USURY. The excess over the legal rate charged to a borrower for the use of money. Originally, the word was applied to all inte rest reserved for the use of money; and in the early ages taking such interest was not allowed.
2. There must be a loan in contemplation of the parties, 7 Pet. 109 ; 1 Iowa, 252 ; 22 Barb. N. Y. 118 ; 14 N. Y. 93 ; 6 Ind. 232 , and if there bs a loan, however disguised. the contract will he usurious, if it be so in other respects. Where a loan was made of depreciated bank-notes, to be repaid in sound funds, to enable the borrower to pay a debt he owed, dollar for dollar, it was considered as not being usurious. 1 Meigs, Tenn. 585. The bona fide sale of a note, bond, or other security at a, greater discount than would amount to legal interest is not, pe2. se, a loan, although the note may be indorsed by the seller and he remains responsible. 9 Pet. 103 ; 1 Iowa, 30 ; 6 Ohio St. 19 ; 29 Miss. 212 ; 10 Md. 57. But if a note, bond, or other se curity be made with a view to evade the laws of usury, and afterwards sold for a less amount than the interest, the transaction will be considered a loan, 2 Johns. Cas. N. Y. 60 ; 3 id. 66 ; 15 Johns. N. Y. 44 ; 2 Dall. Penn. 92 ; 12 Serg. & R. Penn. 46 ; 6 Ohio St. 19 ; 4 Jones, No. C. 399 ; and a sale of a man's own note indorsed by himself will be • considered a loan. It is a general rule that a contract which in its inception' is un affcoted by usury can never be invalidated by any subsequent usurious transaction. 7 Pet. 109 ; 10 Md. 07.. On the contrary, when the contract was originally usurious, and there ia a s.ubatitution bym.new contract, the latter will, generally be coneidered usuri.7 ous. 15 Mass. 96. • 3. Tbere must be a contract for the return of the money at all events; for if the return of the principal with interest, or the principal only, depend upon a contingency;•there can be no usury ; but if the contingency extend only to interest, and the principal be beyond the reach of hazard, the lender will be_gnilty of usury if he receive interest beyond, the amount allowed by law. As the principal is put to hazard in insurances, annuitiee, and bottomry, the parties may charge and, receive greater interest than is allowed ;by 1aW in common .cases,_ and the transaction will .not be usurious. Ord, Usury, 23, 39, 64 ; 2 Pet: 537.
To constitute usury, the borrower enust not only be obliged to return the principal at al) events, but more than lawful interest ; th'is pait of the agreement must, be made with consent and knowledge of the contract ing parties. 3 Bog. & P. 154. When thg
Contractis,rnade a foreign country, the rate Of interesi allowed by the laws of that country may be Charged, and it will not be usurious„ although greater than the amount' fixed by law' in this. Story, Conti. of Lawa, 292. " 4. The ordinary cenunissions allowed by the usages of trade maY'be charged withont tainting a contract With usury ; but it Must plainly.' appear that the commissions are charged;for other serVices, and. 'are not merely a device to 'evade the law. 2 Pat. 86 II. Va.. 110. Commission may be charged by a mer chant for acceptingta bill, '18 Ark. 456 ; but a commission charged in addibion to interest for advancing monay is usurious:" '12 La. Ann. 660. Where' a banker discounts a bill :payable in a distant place, he imay charge the •nsual rate of• exchange on that plaee ; but if :such charge he an excese Of the usual rate it will be considered a deVice•to cover usuri ous interest. 3 Ind, 53. Where the pay ment of usurious interest depends linen the will of the borroWer, is, where he may dis charge himself 'from it b3t. prompt payment of the principal, it is considered in the light of. a penalty, but does not make the contract usurious. 6 Cow. N. Y.'653 ; 9 Paige, .Ch. N. Y. 339. Where a gratuity is given, to influence the tnaking of it loan,it will be con sidered usurious. 7 Ohio St. 387.. Where a bank which by its charter is prohibited.from making loans at over six per cent. makes one at seven, such a contract being. prohibited, the courts will not assist the bank in enforcing it. 26 Barb. N. Y. 595. The burden. of proof is on the person pleading usury.' 22 Ga. 193. Usury is a personal defence, anti cannot be set up by any other person than she borrower or. his heirs: 8 Ind. 352. A mere mistake in the calculation of interest will not be considered usury. Hill & D. N. y. 3.4.: Where parties exchar.ge their notes for niutual accommodation, and both or either are•sold at a higher than the legal rate, they are usurious. Hill & D. N. Y. 65.
common practice of reserving the inte rest on uegotiablepaper at the time of making the loan, Although its effect is to cause the borrower, to pay more than the legal rate, is very eneient, haVing been practised by the Athenian bankers, and is sanctioned by law. Sewell, Banking.
See, generally, Comyns, Dig. ; Bacon; Abr.; Lilly, Reg.; Pane, Abr.; Petersdorff, Abr.; Titter, Abr.; Comyns, Usury, poaaim; .1 Pet. Index ; Sewell,. Banking ; Blydenburg, Usury ; parsons, Notes Bins; INTEEEST.