
    Greenhow’s Administratrix and Heirs v. Harris and Others.
    Decided, Jan. 25th, 1820.
    [8 Am. Dec. 751.]
    I. Usury — What Constitutes — Sale of Bank Stock. — A sale of Bank Stock at whatever price, is not usurious, unless the object be to borrow money at more than lawful interest, and not to purchase stock, and the price of the stock he graduated as a devise to effect that object; or there be a combination between the seller of the stock on credit, and a person to whom the buyer sells it for cash; in either of which cases, the transaction becomes usurious.
    3, Same injunction Case at Bar, — if It be alledged, in a Bill o f Inj unction to pretenL a sale under certain deeds of trust, that a previous loan was injuriously made, upon a note at twelve months secured by another Deed; and that one of the deeds aforesaid was made only as a kind of indulgence on that note, and to close some other transactions ol the like nature; and the defendant, by his Answer, deny all charges of Usury, and aver that he made no loan, but bought the note fairly in the market, without knowing the consideration for which it was given, (setting forth at what price.) upon condition that "the holder" would getit secured, which was done: that it ha,d long since been discharged, and had no connection with the deeds of trust in joined; it seems that the Injunction, being unsupported by evidence on the part of the plaintiff, ought to be dissolved; notwithstanding the defendant evades disclosing the name of the holder of whom he bought Ule note ata large discount.
    3. Same - Charge Denied by Answer — Rights of Plaintiff. — A charge of Usury being explicitly denied by (he defendant’s Answer, the plaintiff has not a right to an order requiring him to produce his books ami papers, for the purpose of establishing such charge.
    The question in this case was, whether certain Deeds of Trust conveying real estate, executed by Doctor James Greenhow, {late of the City of Richmond.) for the benefit of Shelton and Harris, and of Charles Smith, were usurious or not. ':i'Three Bills successively, (the two last amendatory of the first,) were filed by the appellants in the Superior Court of Chancery for the Richmond District, for Injunctions to prevent the trustees from proceeding to soil the property conveyed by two Deeds in favour of Shelton and Harris, for $6492, and $6900, and by one Deed in favour of Charles Smith lor ¾1,851 92 cents; for a decree directing the said usurious Deeds, together with the notes and bonds, (to secure the payment of which the Deeds were given,) to be surrendered and cancelled, — and for general relief.
    The first Bill alledged that the Usury was publicly known, and the plaintiffs hoped to prove it; but that probably the defendants would attempt to elude the justice of the Court by pretending to have sold Stock to the decedent; particularly as John Li. Harris was a director of one of the Banks.
    To this Bill, John D. Harris answered, that, as acting partner of the firm of Shelton and Harris, he, in March 1813, sold thirty shares in the Farmers’ Bank, for $4092, to the said James Greenhow, on two years credit, and took his bond and a deed of trust to secure payment of the money without interest; that the sale was made upon an application of Greenhow to purchase ; arid, at that time, the company had stock to a large amount; that, in April 1814, Greenhow offered to purchase fifty shares more, and this defendant sold them to him for $6900, upon twelve months credit, and took his note and a deed of trust for the same; that, at this time also, Shelton and Harris had stock to a much greater amount, and were willing to have transferred the said fifty shares immediately, but Greenhow preferred taking their notes for delivery thereof upon demand, which, seven clays afterwards, was presented for payment, with the said Green-how’s endorsement to Thomas iiorvell, and Norvell’s to Charles Smith, to whom the said shares were immediately transferred by Shelton and Harris; that there was no communication for borrowing or lending at either of the said transactions; that these are all the claims of Shelton and Harris against the said Greenhow ; but they had a ^former note of his, endorsed by Samuel Greenhow, and secured by deed of trust, which had long since been wholly paid off and discharged, and had no connection directly or indirectly with the two sales of stock aforesaid ; that stock always sells higher upon credit, than for cash, on fair and regular sales in the market among people of good credit, and without any communication for a loan or any idea of usury on either side; that Green-how, at the time of these sales, was a practising physician, having property to a large amount in possession, and this defendant had no expectation that his affairs were in the embarrassed condition stated in the Bill.
    The Answer of Thomas Norvell (a Broker,) stated, that, in March 1813, Doctor Greenhow requested him to make negotiations for him to a considerable amount; and, accordingly he bought thirty shares in the Farmer’s Bank, for the said Green-how, of Shelton and Harris, at $133 46 per share, upon two years credit; twenty of which shares were afterwards transferred to him, who credited Greenhow with them, at $128 per share: that, in April 1813, he bought of Charles Smith nicety three shares of like stock, at one and two years credit, for Greenhow, who gave his bonds for $5624 64, and $6227 28 cents, for the same; forty of which last mentioned shares were transferred to him to be sold for Greenhow, who had credit for them on his books at $108 per share; that, in April 1814, he bought of Shelton and Harris fifty shares of like stock for $6900, for Greenhow, who gave his note and a deed of trust to secure payment of the money; but no transfer of the stock was then made, as Greenhow did not wish it, but chose that he, the respondent, should' sell the stock for money; and therefore he took the note of Bheiton and Harris, to transfer on demand; which note Greenhow afterwards assigned to the said respondent, who sold the shares for $5700 to Charles Smith, to whom the respondent assigned the said note, and Shelton and Harris transferred the shares: that he transacted business as broker for Greenhow at various times; and, at the time of the transactions aforesaid, *could not obtain as favourable terms for him from any other person.
    The Answer of Frederick Harris administrator of Charles Smith. He understood, from his intestate, that Greenhow’s debt was contracted for Bank Stock. The said Smith was a dealer in stock, which he sometimes bought for cash, and sold at an advance upon credit; but he sometimes lost by stock’s falling below the cash prices he had paid. ' This respondent believed the transactions with Greenhow were fair; and that stock could not then have been purchased, on the same credit, at lower prices.
    The plaintiffs in their 2d Bill, repeated their averment that the claims of the defendants were founded upon illegal and usurious considerations, and said they were “now prepared to prove the facts in most instances, and hoped, by having sufficient time allowed them, to be able to prove the whole.” They charged that, on or about March 1813, Shelton and Harris loaned $2000 to Doct. Greenhow, upon his note for $2400 payable at twelve months after date, endorsed by Samuel Greenhow, which note was secured by a Deed of Trust; that the sales of the stock were merely devices to cover usurious contracts, and the pretended sale of fifty shares was made only as a kind of indulgence, for the $2400 note, and to close some other transactions of the like nature; that Shelton and Harris, Norvell and Smith were usuriously combining to shift the same stock from hand to hand; that no such stock was ever transferred to the said Doct. Greenhow by the said Shelton and Harris at the time spoken of, or at any other lime; that Smith transferred 43 shares, only instead of 93; and had, during all the year 1813, but 73 shares, as appeared by a certificate of the Cashier of the Farmers’ Bank.
    The Answer of Thomas Norvell to the last mentioned Bill, referred to, and insisted upon, his former Answer; averring that he never received any usurious interest of Greenhow; that he had no interest in any of the contracts in question; and believed that Greenhow’s transactions, with Shelton and Harris and Charles Smith, were separate *and distinct; that the statements in his answer concerning the transfers of stock were true, notwithstanding the Cashier’s certificate, which was itself erroneous, as would appear by two countervailing and explanatory certificates of the same Cashier: that this respondent knew nothing of the number of Bank shares standing in the name of Smith, further than the last mentioned certificate shewed: — that William Norvell, on the 19th of April 1813, transferred ten bank shares to Greenhow, which this defendant as his Attorney transferred to Smith, who, afterwards, transferred them back to Greenhow; and that the said ten shares, added to the 83 mentioned in the Cashier’s certificate, made up the 93 furnished by Smith to Greenhow.
    The Answer of Smith’s administrator referred to his former Answer, and averred that his intestate actually transferred 93 shares; as appeared by two entries on the decedent’s books, which were all that he found relating to the subject; that, as Smith was a dealer in stock, he might without fault happen to sell Greenhow part of the same stock he had before purchased of him; it being of no importance to the purchaser in whose name it stood, if he got it; and that this defendant had discovered no document proving Usury.
    John D. Harris filed an Answer, and af-terwards an amended Answer, to the said Bill, in which (taken together,) he repeated the allegations in his Answer to the first Bill, and denied that Shelton and Harris lent Greenhow the money paid for the $2400 note; averring that he bought the note fairly in the market at the price of $2,212 or thereabouts, upon condition that “the holder” (“not mentioning who the holder was,) would get it secured; which was done; that that note had long since been discharged, and had no connection with the ■ sales of stock; that he knew not the consideration for which the said note was given; that neither of the notes, given on the said sales, was usurious, or founded upon any communication for a loan; but that Shelton and Harris merely wished to s.ell their stock, of which they had a large quantity, and *could,.on the same credit, have gotten the same for it, from persons of undoubted solidity.
    The third Bill stated, that Greenhow employed Norvell to raise money, and not to buy stock; that Shelton and Harris, and Smith all knew that the negotiations were undertaken for usurious purposes, which, as to Shelton and Harris, was evidenced by their refusing to take, without farther security, the $2400 note, though endorsed bj' Samuel Greenhow, and by their evading a direct answer to the charges respecting it. This Bill contained also other allegations concerning the possession, by the parties, of the several parcels of stock transferred, the rapidity of the transfers from one to another, and some conversations between Harris, Smith and Norvell, from which the complainants inferred usury, and a fraudulent connection and combination among them to the injury of Greenhow. It objected to the former answers for not stating-the prices per share at which Smith sold to Greenhow,' but only that the latter gave his notes for $11,851 94 cents, for the supposed 93 shares. The 2d, & 3d Bills both demanded the production of the books and papers of the defendants before a Commissioner of the Court, without which it was contended the true nature of the transactions could not be fully known, and a fair and legal settlement of the accounts between? the parties be made.
    The answer of John U. Harris to the 3d Bill, denied that the sales of stock made by him to the said Greenhow were pretended, or a shift or contrivance to cover alone; repeating his averment that the stock was-absolutely sold and transferred. “What might have been the views of said Green-how in buying the stock, or what might have passed between the said Greenhow and his the said Greenhow’s agent, it is impossible for this defendant to say; but he can say, and does aver, that, in both instances, the application was made to him not for a loan, but for the purchase of stock, which stock was then held by Shelton & Harris. This defendant had no concern or connection with Norvell or Smith in the said Stock, or the proceeds thereof; and there was no understanding, Stipulation or agreement between him and the said Greenhow as to the use or application that the said Greenhow should make of it: — -he had a right to do what he pleased with it.” As to the note of S2,400, this answer was nearly in the same words as the former, still failing to state who “the holder” was, of whom that note was purchased. The charges of Usury were again expressly denied. The respondent said that his books, or the books of Shelton & Harris, would not in any particular afford the slightest foundation or support to those charges; but insisted that the demand for their production was wholly unwarranted by the usage of this Court and the laws of the Country.
    Smith’s administrator and Norvell again answered, denying the connection and combination charged, and new matter of equity set forth, in the last Bill; and also the right of the plaintiffs to call for the books and papers, which had also been denied in their former answers. Norvell particularly said, that “when he purchased the said Bank stocks, he made no communications for a loan, as Greenhow did not mean to borrow, but to purchase on credit.’”
    The plaintiffs filed exceptions to these answers of Harris and Norvell, as insufficient and evasive: — 1. to that of Harris, for not stating the precise sum given for the note of S2400; nor how that note was discharged or settled; and for not stating (iho’ required by the Bills,) who was the holder of the §¡2400 note, and who procured the security for the payment of it, before Harris would take it: — 2. to that of Norvell, because it did not shew the transaction relating to the said note, nor how it was discharged ; and whether the balance received by him of Smith was applied to the discharge of it, or how that balance was applied ; because the respondent refused to make any statement of Greenhow’s notes in his possession which had been paid off; altho’ the surrender of them was demanded by the Bill; and because he did not discover all that he knew of the transactions of Greenhow with the other defendants.
    *Chancellor Taylor again dissolved the Injunction, which, twice before,
    had been dissolved and re-instated.  From this order, the plaintiffs were allowed an appeal, upon their Petition to a Judge of this Court.
    Upshur for the appellants.
    Where the intention is to commit Usury, the particular form of the contract is not to be regarded.  It is evident that the intention in this case was not a purchase of stock; for Greenhow did not wish to keep the stock, but merely to raise money. He actually kept it not more than two days. The idea that he bought on speculation, is contradicted by all the circumstances, which plainly shew that his object was to convert the stock into cash at whatever sacrifice. The price given was so exorbitant, that no man in his senses would have made such a bargain, for purposes of speculation, or to retain the stock.
    John I). Harris’s Answers do not deny the charge that he knew Greenhow’s object to be merely the raising of money. He evades it even to the last, giving no direct answer as to this point, but struggling very hard to appear to answer the questions put to him, without doing so. If he had not actual notice that such was the object of Greenhow’s application, he had at any rate, constructive notice; for Norvell, being a public broker was the agent of both parties,  and he had actual notice, by which therefore Harris was bound, 
    
    The knowledge of Harris, that Green-how’s object in procuring the stock was to raise money, makes the transaction usurious, as completely as if the contract had been for a direct loan. From 2 Camrib. 375, it. appears that, whore a ground of suspicion of Usury is raised, it is incumbent on the party to remove it, or he will be considered guilty. In this case, if the proof be not direct, there are many strong grounds of suspicion. The risk of loss on the part of Harris was very small; and this is one of the badges of Usury. The sale of stock on long credit, is another ; for bank stock is a cash article, and it is exceedingly unusual to sell it on long* credit. — *The exorbitancy of price in the sale of an article, furnishes also a reason for suspecting Usury ; and here the disproportion between the cash and credit prices of the slock was enormous. The distressed condition of Greenhow for want of money, (which Harris well knew,) is also to be considered.
    He relies in his Answers, repeatedly, on the circumstance that no express communication for a loan took place: but such communication will always be presumed where the real intention of the parties was to borrow on one side, and lend on the other. In Watkins v. Taylor, 2 Munf. 424, it was denied that there was any communication for a loan ; yet this Court decided the contract was usurious; surely on the ground that such communication might be presumed. So also in the case of Gibson v. Fristoe, 1 Call 62.
    Harris’s not thinking the transaction usurious, if such were the fact, would make no difference in the case, 
    
    As to the note for $2400, Greenhow himself was evidently the “holder,” of whom Harris bought it at an usurious discount; otherwise, he would not have given the subsequent deed of trust to secure the payment; for if the note had been in the possession of another person who offered to transfer it, such other person, (being requested by the transferee,) would have given the security, and not applied to Greenhow. The sale of the note was therefore palpably a shift or device to evade the statute. But a note made for usurious purposes, is void in the hands of any body. Quod initio non valet, tractu temporis non convalescit. 
    
    So far as Charles Smith is concerned, the Usury is yet more apparent. It is a striking circumstance, that, when he undertook to sell ninety three shares of stock for the enormous sum of $11,851 92 Cents, he did not own a single share 1 He never transferred more than eighty three shares, though he took the ' bonds and deed of trust for the price of ninety three. Is not the conclusion irresistible that the ten shares not transferred were the premium for the loan? It is impossible by arithmetical calculation to find any integral sum as the price by the *share for the 93 shares of stock in this case. The very extraordinary fractional sum of $127 44, appears to have been the price agreed upon.
    There is no difference in principle between the case of Marks v. Morris, 2 Munf. 407, and this case. In this, the plaintiffs do not sue for a discovery, any more than in that case.
    If, upon the whole, the Court should not consider the Usury proved, the Contracts may perhaps be set aside as unconscionable. 
    
    Call for the appellees, contended, 1. That the prices of the stock were not exorbitant; but, if they had been, that mere exorbi-tancy of price, without any previous communication for a loan, or forbearance, is not Usury, 
    
    2. That there was no evidence of any loan, or communication for a loan, or forbearance, as to Shelton and Harris : but the transactions were sales of stock in their possession at the times of the sales, and for the credit prices at those periods. There are no circumstances from which to infer-an usurious intent; and usury is not to be presumed, without proof, 
    
    3. That Smith’s contract was not usurious ; because, in that case also, there was no communication for a loan or forbearance, and the price was the credit price of the day. It is not material whether he had stock at the time or not; for there is nothing improper in a man’s contracting to furnish stock, although he have none at the moment of contract. He was a dealer in the article, and every thing done in the course of trade is lawful. In fact, he had some stock at the time, and' purchased more to enable him to comply with the contract. His getting some from Norvell makes no difference; for both were in the market, and he might lawfully buy of him.
    4. There was no connection between Shelton and Harris and Smith ; nor between them, or either of them, and Ñorvell.
    Horie of the circumstances resemble the case of Watkins v. Taylor, 2 Munf. 424; for that was, in substance, an advance of money, to be restored with interest beyond *the legal rate. In Marks v. Morris, too, the usury was proved, which is not the case here.
    Heigh on the same side. The simple question before the Court is, whether a sale of Bank stock on credit, at an advance above the cash price, be Usury? Could not Doctor Greenhow have wanted the stock to enable him to comply with a contract for the delivery of stock? If he might have wanted it for any other purpose than that of raising money upon it, the presumption of Usury does not arise. To constitute Usury, there must be a corrupt agreement, concurred in by both parties. Harris is guilty of no evasion : — -for he says, expressly, that he did not know for what purpose Greenhow wanted the stock.
    Stock is not like money, having a certain value, but an article liable to continual fluctuations. The value at a future day being contingent, a sale at a high price on credit is not usurious,  Was it improbable that stock might have arisen before the time of payment, to 122 or 130 per cent?
    The case of Hansbrough v. Baylor, 2 Munf. 36, is identically this; except that there the article sold was a bond; and here it was bank stock. Suppose it had been tobacco or goods; would the vendor be an Usurer, because the vendee sold afterwards, for Cash, at a loss? If not, why is a vendor of Bank stock to be so considered?
    Wickham on the same side,observed, that a Broker’s being employed in the negotiation for the stock, was not a suspicious circumstance. The uniform practice, where a man wants to buy stock, is to go to a broker. The profession of a broker is honest and lawful; and stock is as much an article for sale, as wheat, or tobacco,- — land, or slaves.
    Mr. Upshur says the answer is evasive. How is it evasive? It says the transaction was a fair, bona fide sale, and not a loan. Is not this directly responsive to the Bill? He says the Bill is not for a discovery. Yet it demands the production of books and papers, and accounts to be rendered. If then it be not a bill for discovery, what is it? If the answers of the defendants be *not relied on, where is the proof on the side of the plaintiffs? He is mistaken on the subject of the 93 shares. It appears in the record that Smith bought 10 shares of Norvell to make up the quantity. A buyer and seller of stock, as well as a trader in bills of exchange, has a right to make his selling, different from his purchasing, price.
    
      
       Usury — What Constitutes — Sale of Bank Stock.— It has often been decided that the sale of stock, or any other property, at whatever price, does not of itself constitute usury. Selby v. Morgan, 3 Leigh 585, 586, citing the principal case. As the price of stock is in continual fluctuation, the contingency existing in such sales has been justly held to exempt them from the imputation of usury, provided they are not used as a device to cover that offense Smith v. Nicholas. 8 Leigh 358, citing principal case.
      Again, in Brockenbrough v. Spindle, 11 Gratt. 33. it is said: “Nothing is: better settled in Virginia and elsewhere, than that stock, bonds and notes may be sold, like any other property, at any price not above par which may be agreed between the parties. And sales oí stock and notes on credit at par when the market price was as much as twenty per cent, below par, have been sustained as lawful by this court. West v. Belches, 5 Munf. 187; Green-how a. Harris, 6 Munf. 472; Selby y. Morgan, 3 Leigh 5)77." See principal case cited to same effect, in Brockenbrough v. Spindle, 17 Gratt. 34, 41,45. See further, monographic note on "Usury” appended to Coffman v. Miller, 26 Gratt. 698.
    
    
      
       Note. The. charges la the Bills were not supported by any affidavit or deposition. — Note in Original .Edition. .
    
    
      
       Floyer v. Kdwards, Cowp. 113; Chesterfield v. Janssen, 1 Aik. 801.
    
    
      
       Marleney v. ColeH, 1 Maulé and Selwyn. 140.
    
    
      
       Brotherton v. Hatt and others, 2 Vern. 574; Jennings v. Moore, Ibid. 609; Re Neve v. Le Neve. S Atk. 646.
    
    
      
       Tiansbrough v. Baylor, 2 Munf. 86; watkins v. Taylor, Ibid 434; Cro. Kite. 643.
    
    
      
       Hammett v. Yea, 1 Bos. & Pull. 155; Marsh v. Martindale, 3 Bos. & Pull. 159.
    
    
      
       Orde on Usury, 77; 3 Wm. 131. rep. 864, Murray v. Harding; 1 lisp. N. P. cases, 11, Doe v. Barnard.
    
    
      
       Moore v. Baltie, Ambl. 371.
    
    
      
       Young- v. Wright, 1 Campb. 141; Jordaine v. Lashbroke, 7 Term Rep. 601; Steers v. Lashley, 6 Term Rep. 61.
    
    
      
       Chesterfield v. Janssen, 1 Atk. SOI.
    
    
      
       Orde, 73-75; Murray v. Harding-. 2 Wm. Bl. rep. 803. 864; & 3 Wils. 395; Jones v. Hubbard, in this Court; 4 Leon. 208; 1 Anderson, 121.
    
    
      
       Lamego v. Gould, 2 Burr. 716; M’Guire v. Parker’s ex’or., 1 Wash. 368'
    
    
      
       Moyer v. Ed wards, Cowp. 112.
    
    
      
       Price v. Campbell, 2 Call 110 — 124.
    
    
      
       Maddockv. Rumball, 8 Hast 304; Orde, 46; Pike v. Ledwell, 5 Esp. N. P. cases 164.
    
   January 25th 1820, the Judges delivered their opinions.

JUDGE CO ALTER.

I am of opinion that there is no error in the decree appealed from, and which dissolves the Injunction as it regards the debts created by the intestate of the'appellants with Shelton and Harris and Charles Smith, for the different sales of stock by the latter to the former; it not appearing that there was usury in either of those transactions.

As to the debt of $2400 formerly due to - Shelton and Harris, and which has been paid off, if usury existed in that case, the appellants, on proving it, or on it’s being confessed by the appellee Harris, should a further answer from him be required by the Court of Chancery, will be entitled to a decree for the usurious interest, as they will also be for the usurious gain in the other transactions, should they hereafter prove usury in them.

The Decree must therefore be affirmed.

JUDGE BROOKE concurred.

JUDGE ROANE.

It will be inferred from my opinion delivered in the case of Taylor v. Bruce, the other day, that I distinctly admit the right of a party' to sell property, such as Bank shares, at whatever price is agreed on. The transaction becomes usurious, only when the object is to borrow money, and not purchase stock, and the price of the stock is graduated as a device to effect that purpose; or where there is a combination between the seller of stock on credit, and the purchaser for cash; as, for example, in this case, between Smith and Shelton and Harris. Such a combination or connection is explicitly disavowed in this case, and is not proved:— *nor is it in any manner'proved, that the purpose for which the parties met was to borrow money rather than buy stock. The contrary is not only shewn by the answers of Harris, but it is explicitly proved by Norvell that Greenhow’s purpose was not to borrow money, but to purchase stock. So much for the purchase of stock.

As for the note for $2400, it is said the injunction has not been applied for, or granted, as to the Deed securing the payment of it. If it had, it would readily have been perpetuated on the admission of Harris, that that debt has long since been paid. As to it, the transaction is said to be closed. If it had been paid by merely being carried into the other debts, it might deserve a different consideration: — but that idea is explicitly reprobated by the repeated answers of Harris, that that debt was wholly unconnected with the sales of stock.

Although, therefore, it is possible, and even probable, that these transactions were founded in usurious views on the part of all the parties, we can not say so upon this record, and therefore I concur in opinion that the decree be affirmed.

Decree affirmed unanimously'. 
      
       The case of Taylor y. Bruce was re-considered, andnot finally decided until .June 1820.— Note in Original Edition.
     