Lamb v. Lindsey

The opinion of the Court was delivered by

Huston, J.

— This is a qui tam action by the plaintiff Lamb against the defendants, brought on the Act of 2d March 1723, which is as follows: “ If any person or persons whatsoever do or shall receive or take more than £6 per cent, per annum on any such bond or contract, upon conviction thereof, the person so offending shall forfeit the money and other things lent, one-half thereof to the governor for the support of government, and the other half to the person who shall sue for the same, by action of debt, bill, plaint, or information, in any court of record within this province wherein no essoign, protection, or wager of law, or any more than one imparlance shall be allowed.” This Act, changing the rate of interest to 6 per cent., and the clause making the bond or contract void, and making the penalty on conviction the money or other thing lent, instead of three times the value thereof, is the same as the stat. 12 Anne, c. 16.

By section 6th of Act 26th of March 1785, it is provided, that all actions, suits, bills, or informations, which shall be brought for any forfeiture upon any penal Act of Assembly, made or to be made, the benefit and suit whereof is or shall be by the said Act limited to the Commonwealth, or to any person or persons who shall prosecute in that behalf, shall be brought by any persons that may lawfully sue for the same, within one year after the offence was committed.

As the cause goes back for trial on the merits, I shall state only such facts as will show the point decided. William and Joseph Lindsey and Joseph Sharp, after consulting how the law against usury could be evaded, and being told by the conveyancer that he knew of no way, agreed to lend to Joshua Garsed and Joshua Garsed, Jun., $9000, at the interest of 15 per cent, for 4 years, interest payable half yearly, to be secured in this way: The Garseds were to convey to the Lindseys and Sharp a plantation and factory for $9000, the interest of that sum at 15 per cent, was to be the rent, and the Garseds were to accept a lease from the Lindseys and Sharp for the amount of the interest, $1350 per year, payable half yearly. The rent was paid every half year. After the last half year’s interest at that rate had been paid, and the whole principal paid, this suit was brought for the penalty in the Act of Assembly, charging the penalty to have accrued on Lindsey and Sharp, (for William Lindsey had died), receiving at the rate of 15 per cent, interest on the $9000 for the last 6 months. No suit had been brought for the violation of the law in receiving interest at that rate, at any previous half yearly payment.

The judge was of opinion, “ that the offence can only be committed once, so as to work, a forfeiture; and that in the present case the offence was complete when the first usurious interest was taken, As the first taking of the interest was an infraction of the Act, it appears to me the offence was complete in 1835, and that then alone the defendants were liable to the qui tam action. It can only be claimed once, and if it be not within the time prescribed, it cannot be claimed at all. It is therefore clear that this action, not having been brought in time, is void.” This suit was brought within a year of the last payment of the usurious interest due the last half year.

The above decision was made on the authority of Loyd v. Williams, (3 Wils. 250). I have carefully examined that case; it was this: Hinchcliffe wished to borrow £100 for 3 months, and Williams agreed to lend him the money for £6 5s. interest for the 3 months; and when he advanced the £100, on the 31st of March 1769, he took out of it £6 5s. as the interest. At the time of receiving the money, Hinchcliffe lodged with Williams certain wares as a collateral security. These Williams sold at the end of the 3 months, and they produced £24 4s., and he at the end of 3 months took a new note for £78 19s. 8d., which, with the produce of the goods sold, amounted to £101 3s. 8d. This, as it was paid on the 10th of August 1769, was more than legal interest again. The suit for the penalty was brought in July 1770. The declaration is not given, but the whole case shows the suit was to recover the penalty for taking the £6 5s. as interest in March. 1769. The case was stated for the opinion of the court whether suit for this was brought within time. It is more than once said this was like a special verdict, and the court were confined to the point made. The court decided that as it was more than a year from the receipt of this sum, the suit was too late. The sale of the goods, and the amount produced, and the second note are stated, and the time when it was paid; but this was a new and distinct contract, and neither the counsel, though it was twice argued, nor the court, ever mention it. The whole case turned on the first loan arid the £6 5s. for 3 months, from which I conclude that alone was stated in the narr.

By the British statute, if the lender by the contract is to receive more than legal interest, the bond is void, though he only take legal interest; but the penalty is not incurred until he actually has received more than legal interest. This is the case in Doug. 235. A agreed to lend £100 at 5 per cent, but was to have and receive two guineas premium, and they were paid at the time of the loan. The interest was to be paid half yearly. At the end of the half year, the borrower paid £2 10s. The penalty was sued for within a year from that payment, but more than a year from the payment of the two guineas. Lord Mansfield nonsuited the plaintiff, but the nonsuit was taken off. The two guineas, £2 2s., did not amount to the legal interest for half a year. There was tíren no forfeiture until the £2 10s. was paid, which, with the former sum, was usury; and he says in the case before C. J. De Grey, the first sum of £6 5s. was more than legal interest.

The case in 2 Bos. & Pul. 381, is more to the purpose. A agreed to lend B £500, but B was to make some present, and when he got the money, paid back £50. B continued to pay interest at 5 per eent. on £500, till 1797, when the securities were changed, and continued paying at the same rate until 1799. Within a year after the last payment, suit was brought for the penalty. The court held that as the borrower received in fact but £450, every payment and receipt of the interest on the £500 was usurious. Best, Sergeant, contended that the usury was complete when the £50 was paid back, and the time for recovering the penalty had passed, and cited the case in Wilson; but the whole court gave judgment for the plaintiff. So that on looking at the whole case, the very point taken by the defendant here was urged in that case, and the cause could not have been decided as it was if the court had not been of opinion that the penalty was incurred at each time when the lender received more than legal interest.

Our Act of Assembly does not make the bond or security void, and the usurer can recover the sum lent and legal interest. If, then, we were to decide that the first payment of interest was the only one on which suit could be brought, it would go far to defeat the plain meaning of the Act, and secure the usurer for any risk in any length of usurious extortion. We are of opinion that the nonsuit must be taken off, and that proof of taking more than legal interest, though it should be the eighth or twentieth time, will support a suit for the penalty if brought within a year after such taking.