
    The Planters’ Bank of Fairfield vs. The Bivingsville Cotton Manufacturing Company.
    
    
      Bill of Exchange — Usury.
    The Planters’ Bank of Fairfield has authority to discount bills, drawn in this State on New York, at the usual rates of exchange among merchants.
    To charge the drawer of a bill of exchange, drawn in this State on New York, a discount of one per cent, a month, the bill having forty-five days to run, is not usury, unless it be shown that the amount charged exceeds the usual rate of exchange.
    BEFORE O'NEALL, J., AT FAIRFIELD, FALL TERM, 18*57.
    So much of tbe report of bis Honor, tbe presiding Judge, as relates to tbe only important question of law wbicb tbe case involved, and in reference to wbicb alone tbe case is reported, is as follows:
    “In this case tbe action was brought on a bill* exchange, addressed to Messrs. Flint & Bingham for $12,500, in favor of E. 0. Leitner or order, payable ninety days after date, at tbe Corn Exchange Bank, New York, and drawn by E. 0. Leitner, agent of tbe Bivingsville Cotton Manufacturing Company, and indorsed by E. C. Leitner; and, without authority, be added the names of George Leitner, Simpson Bobo, and B. B. Poster, as indorsers. The bill was dated December 24,1854.
    “ E. C. Leitner and George Leitner constituted the Bivings-ville Cotton Manufacturing Company. > The Act incorporating the Company made the members liable to be sued as partners; and in that character the defendants were treated. E. 0. Leitner was out of the State, and was so stated, and the case proceeded against George Leitner alone, as the partner served.
    “ The bill was presented by E. C. Leitner to the Planters’ Bank of Fairfield, to be discounted, 12th February, 1855. Tt was discounted at one per cent, per month, having forty-five days still to run, making an usury of $187 50.
    “The bill was accepted by Flint & Bingham, before it was discounted by the bank; it was not paid by the acceptors at maturity, and was protested for non-payment. Notice was given to the plaintiff, and thereupon notice was given through the mail to the drawers.
    “I thought the transaction was usurious, and the jury took that view, for they found $12,500 for the plaintiff, without interest, damages, or costs. Their verdict should have been the sum actually loaned, $12,312 50,- and the plaintiff ought to release $187 50, the usury paid.”
    The defendant appealed, and moved this Court for a new trial on several grounds, the first being as follows:
    1. Because it was proved that the bill sued upon was discounted by the plaintiff at a usurious rate; and in accordance with the legal principle^ laid down i-n the charge of his Honor, the presiding Judge, the jury ought not to have found a verdict for more than the-sum actually lent to E. C. Leitner, which was $12,312 50.
    
      Gregg, Bobertson, for appellant.
    
      Me Cants, Boylston, contra.
    
      
       This ease was decided at November and December Term, 1857, but the opinion was not filed until some time afterwards. R.
    
   The opinion of tbe Court was delivered by

Glovbe, J.

A preliminary inquiry suggested by tbe argument is, whether tbe plaintiff is authorized, and upon what terms, to discount bills of exchange. The Planters’ Bank of Fairfield, with seven others, was incorporated in 1852, (12 Stat. 212,) with the same rights conferred upon the Planters’ and Mechanics’ Bank, the Union Bank and Commercial Bank. By the 6th section of the Act of 1811, (8 Stat. 22,) amending the charter of the Planters’ and Mechanics’ Bank, it is provided, that “whereas the Union Bank of the city of Charleston have, by their memorial, prayed that they might be permitted, for the purpose of facilitating the exchange between this and our sister States, to discount bills of exchange; and whereas it appears just and reasonable that the prayer of the said memorialists should be granted: Be it therefore enacted by the authority aforesaid, that the directors of the said Union Bank and Planters’ and Mechanics’ Bank of the city of Charleston, may, and they are hereby authorized, whenever they shall see fit so to do, discount inland bills of exchange which may be offered them, at the ordinary rates of exchange among merchants.” The word inland ” applied to bills drawn in one State, and payable in another, is certainly not technically correct. (Duncan vs. Course, 1 Const. R. 100, and Bank of Cape Fear vs. Stinemetz, 1 Hill, 44.) But if any doubt of the intention of the Legislature is created by tbe use of the word in that connection, it is removed by the preamble, which declares it just and reasonable to facilitate “the exchange between this and our sister States.” The authority conferred was certainly not limited to bills drawn and payable in South Carolina, but was intended to embrace domestic exchanges.

The legality of the contract in this case depends more upon the rate of exchange than upon the law of usury. Current rates of exchange are so fluctuating, that if the question had been made on circuit, it could have been ascertained only by evidence of tbe ordinary rate, and should have been submitted to the jury; but no such question was made,'nor was evidence offered to show that one per cent, per month on a bill having forty-five days to run, is more than the ordinary rate of exchange among merchants. The opinion of the Circuit Judge was, that the transaction was usurious, and this is the first ground of the appellant’s motion for a new trial. Waiving then the question of exchange, was the bill discounted at a usurious rate of interest ? The detestation with which all lending of money for gain was once regarded, has become less intense, and the legal restraints and penalties imposed upon those who exact more than legal interest, have been greatly relaxed. So extreme was the execration denounced against the sin of usury in the sixteenth century, that a member of the House of Commons said, “that the usurer who taketh less because he would seemdionest, shall go the Devil, because he had wittingly sinned against God, as well as the other that taketh more.” Our duty, however, is to ascertain what the law is, and not to indulge in speculations respecting its policy, which devolves on those who make the laws.

It was once doubted if half yearly payments of interest, or the taking of interest at the time of forbearing was lawful; but Lord Mansfield afterwards held that it was not usury, although upon a nice calculation, it will be found that the practice of the bank in discounting bills, exceeds the legal rate of interest. (Floyer vs. Edmonds, Camp. 112.) So, too, the opinion of the Circuit Judge in this case — that it is usury to take more than legal interest by way of discount — is not without authority. (Peachy vs. Osbaldiston, 7 Mod. 353.) Subsequently, a different rule has been established, and charges are now allowed, amounting to more than the legal rate of interest, if not made pretensively to cloak usury, and are sanctioned by custom. (Areriol vs. Thomas, 2 T. R. 52; Calicot vs. Walker, 2 Anstru. 495.) The taking of interest at the time of the loan is permitted in favor of trade, and an extra charge for discounting a bill rests on tbe ground of just compensation for trouble and expense, and should not be confounded with interest. The expense of transporting gold and silver from .place to place, added to the time of payment, character of the paper, &c., produce those deviations from a par value, which the brokers daily determine. '

The defendant offered no evidence to show that the rate of discount was not a fair remuneration for trouble and expense, or that the charge was made to cover usury. \

It is not necessary to prove the consideration unless it be impeached, and conceding that this is an accommodation bill, it may be presumed that the plaintiff is holder for value. Under the general issue, he must prove the handwriting and make out a prima facie case, and afterwards, if necessary, prove the consideration in answer to the defendant’s case. “ Unless the bill be connected with some fraud, and a suspicion of fraud be raised from its being shown that something had been done with it of an illegal nature, as that it had been clandestinely taken away, or has been lost or stolen, (in which cases the holder must show that he gave value for it,) the onus probandi is cast upon the defendant.” (Mills vs. Barber, 1 Mees. & W., 425.) The burden which the defendant assumed was, to show, that the excess retained on the discount was more than enough to cover the expense of remittance, or the difference of exchange, and used as a cloak for usury. The only proof was, that the contract was for more than legal interest; but this does not make it usurious, unless it could be also shown that the legal rate of interest is the standard of exchange.

The case of Boisgerard vs. Fogartie, (2 Brev. 199,) referred to in the argument, was an action against the indorser who, upon his indorsement, negotiated the note at usurious interest, and it was held, that as to him it was a new note, and, the consideration of the indorsement being usurious, the note was void. Here the action is against the drawer of a bill after acceptance, and it does not appear that originally the bill was founded upon an illegal consideration, which alone could support the defence of usury, if set up by the drawer. Had it been indorsed for the accommodation of the drawer, who procured it to be discounted at an illegal rate of interest, it would have been void against both the drawer and indorser. (Flemming vs. Mulligan, 2 McC. 175 ; Brummer vs. Wilks, Id. 178.) If the bill was founded upon a valuable consideration and put in the market, the sale of it, at any amount below the nominal value, would not sustain the plea of usury by the drawer in an action against him by a subsequent holder.

A majority of the Court cannot concur in the opinion of the Circuit Judge, that the discounting of a bill, having forty-five days to run, at one per cent, per month, is a usurious transaction. Because it exceeded the rate of interest fixed by law, is not per se evidence of usury. Defendant must also prove that it exceeded the rate of exchange, which he failed to do.

For the plaintiff it has been argued, that usury cannot be given in evidence under the general issue, unless the whole consideration be usurious, and the case of Gaillard vs. Le Seigneur, (1 McMul. 225,) is cited. It may be inferred from the language of the Court, that when a part only of the consideration is usurious, the defendant must plead it specially. That question however was not presented by the case made, and the general rule is, that on non-assumpsit, an usurious contract may be given in evidence, except in case of a speci-ality, where it must be pleaded. (Com. Dig. Title Pleader E. 13.)

As the verdict includes neither interest, costs nor damages a new trial would be granted at the instance of the plaintiff; but as this is declined the motion of the defendant is refused, on the first ground. Nor do the other grounds taken, support the motion. 'The information elicited by the question propounded to Geni. Jones, consisted of facts connected with tbe management of manufacturing companies, wbicb were pertinent to tbe issue, and were properly admitted. Tbe answer to tbe last ground will be found in Devlin vs. Kilcrease, (2 McM. 425.) It is not only tbe right but, in complicated facts, tbe duty of a judge to comment on tbe evidence, provided tbe ultimate decision is not withheld from the jury.

Motion dismissed.

Wardlaw, Withers and Whither, JJ., concurred.

O’Neall, J.,

dissenting.

In this case I shall briefly state my reasons for ruling that this bill of exchange was contaminated with usury. In tbe 6th § of tbe Act of 1812, in tbe amendment to tbe charter of the Planters’ and Mechanics’ Bank, is found the clause which it is supposed, notwithstanding the law on the subject of usury, permits the banks to sell and purchase bills of exchange at the enormous sums, which of late have been demanded. It enacts, that the Union Bank and Planters’ and Mechanics’ Bank of the City of Charleston may and they are hereby authorized whenever they shall see fit so to do, to “ discount all inland bills of exchange, which may be offered to them at the ordinary rates of exchange among merchants.” (8 Stat. 34.) I suppose this has been carried forward to all the banks, unless it be the Bank of the State of South Carolina may not have that power, for I see that bank, by its charter, is expressly confined to bills of exchange, within the State, (which I suppose are inland bills,) to one per cent, for every sixty days. Under the provision of the Act of 1812, what is meant by inland bills of exchange ? If it cannot be shown, that they mean bills on our sister States, then beyond all doubt, the practice of charging more than seven per cent, per annum, can receive no sanction from that Act. From tbe 3rd clause of tbe Act of 1786, 4 Stat. 741, wbicb declares sucb bills returned protested as liable to ten per cent, damages it would seem that they were considered/oragn Mils.

But waiving tbis discussion, I bold that tbe defendant here could not have been charged beyond tbe sum actually loaned. For it was not the purchase- of a bill of exchange really and Iona fide made. But it was a pretext to borrow money. Tbe bill was negotiated at one per cent, per month, to enable E. 0. Leitner, who bad made the bill in tbe name of tbe defendant, and who had also indorsed it to obtain the money. He and tbe defendant were both liable for tbe money: and in sucb a case, tbe forbearance to demand tbe money from them, wbicb is tbe legal effect of tbe bill, at one per cent, per month, makes it usury. Tbe case of Payne vs Trezevant, 2 Bay, 23, wbicb was on notes made to raise money and sold at an usurious discount, pointed out the real distinction between a loan and a sale. “ Every loan contemplated a return of tbe money at some given or fixed period; whereas a sale was an absolute irredeemable transfer for valuable consideration never to be returned.” Test tbis case by the rule thus given. Tbe bill contemplated tbe return of tbe money by tbe defendant, if tbe acceptor did not pay. That was not a sale of tbe bill. It was a discount of it at an usurious rate of interest: and that I think can have no sanction in a Court House, where tbe usury law prevails. I know it is fashionable to denounce tbe usury law, as wrong in principle, and working badly in practice: and I once entertained sucb views: but I have been convinced that I was wrong, and that an usury law, sucb an one as ours, is wise, just and proper. It protects, as all law should, tbe weak, tbe needy, and tbe improvident, from the rapacious, grasping, and exacting money lender. Bead tbe case of T. Gaillard vs. Le Seigneur and Le Roy, 2 McM 229, and tbe wisdom and necessity of an usury law will be seen.

In 2 Brev. 199, the case of Boisgerard vs. Fogartie, will be found. That was on the indorsement of a note bona fide in its creation ; but it was sold by the defendant at a discount considerably above the legal interest for the time it had to run, and indorsed by him. In that case the maker was clearly liable, but the usurious discount relieved the indor-ser. That great lawyer and judge, Cheves, it will be seen, was the lawyer who made the defence, and that judge, whose name is and has been the subject of admiration in South Carolina, Judge Wilds, with the concurrence of his brethren, Bat, Teezevant and BREVARD, sustained the defence on the ground, that the indorser had forbearance, until the note was clue at a greater rate of interest than was legal. How that case can be distinguished from this, it is difficult to conceive, unless something can be found in the Act of 1812, which I do not think can legitimately affect this question.

The case of Fleming vs. Milligan, 2 McC. 173, while it ruled that a note, bona fide for valuable consideration, brought into market may be sold for less than its value, yet it, and the case of Brummer and Wife ads. John Wilkls, indorsee, 2 McC. 178, also ruled, that a note made to raise money and sold in the market, o.r an indorsement on which a greater sum than that which is allowed by law, is charged, will be usurious.

These cases, I think justify my ruling on the circuit, and I regret that a majority of the Court cannot sustain my decision. Por I believe, that it would make the banks, and people, what they ought to be, friends instead of enemies.

Munro, J., concurred

Motion refused.  