FITCH v. HAMLIN.
[NO NUMBER IN ORIGINAL]
SUPREME COURT OF ERRORS OF CONNECTICUT
1 Root 110; 1789 Conn. LEXIS 1
October, 1789, Decided
PRIOR HISTORY: ERROR to reverse a judgment of the Superior Court rendered at Windham, March term, A. D. 1787; reported in Kirby, page 260; which judgment was reversed for the following reasons, viz.
Hamlin sued Fitch upon a note given by Fitch and Campbell on the 1st of March 1784, for $ 16,839 16-90 in final settlement notes, received to be repaid in notes of same tenor, dates and value, in six months and lawful interest.
In bar of which action, the defendant plead the statute against taking unlawful interest, and that more than lawful interest was included in and secured by said note by the corrupt agreement of the parties, etc. upon which the parties were at issue to the jury -- who found the following verdict, viz.
Hamlin v. Fitch. In this case the jury find, that on the day of the date of the note on which, etc. it was corruptly agreed, by and between the plaintiff and said Campbell and the defendant; that said Campbell and the defendant, should execute the note on which, etc. to the plaintiff; and it was also agreed, that said Campbell should give to the plaintiff his note for $ 1,000 lawful money, for the loan, interest and forbearance of the sum loaned and secured in the note on which, etc. for the term of six months, over and above the lawful interest; and that the defendant and said Campbell did in pursuance of said corrupt agreement, and as part and parcel of the same, contract, make and execute to the plaintiff the note on which, etc. and the said Campbell did make and execute his note to the plaintiff for the sum of £ 300 payable in six months; and that there is included in and secured by said two notes, the sum of $ 1,000 in silver, for the loan, interest and forbearance of $ 16,839 16-90 dollars in said certificates, over and above the lawful interest, at the rate of 6 per cent. per annum, by the corrupt agreement of said parties, and for no other cause or consideration; all in manner and form as the defendant in his plea and rejoinder has alleged, and therefore find for the defendant his cost -- which verdict found the defendant's plea in bar in the very terms of it, to be true.
Upon which, Hamlin moved in arrest of judgment, 1st. That the issue is immaterial; 2d. That said note is for final settlement securities, in a depreciating condition, and subject to a total loss in the course of six months, or to more than the value of £ 300 lawful money.
Judgment -- That the motion in arrest is sufficient, and a repleader ordered. Upon a repleader the pleadings were in substance the same as before; to which a demurrer was given by the plaintiff, and the same exceptions taken as in the motion in arrest. Judgment -- That the plea in bar is insufficient. The judgment of the Superior Court was reversed, for the following reasons, viz. The point of a loan, and a corrupt agreement between the parties and William Campbell, was upon the first trial, put directly in issue to the jury, by the most correct and approved forms of pleading; and by them found for the plaintiff in error, in the very terms of the issue joined; the arrest of judgment goes upon the ground, that no corrupt agreement could exist in a case of this nature, when the thing loaned, was in a depreciating condition and of a perishable nature, and where the depreciation was at the risk of the lender.
1st. The jury were the proper judges not only of the fact, but of the law, that was necessarily involved in the issue; not only that there was in fact reserved by the agreement for loan and forbearance, more than at the rate of 6 per cent. per annum; but also of the legal deduction, that it was reserved by corrupt agreement; if the circumstances of the thing loaned were such, that no corrupt agreement could arise out of the transaction, the jury should have found for the defendant in error, whatever sums were secured by the notes; but as they have found a corrupt agreement, it is too late for the court to say there was no such corrupt agreement; the point being determined by the proper judges.
2d. That the thing loaned, was in a depreciating condition and of a perishable nature, does not appear from the pleadings; and the court would not determine the fact by an inquiry in pais, nor by any matters dehors the record, upon the motion in arrest; this fact therefore, which was the sole ground of arresting the judgment, the court assumed without proof.
3d. Had there been evidence of the fact, it would not have justified the court, in arresting the judgment, or for giving judgment for the defendant in error on the demurrer; for there is no article whatever that can be loaned, but what may and frequently does, change its relative value, not excepting gold and silver coins; and if it be lawful for the lender to reserve more than at the rate of 6 per cent. per annum, to secure him from a possible loss, arising from a depreciation in one thing, he may in all; but this would destroy the statute against taking unlawful interest and render it of no effect.
4th. Whether at the time of the contract, in the present case, the article loaned would depreciate or appreciate, was perfectly uncertain, and a contract which in its creation, was usurious, could never be saved by a subsequent contingent loss in the value of the principal loaned.
5th. This contract was not a bargain of hazard as in the case of money lent on bottomry bonds, where the lender, by the act of lending, is exposed to the loss of his whole principal; but in this case the securities loaned were equally liable to loss by depreciation in whosoever hands they were, and the lending did in no measure increase the risk.
In a loan of final settlement notes, an agreement to secure the repayment of said final settlements at a future day, in notes of the same tenor, date and value, with the lawful interest; and to give a note for a further sum in good money for the loan of said final settlements, is a corrupt agreement and will render both notes given in pursuance of such agreement usurious, and void by the statute.
[*112] [EDITOR'S NOTE: No Majority Opinion Appears at this Cite.]