2.
To constitute a usurious contract the following are the requisites: 1. A
loan express or implied. 2. An agreement that the money lent shall be
returned at all events. 3. Not only that the money lent shall be
returned, but that for such loan a greater interest than that fixed by
law shall be paid.
3.
- 1. There must be a loan in contemplation of the parties; 7 Pet. S. C.
Rep. 109, 1 Clarke R. 252; and if there be a loan, however disguised,
the contract will be 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 usur-ious. 1 Meigs, R. 585. The bona fide sale
of a note, bond or other security at a greater discount than would
amount to legal interest, is not per se, a loan, although the note may
be endorsed by the seller, and he remains responsible. 9 Pet. S. C. Rep.
103; 1 Clarke, R. 30. 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 considered a loan; 2
Johns. Cas. 60; 3 Johns. Cas. 66; 15 Johns. R. 44 2 Dall. 92; 12 Serg.
& Rawle, 46 and a sale of a man's own note, endorsed by himself,
will, be considered a loan. lt is a general rule that a contract, which,
in its inception, is unaffected by usury, can never be invalidated by
any subsequent usurious transaction. 7 Pet. S. C. Rep. 109. On the
contrary, when the contract was originally usurious, and there is a
substitution by a new contract, the latter will generally be considered
usurious. 15 Mass. R. 96.
4.
- 2. There must be a contract for the return of the money at all
events; for if the return of the principal with interest, or of 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 guilty of usury, if he received
interest beyond the amount allowed by law. As the principal is put to
hazard in insurances, annuities and bottomry, the parties may charge and
receive greater interest than is allowed by law in common cases, and
the transaction will not be usurious.
5.
- 3. To constitute usury the borrower must not only be obliged to
return the principal at all events, but more than lawful interest: this
part of the agreement must be made with full consent and knowledge of
the contracting parties. 3 Bos. & Pull, 154. When the contract is
made in a foreign country the rate of interest 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, Confl. of Laws,
§292. Vide, generally, Com. Dig. h. t.; Bac. Ab. h. t.; 8 Com. Dig. h.
t.; Lilly's Reg. h. t.; Dane's Ab. h. t.; Petersdorff's Ab. h. t.; Vin.
Ab. h. t.; 2 Bl. Com. 454; Comyn on Usury, passim; 1 Pt. S. C Rep.
Index, h. t.; 1 Supp. to Yes. jr. 307, 337; Yelv. 47; 1 Ves. jr. 527; 1
Saund 295, note 1; Poth. h. t.; and the article Anatocism; Interest.
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