
    Philemon Brockway v. Ralsa Clark.
    Where a money-lender takes from a borrower an obligation for a greater amount than the money lent and the stipulated interest, with an undertaking on his part to receive a less sum in discharge of the obligation if punctually paid, chancery may relieve against the excess as a penalty.
    In chancery, from Trumbull. The bill makes the following case: That the complainant being pressed for money in October, 1827, applied to the defendant to lend him one hundred dollars. The defendant, knowing the complainant’s embarrassment, and that he had a good farm, fraudulently contriving to extort from him an unconscionable bargain, loaned him the hundred dollars for ninety days, and took from him a note for one hundred and thirty dollars, with a condition inserted in it, that if it was paid within the ninety days, one hundred and ten dollars should discharge it. The compilainant, when the note fell due, made application to the defendant to continue the loan for ninety days longer, which was agreed to, and a new note given, for either one hundred and fifty or one hundred and sixty dollars, ■ conditioned that a less sum should discharge it, if paid within the time. When this note-had run its time, the complainant applied to the defendant to continue the loan another ninety days, which was acceded to, and a new note given for two hundred and sixteen dollars, conditioned, as before, that a less sum should discharge it, if punctually paid. The complainant paid, on this note, thirty dollars in September, and thirteen dollars in December, 1828. The residue remaining 46] ^unpaid, the parties entered into a new agreement, in pursuance of which, the complainant executed to the defendant three notes under seal; one for seventy-two dollars, on demand, one for seventy-two dollars and forty-two cents in sixty days, and the other for seventy-two dollars and twenty-one cents at four months. In June, 1829, the complainant paid forty-five dollars; after which the defendant'commenced several suits before justices of the peace, for the balance due on the notes, and recovered judgments, which were appealed by the complainant to the court of common pleas, where the suits are still pending. That, reckoning interest at the rate of six per centl per annum, upon the money borrowed, there remained, at the filing of the bill, less than thirty dollars due to the defendant. The complainant has not the notes which have been paid off, and charges that the defendant has fraudulently retained them. The bill prays that the defendant may be compelled to give up the notes paid off; to accept the balance of principal and interest at the rate of six per cent, upon the'money loaned; be perpetually enjoined from collecting the residue; and for general relief.
    The defendant answers, denying all the fraud and extortion charged against him, and the possession, detention, or knowledge of the notes paid off. To the residue of the bill he demurs generally.
    Giddings and Wade, for the demurrant, made two points:
    1. That the several contracts set forth in the bill having been entered into by the parties, with a full knowlege of their rights, in contravention of no law, can not be avoided in equity, without fraud or covin.
    2. The court can not, as is prayed for in the bill, make and 
      carry into effect between these parties, a new contract, which neither of them ever intended to enter into.
    C. Pease, contra:
    It is urged in support of the demurrer, that the legislature, by the repeal of the usury act, had left it entirely to the discretion of men to take such bargains as they please, in relation to the use of money, without being subject to any restraint by the courts of law or chancery; that the complainant acted with his eyes open, and was without the aid of chancery, etc.
    I have a different view of the intention of the legislature. *They have certainly established what they considered to [47 be the fair and just rate of interest at six per cent, per annum, and no more. Under this act,- the Supreme Court in Hamilton county decided, in a suit brought upon a note, promising to pay three and a half per cent, per month, amounting to forty-two per cent, per annum, that they would compute (in the words of the statute) six per cent, per annum, and no more.
    
    I have supposed that 'the legislature intended to fix the rate in computing damages, remove all pains and penalties, and leave people at liberty to contract as they please, subject, however, to the same rules and regulations which govern other contracts in cases of fraud or oppression. Although some lawyers insist, that as the law has fixed the boundary, beyond which wé can not pass, and as it is contrary to the letter and policy of the law to pass that boundary, such a contract would be illegal and void, and should be so treated by courts of law and chancery. 1, however,-have considered such contract good for the true consideration, and, under some circumstances, for the legal interest also.
    I can not entertain the supposition, that while the courts of chancery protect us against fraud and extortion in ordinary contracts, and daily set them aside where the fraud is evidenced principally or entirely by the inadequacy of consideration, that in mere money transactions, weak and necessitous persons are to be left entirely to the mercy of usurers, grinders, and extortioners. If they are to be our lawgivers, woe betide us.
    I shall, therefore, consider this cause as depending upon the same principles as other cases of fraud and extortion, evidenced by inadequacy of consideration. I am aware that a rule is laid down in the books, that for inadequacy of consideration merely, without some other circumstances, a contract will not be set aside j. but where the inadequacy is so gross that a man will readily exclaim against it, very slight circumstances will be sufficient to consummate the evidence of fraud, and it can not be disguised that, in many instances those slight circumstances exist more in the imagination than in the vision of the court.
    Rook rules should undoubtedly receive a due share of veneration, although they may many times appear illiberal and contracted, and, in the opinion of some, should be got round, rather than met by other rules more just and equitable, but where the 48] inadequacy is so monstrous that even Mammon himself *would be ashamed of it, we may, without any great violence to rule, pronounce it fraud per se, and as rationally as in other cases conclude that the party cheated was so weak in mind, or under such embarrassments and distress, and so completely within the power of his oppressor, that he could not exercise his judgment, if he had any; and I confidently hope that this court will adopt and apply this new rule, or manufacture one as efficacious.
    So far as I can gather from cases, what may be termed a standard rule of such inadequacy as would be deemed presumptive evidence of fraud, is, where the thing sold is worth double the price, or the price double the value of the thing sold, although there are many cases where the courts have rescinded, contracts when the-inadequacy was less, and refused where it was more, according to the attendant circumstances.
    Reasoning, then, from analogy, if six per cent, per annum is the fair price for the use of money, twelve per cent, would be gross, twenty-four per cent, monstrous, fifty per cent, outrageous, and one hundred and fifty-five per cent, (about the rate exacted by the defendant for the first nine months) beyond endurance. If any case can be presented to the court carrying internal evidence of rank oppression, this is one. It is a fit companion for the case of the sale of a horse for a penny a nail, doubling each to thirty-two. Where the subject matter is sufficient of itself, circumstances are useless companions.
    It may be said that here were several distinct and separate contracts ; that no one of them was so very outrageous; and the court must look only to the last. To this I answer, that each contract was bad enough, but they must be taken together as parts of a systematic operation. It makes no difference, in the eye of justice, whether a man is ruined by a single transaction, or a systematic course of oppression continued for months or years, whether-he be devoured by mouthfuls, or swallowed at a single gulp.
    The great question is, will our judicial tribunals afford any protection to the weak and necessitous against their oppressors, or must the legislature again resort to usury laws ? When the avarice of man is insatiable and knows no bounds, and no legal-restraint is laid upon his cupidity, the evil of extortion, which has already risen to an alarming height, will soon become intolerable. It already cries aloud for reform. The public should be-made acquainted with their situation.
    *The equitable statement of the case stands thus:
    The complainant, in October, 1827, borrowed................. $100 00
    Interest to October, 1828............................................ 6 00-
    $106 00-
    Payment in August or September, 1828.............. $30 00
    Interest on do. to October, say.......................... 15
    - 30 15-
    Balance................................................................... $75 85
    Interest on balance to October, 1829............................ 4 73
    $80 58-
    Payment in December, 1828............................ $13 00'
    Interest on do. to October, 1829........................ 65
    - 13 65-
    Balance................................................................... $66 93
    Interest on balance to October, 1830............................. 4 02
    $70 95-
    Payment, June 12,1830.................................... $45 00
    Interest on do. to October 1830......................... 90
    ' - 45 90
    Balance due October, 1830.......................................... $25 05
    But defendant claims upon his last three notes, after deducting the payment of lorty-five dollars in June, 1830. $183 73-
    Making the trifling difference of................................. $158 68-
    0
    Loomis and Metcalf,
    on the same side, contended that this-transaction was characterized by a degree of injustice and oppression, which must at first blush shock the feelings of every .good citizen, its terms being so extremely inadequate as to satisfy the conscience of the court, that there must have been imposition upon the complainant, or that species of pressure upon his distress, which, in the view of equity, amounts to oppression; and that from the intrinsic unconscionableness of the demand, fraud would be presumed, to give the court jurisdiction, and require of it to order the instrument to be delivered up. They •cited 2 Swift’s Dig. 47; 14 Johns. 559; 5 Ohio, 472; 2 Vern. 14, 121, 402; 1 Atk. 301; 1 Bro. C. C. 1, 558; 2 Bro. C. C. 167; 10 Ves. 219; 13 Ves. 103 ; 14 Ves. 214; 4 Des. 651, 697.
   *Wright, J.,

delivered the opinion of the court:

The denial by the defendant that he had any knowledge of the complainant’s embarrassments, of the use of undue means to induce the loan or its continuance, and of all fraud in the transaction set out in the bill, presents this case to us upon its intrinsic merits, as shown in the nature of the transaction, unaccompanied by the ordinary tests of jurisdiction. But if resort were had to the evidence filed to do away the answer, the result would be the .same.

The case presented is one between an avaricious money-lender and an improvident borrower, and exhibits, on the part of the lender, an appetite for gain too insatiable and greedy to rest satisfied with ordinary acquisitions. It is pressed upon our consideration as one showing a ruinous and unconscionable bargain between the parties; one that the complainant should be relieved against, as fraudulent per se, because the inadequacy of -compensation for the money loaned is so gross as to shock every correct mind. The ruinous tendency of borrowing considerable .sums where such rate of interest is exacted and paid for any length of time, is sufficiently apparent to any one. The hundred .dollars loaned, in this case, is increased in less than two years and a half to two hundred and fifty-nine dollars and sixty-two cents — one hundred and sixty per cent. — an amount so repugnant to our sense of propriety, as to induce a strong inclination to relieve against its payment; but we must take care that our feelings do not lead us to overleap the rules which govern courts in -such cases.

Until the year 1824, we had a statute fixing the rate of interest at six per cent, per annum, and providing punishment for usury. This law was held to make void so much of contracts as-stipulated for more than the legal rate of interest; and under it our courts were in the practice of enjoining from collecting the excess, where the debtor tendered the amount of principal and lawful interest due. But the tender of the sum admitted to be due, and the bringing it into court for the use of creditors, was commonly held an indispensable requisite to the chancellor’s interference. The-maxim, “ he that seeks equity, must first do equity,” was deemed applicable to that class of cases. The bill before us contains no-such offer, and the complainant does not in any way bring himself within the strict rule. He avers only that he is willing to pay the balance as the court *may direct, and leaves his case [51 embarrassed with difficulty, on account of his departure from correct practice.

The general assembly, in 1824, repealed the law against usury,, and enacted in its stead the present law, fixing the rate of interest upon all moneys, after the same shall become due, at the rate of six per cent, per annum, and no more. 29 Ohio L. 151. It is contended, for the complainant, that the only change effected in the interest law by this last act, is one of phraseology, the substantial enactment of both being the same. We do not think so. The two acts differ in very essential particulars. In the former, any person demanding or receiving “ more than six per cent, per annum, on any contract, debt, or demand whatever,” forfeited “ the whole amount of the debt on which such illegal interest was chai’ged or received,” one-half to the county, and the other to the pe rson prosecuting. See act of December 29, 1804; 1 Chase’s Stat. 484. The act of 1824 contains no provision forfeiting the debt, nor any one prohibiting the contracting for, or ■ the receiving, any rate of interest. The first was entitled “an act fixing the rate of interest, and for preventing usurythe last simply-“an act fixing the rate of interest." These differences clearly indicate that the assembly, in the two enactments, had not the same-object in view. The change of the law presents this class of cases before a chancellor in a new light.

The 'distinguished counsel for the complainant, feeling the difficulty and novelty of this case, urge their claims to relief upon the ground that the contract is hard and unconscionable; and claim-that, being open, it may be relieved against or rescinded. We feel the truth of the assertion, that these contracts are hard and ■unconscionable; and if our aid was sought to enforce their performance, we should not hesitate to refuse it. Yet, as no portion of these contracts is against law, the usual way of restraining against the illegal part of the contract, upon the party bound coming forward and paying what is legally dije, is not open to ns. To declare a contract for more than six per cent, per annum interest void, would be to go beyond the legislative provisions on the subject; and to impose a penalty upon such contracts would set up again that which the legislature has taken away. Such .a course would draw to chancery, from the legislature, to whom the subject peculiarly belongs, the power of fixing the rate of interest and defining and punishing usury. Whatever gratification, •52] therefore, as individuals, we might feel *to be able to relieve against such enormous interest, we do not find the authority, as .a court, to do so on either of the grounds pressed in argument.

The case is susceptible of one other view, the result of which may be more to the complainant’s advantage. It comes within one of the ordinary heads of chancery jurisdiction to relieve against penalties affixed to legal contracts, which the rules of proceeding in courts of law enable parties to exact. Accustomed as chancery is to exonerate parties from penalties and forfeitures, we shall pursue an open track, if the case in hearing afford opportunity to apply such relief. The transactions between these parties disclose the fact, that in the first note for one hundred and thirty dollars, there was an agreement that one hundred and ten dollars, paid before the stipulated time expired, should discharge it. We .are disposed to regard this as a penalty, inserted in the contract, in order to compel its punctual performance, and to relieve against it upon the same principles parties are ordinarily relieved from penalties. All the changes made in this contract since it was first entered into, we understand retain the same feature, although the case does not disclose the exact amount of penalty in any of the obligations except the first one. In taking measures to exonerate the complainant from these penalties, we contravene no provision of our interest law. It is due to the subject to say we should have been better satisfied if the complainant had proffered payment of the money due, and if refused, had brought it into court; but the case admitted by the demurrer is so strongly marked, and the ex-.actions for the use of the money so scandalous, that we are induced, ■without intending to establish a precedent, to overlook the omis:sion; and we the more readily do this, because the defendant has gone to a hearing of his case without raising any objection on •this account. See 3 Munf. 397.

The case will be referred to a master, with instructions to proceed on short notice to take an account showing what proportion of the three last notes mentioned in the bill is for penalties, and how much is still due the defendant, allowing the stipulated rate of interest on the sum borrowed, and deducting the payments as ■of the date when made. The complainant is required to pay the .amount so found to the master for the use of the defendant, within thirty days after the account is completed; and also to pay the •costs accrued in the suits at law; but if he fail in these payments, the injunction heretofore allowed will, from the ^expiration [53 of said thirty days, stand dissolved. Eor the coming of the report •of the master and further proceedings, the cause is continued.  