USURY. The excess over the legal rate charged to a borrower for the use of money.
Taking an illegal profit for the use of mon ey. MacRackan v. Bank, 164 N. C. 24, 80 S. E. 184, 49 L. R. A. (N. S.) 1043.
Originally, the word was applied to all interest reserved for the use of money ; and in the early ages taking such interest was not allowed. In the later Roman law, usury was sanctioned; and it is said that taking usury was not an offence at common law ; Tyler, Usury 64 ; but see Ord. Usury 17.
Unless there is a law limiting the rate of interest that can be charged for money; there can be no usury ; Newton v. Wilson, 31 Ark. 484; Reynolds v. Neal, 91 Ga. 609, 18 S. E. 530 ; Lamprey v. Mason, 148 Mass. 231, 19 N. E. 350. The enactment of a usury law cannot affect prior contracts ; Swint v. Carr, 76 Ga. 322, 2 Am. St. Rep. 44; Richardson v. Camp bell, 34 Neb. 181, 51 N. W. 753, 33 Am. St. Rep. 633. If a contract is usurious, no cus tom can legalize it ; Harmon v. Lehman, Durr & Co., 85 Ala. 379, 5 South. 197, 2 L. R. A. 589. A note void for usury in its incep tion cannot be enforced by an innocent purchaser for value ; Littauer v. Rodecker, 59 Fed. 857, 8 C. C. A. 320, 19 U. S. App. 455.
"The shifts and devices of usurers to evade the statutes against usury have tak en every shape and form that the wit of man could devise, but none have been al lowed to prevail. Courts have been astute in getting at the true intent of the parties and giving effect to the statute." Quacken bos v. Sayer, 62 N. Y. 346.
There must be a loan in contemplation of the parties; Nichols v. Fearson, 7 Pet. (U. S.) 109, 8 L. Ed. 623; Schermerhorn v. Tal man, 14 N. Y. 93; and if there be a loan, however disguised, the contract will be usu rious, 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 usu rious ; Burton v. School Com'rs, 1 Meigs (Tenn.) 585. The bona fide sale of a note, bond, or other security at a greater di• count than would amount to legal interest is not per se a loan, although the note may be indorsed by the seller and he remains re sponsible ; Corcoran v. Powers, 6 Ohio St.
19 ; Newman v. Williams, 29 Miss. 212. But if a note, bond, or other security 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 consider ed a loan ; Munn v. Commission Co., 15 Johns. (N. Y.) 44, 8 Am. Dec. 219; Turner v. Calvert, 12 S. & R. (Pa.) 46; Corcoran v. Powers, 6 Ohio St. 19 ; and a sale of a man's own note indorsed by himself will be considered a loan. Usury cannot arise from the purchase from brokers of a note at a discount ; Chase Nat. Bank v. Faurot, 72 Hun 373, 25 N. Y. Supp. 447. Nor is there usury in a transaction for the sale and repurchase of securities, where there is no loan ; Struth ers v. Drexel, 122 U. S. 487, 7 Sup. Ct. 1293, 30 L. Ed. 1216. It is a general rule that a contract which in its inception is unaffect ed by usury can never be invalidated by any subsequent usurious transaction ; Nichols v. Fearson, 7 Pet. (U. S.) 109, 8 L. Ed. 623 ; Wil liams v. Reynolds, 10 Md. 57. On the other hand, when the contract was originally usu rious, and there is a substitution by a new contract, the latter will generally be con sidered usurious ; Bridge v. Hubbard, 15 Mass. 90, 8 Am. Dec. 86 ; but a note or other contract for the payment of money is not usurious and void for providing for the pay ment of more than the statutory interest after maturity; Green v. Brown, 22 Misc. 279, 49 N. Y. Supp. 163.
There must be a contract for the return of the money at all events ; for if the return of the principal with interest, or the princi pal only, depend upon a contingency, there can be no usury ; Spain v. Brent, 1 Wall. (U. S.) 604, 17 L. Ed. 619 ; but if the con tingency extend only to interest, and the principal be beyond the reach of hazard, the lender will be guilty of usury if he receive interest beyond the amount allowed by law. Where the principal is put to hazard in in surances, annuities, and bottomry, the par ties may charge and receive greater interest than is allowed by law in common cases, and the transaction will not be usurious; U. S. Bank v. Owens, 2 Pet. (U. S.) 537, 7 L. Ed. 508. See. Tiffany v. Boatman's In stitution, 18 Wall. (U. S.) 375, 21 L. Ed. 808.