broker's commission,
and
Page 85 U. S. 379
pass the balance to Darby. This sort of operation was carried on
for a certain time, the Boatman's Institution at the end of it --
that is to say in January, 1869 -- being the holder of six notes
for $5,000 each, which, with interest on them, at rates never less
than 10 percent, and sometimes near 18 percent, were paid, by a
sale of certain real property of Darby's, made in April, 1869,
through the agency of Hogeman. [
Footnote 2]
Before the 17th of June of the year just mentioned, Darby had
become too notoriously embarrassed to go on longer with his
business, and at a meeting of his creditors held on that day he was
told by one of them that he must file his petition to be adjudged a
bankrupt or that he would be forced into bankruptcy. He did
accordingly file such his petition, on the 1st of July, and on the
12th was adjudged a bankrupt, one Tiffany being appointed his
trustee.
Hereupon Tiffany, as such trustee, filed a bill in the court
below against the Boatman's Institution to recover from it, as
having been lent at usurious rates and in violation of the Bankrupt
Act, the moneys which it had lent to Darby -- that is to say, the
$135,000 -- for which he had given the one note, and the $30,000
for which he had given the six notes, and both and all of which
loans, as already said, Darby and paid. The provisions of the
Bankrupt Act relied on were certain ones in the thirty-fifth
section, thus:
"And if any person, being insolvent or in contemplation of
insolvency or bankruptcy, within six months before the filing of
the petition . . . makes any
payment, sale, assignment,
transfer, conveyance, or other disposition of any part of his
property to any person who then has reasonable cause to believe him
to be insolvent . . . and that such payment, sale, assignment,
transfer, or other conveyance is made with a view to prevent his
property coming to his assignee in bankruptcy or to prevent the
same being distributed under this act . . . the sale, assignment,
transfer, or conveyance shall be void and the assignee may recover
the property or the value thereof as assets of the bankrupt.
[
Footnote 3] "
Page 85 U. S. 380
The bill did not ask for a decree for the
excess of
interest reserved and taken over lawful rates, but asked for all
the money lent to Darby and repaid by him. The grounds on which it
proceeded were apparently these:
I. That at the time of the making of all these notes and of the
payments on and of them, Darby was insolvent, and that both he and
the Boatman's Institution had cause to know, and did know, that
fact; that the payments were thus made with an intent to give the
defendant a preference over other creditors, and in violation of
the provisions of the Bankrupt Act, and were received with
knowledge that such preference was intended and given; and finally,
that such violation and fraud was contemplated and
accomplished.
II. That the general statute of Missouri declaring the effects
of usury and diverting the interest from the lender but saving the
principal to him, applied only to "persons" -- that is to say, to
natural persons -- and did not include corporations; that therefore
loans by corporations at rates forbidden by law -- usurious loans
-- stood upon general principles, and being illegal were wholly
void; that applying these principles:
1st.
To the case of the $135,000, evidenced by the one
note; that the loan being illegal and not anything which the
law would regard as a loan, the note given as evidence of it was
void, and the attempted transfer of jail bonds as security no valid
transfer; that therefore there was in law no security held by the
Boatman's Institution for the note of $135,000; that accordingly
any payments made to the Boatman's Institution stood upon the same
ground as any other payments made by an insolvent debtor to an
unsecured creditor.
2d.
To the case of the $30,000, evidenced by the six
notes; that the money had undoubtedly been lent to Darby, and
was known by the Boatman's Institution (Hogeman's, its cashier's,
knowledge being
its knowledge) to have been so; that the
loan being at above 8 percent it was void, and the payments,
transfers, or gifts of money without consideration.
III. That independently of these general principles, the matter
of the $135,000 was specially open to censure; that
Page 85 U. S. 381
the manner in which the subject of the jail bonds, given for the
purpose of securing the $135,000, had been arranged by Darby and
the company (Darby taking the bonds from the National Bank of
Missouri, where he had them on just the same sort of loan as he was
about to put them with the Boatman's Institution, except apparently
that the bank would not let him appear as owner of them and sell
them, and being allowed to put them in the Boatman's Institution on
pledge, and yet to manage as his own and sell them as if he were
absolute owner), gave to him a fictitious credit and enabled him to
defraud his creditors. The special form of the transaction thus
involved the Boatman's Institution in complicity with his
fraudulent intent.
That though equity might not enable Darby, he being a party to
the unlawful dealings, to recover what he had once voluntarily
paid, it would enable his assignee under the Bankrupt Act, who was
acting for creditors, and was therefore not to be affected by
Darby's complicity in the unlawful arrangements, when its effect
was to injure
them.
The bill was resisted on various grounds, including the one that
the general statute of Missouri about usury did apply to
corporations, a position for which The Bank of Louisville v. Young
[
Footnote 4] was cited, as also
a provision in the General Statutes "on the construction of
statutes," in which it was thought to be declared that under the
term "person" corporations were included; [
Footnote 5] and that for the rest, equity would not
enable the assignee of a bankrupt to pay even the bankrupt's just
debts out of other men's money, because the bankrupt had borrowed
money at illegal rates and repaid it, and that the most it would do
would be to put him where he would have been had he paid no more
than lawful interest -- that is to say, would enable him to recover
the surplus.
The court below thought that the first transaction -- that of
the $135,000 -- it being a transaction directly with Darby --
was
Page 85 U. S. 382
unlawful so far as concerned any interest above 8 percent, the
lawful rate, but that it was lawful for the residue. While, as to
the other transaction or series of transactions -- the transaction
or transactions about the six notes of $5,000 each, $30,000 in all
-- assuming, as the court did, that none of these loans were to
Darby directly, but were purchases by the Boatman's Institution in
the market of negotiable paper, made by Darby to third parties, by
them endorsed, and which the institution might naturally believe
that
such third parties had thrown on the market for their own
purposes -- it held that there was
nothing unlawful
-- not even the excess of interest -- in
them.
From a decree to this effect and from a ruling which had
excluded certain evidence tending to prove Darby's insolvency at
the time of the transactions, the assignee took this appeal.
MR. JUSTICE DAVIS delivered the opinion of the Court.
The general statute of Missouri concerning usury allows an
individual to receive ten percent per annum interest for the loan
of money, but if more be taken and suit is brought to enforce the
contract, and the plea of usury be interposed, the whole interest
is forfeited to the proper county for the use of schools. The
debtor is not released from his obligation to pay, but the interest
is diverted from the parties and appropriated for school purposes.
If, however, the borrower suffers judgment to go against him,
without pleading usury, or if, without suit, he pays the usurious
interest, he cannot, either at law or in equity, maintain an action
for its repayment. This was settled in
Ransom v. Hays,
[
Footnote 6] and affirmed in
Rutherford v. Williams, [
Footnote 7] and these decisions would be conclusive of
this controversy, unless it is affected by the Bankrupt law, if the
legislature intended the general provisions
Page 85 U. S. 383
of this act to apply to loans by artificial as well as natural
persons, although the former might be restricted to a less rate of
interest than the latter. It is contended by the defendant that
this act was meant to apply to corporations, and that if a bank,
discounting a note in the course of business, commits usury, it is
subject to precisely the same consequences with an individual. On
the other hand, the complainant insists that the legislature did
not intend in this matter to place corporations on the same footing
with natural persons, and cites in support of this position
Bank of Louisville v. Young. [
Footnote 8] But the facts of that case did not involve the
construction of a contract made by a corporation created by an act
of the Legislature of Missouri. The point decided there was that a
note given to secure a loan made in foreign bank notes by a foreign
corporation doing business by an agent in St. Louis, contrary to
the provisions of an act to prevent illegal banking, was void.
We have been referred to no case in the courts of Missouri, nor
are we aware of any, in which the question has been directly
presented whether the general law relating to usury applies to and
has the same effect upon a contract made in violation of its
charter by a bank as upon a contract made by an individual. The
question is one of great importance to the business interests of
that state, and may be far-reaching in its consequences, and as it
is not necessary to decide it in order to dispose of this case, in
accordance with the principle on which the circuit court placed its
decree, we prefer to leave its decision to the state tribunals.
Assuming, then, that this defendant is not within the purview of
the general usury statute of the state, what are the consequences
that must attach to it for taking excessive interest from Darby?
The bill proceeds on the idea that the provision of the charter
being violated all the loans to Darby were
ultra vires and
void, and as they were made to him within four and six months of
his adjudication as a bankrupt, with the knowledge of the defendant
during the whole
Page 85 U. S. 384
course of its dealing with him that he was insolvent, the
complainant has, in his character of trustee, the right to recover
for the use of his trust all the sums of money paid to the
defendant by Darby, because paid in fraud of the Bankrupt Act.
The defendant is by its charter authorized to lend money on
interest, but is forbidden to exact more than 8 percent for the
loan. No penalty is prescribed for transgressing the law, nor does
the charter declare what effect shall be given to the usurious
contract. This effect must therefore be determined by the general
rules of law. The modern decisions in this country are not uniform
on the question whether, if the bank takes more than the rate
prescribed, the contract shall be avoided or not on these general
rules; nor is this a matter of surprise if we consider the growing
inclination to construe statutes against usury so as not to destroy
the contract. It is, however, unnecessary to review these cases, or
the earlier ones in England and this country which uniformly hold
that the contract is avoided, because this Court has in the case of
Bank of the United States v. Owens, [
Footnote 9] decided the question. The bank in that
case brought suit upon a promissory note that was discounted at a
higher rate of interest than 6 percent, which was the limit allowed
by its charter upon its loans or discounts. The charter, like that
of the Boatman's Institution, did not declare void any contract
transcending the permitted limits nor affix any penalty for the
violation of the law. It was contended in that case, as it has been
in this, that a mere prohibition to take more than a given percent
does not avoid a contract reserving a greater rate, and that when a
contract is avoided, it is always in consequence of an express
provision of law to that effect. But the court held otherwise, and
decided that such contracts are void in law upon general
principles; "that there can be no civil right where there is no
legal remedy, and there can be no legal remedy for that which is
illegal." Chief Justice Taney, in the Maryland circuit, as
Page 85 U. S. 385
late as 1854, in a similar case held similar views, and
supported them by the decision in this case. [
Footnote 10] It must therefore be accepted as
the doctrine of this Court that a contract to do an act forbidden
by law is void, and cannot be enforced in a court of justice.
But it does not follow in cases of usury, if the contract be
executed, that a court of chancery, on application of the debtor,
will assist him to recover back both principal and interest. To do
this would be to aid one party to an illegal transaction and to
deny redress to the other. Courts of equity have a discretion on
this subject, and have prescribed the terms on which their powers
can be brought into activity. They will give no relief to the
borrower if the contract be executory, except on the condition that
he pay to the lender the money lent with legal interest. Nor, if
the contract be executed, will they enable him to recover any more
than the excess he has paid over the legal interest. [
Footnote 11] In recognition of this
doctrine, the court below rendered a decree for the excess of
interest over 8 percent per annum exacted of Darby on the note for
$135,000 and dismissed the bill as to all other claims.
The six accommodation notes, which the defendant alleges were
purchased from note brokers, were really taken on loans to Darby,
and the illegal interest received above 8 percent on them should,
on the principle of that decree, be refunded, as much as that upon
the larger note. It is true that usury is only predicable of an
actual loan of money, and equally true that a negotiable promissory
note, if a real transaction between the parties to it, can be sold
in the market like any other commodity. The real test of the
salability of such paper is whether the payee could sue the maker
upon it when due. He could do this if it was a valid contract when
made, otherwise not. Mere accommodation paper can have no effective
or legal existence until it is transferred to a
bona fide
holder. It follows, then, that the
Page 85 U. S. 386
discounting by a bank at a higher rate of interest than the law
allows of paper of this character, made and given to the holder for
the purpose of raising money upon it, in its origin only a nominal
contract, on which no action could be maintained by any of the
parties to it if it had not been discounted, is usurious, and not
defensible as a purchase. The point was decided in New York at an
early day, [
Footnote 12] and
this decision recognized and approved by this Court in
Nichols
v. Fearson, [
Footnote
13] and the general current of decision is in the same
direction. [
Footnote 14]
There are cases which hold that the purchaser of such paper is
protected, if he took it in good faith of the holder, without
knowledge of its origin, and in the belief that it was created in
the regular course of business. [
Footnote 15] Whether this limitation of the rule be
correct or not it is not important to inquire, as the decision of
the question under consideration does not rest upon it.
The six notes which are the basis of the transaction complained
of were executed by Darby solely for the purpose of raising money
upon them, endorsed by Brotherton & Knox for his accommodation,
and delivered by him to Stagg and other street brokers to be
negotiated. This negotiation was effected with the Boatman's
Institution, and it is perfectly manifest that the cashier, in
purchasing the paper, did not suppose he was advancing the money
for the benefit of the brokers who held them or of Brotherton &
Knox, who endorsed them. They were doubtless purchased because the
security was deemed sufficient, but it is impossible to conceive
that the cashier did not know the paper to be of that class called
accommodation, as it is conceded that Brotherton & Knox were
gentlemen of large pecuniary ability, and had no occasion to go
upon the street to get paper held
Page 85 U. S. 387
by them
bona fide, against Darby or anyone else,
discounted. Indeed, Stagg says the notes were negotiated for
Darby's benefit, and explains in some instances how it was done.
Darby would apply to him for money on his paper, and he would go to
the Boatman's Institution to see if the cashier would taken, it,
and if the reply was in the affirmative, the paper would be made,
taken to the bank, and the money obtained on it. Can any rational
person suppose, in the absence of any direct evidence, that the
cashier in dealing with Stagg thought he was dealing with the owner
of the notes? The presumption is that street brokers act for
others, not themselves, and that the cashier was well acquainted
with this course of business. If so, he knew or ought to have known
that Darby wanted the money, and that the paper was made to enable
him to get it, and for no other purpose. This being the case, the
transaction can be viewed in no other light than as a loan of money
directly to Darby, and as he paid more than 8 percent for its use,
the circuit court erred in not ordering the excess to be
refunded.
The remaining question to be considered is whether in this case
the rights of the trustee are greater than those of Darby. It is
certainly true in very many cases he can do what the bankrupt could
not, because he represents the creditors of the insolvent. If, for
instance, the bankrupt should create a trust which was designed to
conceal his property from creditors, although equity would not lend
its aid to him to enforce the trust, it would to his assignee for
the benefit of creditors. [
Footnote 16] And many other examples might be cited in
illustration of the rule, but it would be a waste of labor to do
so. The point is whether, under the facts of this case, the bill
will lie to recover back both principal and interest paid on the
loans by Darby, when, as we have seen, if he had not been declared
a bankrupt and had filed it in his own behalf, he could have only
recovered the excess of interest paid beyond the charter rate.
It is very clear if the loans in controversy had been made
Page 85 U. S. 388
at legal rates and were not fraudulent in fact, they could not
be impeached. There is nothing in the Bankrupt law which interdicts
the lending of money to a man in Darby's condition if the purpose
be honest and the object not fraudulent. And it makes no difference
that the lender had good reason to believe the borrower to be
insolvent if the loan was made in good faith, without any intention
to defeat the provisions of the Bankrupt Act. It is not difficult
to see that in a season of pressure, the power to raise ready money
may be of immense value to a man in embarrassed circumstances. With
it he might be saved from bankruptcy, and without it financial ruin
would be inevitable. If the struggle to continue his business be an
honest one and not for the fraudulent purpose of diminishing his
assets, it is not only not forbidden, but is commendable, for
everyone is interested that his business should be preserved. In
the nature of thing, he cannot borrow money without giving security
for its repayment, and this security is usually in the shape of
collaterals. Neither the terms nor policy of the Bankrupt Act are
violated if these collaterals be taken at the time the debt is
incurred. His estate is not impaired or diminished in consequence,
as he gets a present equivalent for the securities he pledges for
the repayment of the money borrowed. Nor in doing this does he
prefer one creditor over another, which it is one of the great
objects of the Bankrupt law to prevent. The preference at which
this law is directed can only arise in case of an antecedent debt.
To secure such a debt would be a fraud on the act, as it would work
an unequal distribution of the bankrupt's property, and therefore
the debtor and creditor are alike prohibited from giving or
receiving any security whatever for a debt already incurred if the
creditor had good reason to believe the debtor to be insolvent. But
the giving securities when the debt is created is not within the
law, and if the transaction be free from fraud in fact, the party
who loans the money can retain them until the debt is paid. In the
administration of the bankrupt law in England, this subject has
frequently come before the courts, who have uniformly held that
advances
Page 85 U. S. 389
may be made in good faith to a debtor to carry on his business
no matter what his condition may be, and that the party making
these advances can lawfully take securities at the time for their
repayment. And the decisions in this country are to the same
effect. [
Footnote 17]
Testing this case by this rule, there is no difficulty about it on
the theory that the loans were not made in excess of lawful
interest.
There is nothing to invalidate the jail bond transaction. If it
was unwise in Darby to purchase these bonds, the defendant did not
advise it, and is not, therefore, chargeable with the fictitious
credit which, it is alleged, he obtained by reason of the purchase.
So far as the evidence shows, the purchase was accomplished before
the defendant knew of it. It is a fair inference of fact that the
National Bank of Missouri was tired of carrying the loan which
Darby made of it in order to buy the bonds, and that the effect of
the loan from this defendant was to prevent their sacrifice. At any
rate, the creditors of Darby were not harmed by the transaction,
for the bonds when sold realized more than they cost; nor was any
wrong intended by Darby. The money was not borrowed to conceal it
from creditors, but to take valuable securities out of pledge. This
Darby had the right to do, and the defendant in helping him to do
it was guilty of no fraud on creditors, nor was any contemplated.
On the contrary, so far as we can see, the creditors were benefited
by the substitution of the Boatman's Institution for the National
Bank of Missouri. At all events, Darby's estate was is no wise
impaired by the transaction. The securities were valid in the hands
of the defendant, and Darby could lawfully apply the proceeds
arising from their sale to repay the advances made by it.
If the six accommodation notes had been discounted at
Page 85 U. S. 390
legal rates, the loan would have been equally unimpeachable.
Conceding that the bank had good reason to believe Darby to be
insolvent, the proceeding, as we have seen, was not necessarily
fraudulent as a matter of law, and there is nothing in the evidence
to show that it was fraudulent in fact. The loans were not made to
defeat creditors or delay them, or to conceal property from them,
nor was such their effect. The paper on which they were based was
taken as other paper with good endorsers is taken in the regular
course of business. There is no evidence that the money was used
improperly or that the bank supposed it would be. Darby doubtless
raised the money hoping to be able to go on with his business --
not to defeat his creditors, but to pay them.
If it were clear at the time to his mind that he could overcome
his difficulties (as we think it was), notwithstanding the real
state of his affairs did not justify the belief, his conduct was
not in fact fraudulent, nor is it condemned by any provision of the
Bankrupt law.
Does the fact, then, that the interest reserved on the notes in
controversy exceeded the charter rate change these transactions,
which were lawful if not tainted with usury, so that the trustee
can recover back the whole sum when, as we have seen, Darby, if
suing personally, could only recover the excess? We think not. The
trustee in this matter has no larger interest than the bankrupt.
The estate of Darby is diminished, by reason of his dealings with
this defendant, to no greater extent than the usurious interest
which he has paid. This the trustee should obtain as proper assets
to be administered, but to allow him to get what he asks would be
to transfer to the creditors of Darby a sum of money exceeding
$150,000, which he never owned, by way of punishment of the bank
for taking excessive interest. A court of equity does not deal with
contracts affected with usury in this way. The relief it gives is
always based on the idea that the money borrowed with legal
interest shall be paid. [
Footnote 18]
We have not considered the point raised about the exclusion
Page 85 U. S. 391
of evidence, because, at the most, the evidence, if admitted,
would only have been cumulative on the subject of Darby's
insolvency and the defendant's knowledge, and we have treated the
case on the theory that the officers of the institution knew, when
they made the loans and received payment of them, that Darby was
insolvent.
The case will have to go back for the purpose of enabling the
circuit court to ascertain in some proper way the excess of
interest over the charter rate paid on the six accommodation notes
and to enlarge the decree so as to cover that sum. In all other
respects, the disposition of this case by the circuit court was
correct.
Decree reversed and the cause remanded with directions to
proceed in conformity with this opinion.
[
Footnote 1]
General Statutes of Missouri, 1865, p. 401, chap. 89, §
4.
[
Footnote 2]
This sale is described in
<|15 Wall. 411|>Tiffany v.
Lucas, 15 Wall. 411.
[
Footnote 3]
14 Stat. at Large 534. The word "payment," in the last
paragraph, is left out in the statute as printed.
[
Footnote 4]
37 Mo. 406.
[
Footnote 5]
General Statutes of 1865, p. 83, chapter 9, § 4.
[
Footnote 6]
39 Mo. 448.
[
Footnote 7]
42
id. 35.
[
Footnote 8]
37 Mo. 406.
[
Footnote 9]
<|2 Pet. 527|>2 Pet. 527.
[
Footnote 10]
Dill v. Ellicott, Taney's C.C. 233.
[
Footnote 11]
Story's Equity Jurisprudence, 1 vol., 10th edition by Redfield,
§§ 300, 301, 302.
[
Footnote 12]
Munn v. Commission Co., 15 Johnson 55.
[
Footnote 13]
<|7 Pet. 103|>7 Pet. 103.
[
Footnote 14]
Munn v. Commission Co., 15 Johnson 55;
Powell v.
Waters, 17
id. 176;
Wheaton v. Hillard, 20
id. 289;
Powell v. Waters, 8 Cowen 669;
Corcoran & Riggs v. Powers, 6 Ohio St. 37; 3 Parsons
on Contracts, 6th ed., p. 144, and cases cited in note S.
[
Footnote 15]
3 Parsons on Contracts 145, and cases cited in the note on that
page.
[
Footnote 16]
Carr v. Hilton, 1 Curtis 235.
[
Footnote 17]
Hilliard on Bankruptcy, ch. 10, p. 333, § 10;
Hutton v.
Cruttwell, 1 Ellis & Blackburn 15;
Bittlestone v.
Cooke, 6
id. 296;
Harris v. Rickett, 4
Hurlstone & Norman 1;
Bell v. Simpson, 2
id.
410;
Lee v. Hart, 34 English Law and Equity 569;
Hunt
v. Mortimer, 10 Barnewall & Cresswell 44;
Ex Parte
Shouse, Crabbe 482;
Wadsworth v. Tyler, 2 B.R.
101.
[
Footnote 18]
1 Story's Equity § 301-302.
