Stribbling v. The Bank of the Valley
| Decision Date | 25 May 1827 |
| Parties | Stribbling v. The Bank of the Valley. [*] |
| Court | Virginia Supreme Court |
[Syllabus Material] [Syllabus Material]
This was an appeal from the Superior Court of Law for Frederick county, where a suit was brought by the Bank of the Valley against Erasmus Stribbling, on a promissory note for $ 8,810 made payable to Francis Stribbling, endorsed by him to Francis Stribbling, jun'r., endorsed by him to A. S. Tidball, administrator of Sigismond Stribbling, deceased, endorsed by him to John Jolliffe, endorsed by him to John Mackey, endorsed by him to George W. Kiger, who, at the foot of the note, ordered the drawer to be credited for the amount of the proceeds of the said note. The declaration alleges, that this note was afterwards discounted at the Bank of the Valley, and the full amount thereof paid to Erasmus Stribbling, deducting therefrom the lawful discount or interest, & c.
All the subsequent proceedings are so fully detailed in the opinions which follow, that it would be needless repetition to insert them here.
Judgment reversed.
Jones and Johnson, for the appellant.
Standard and Leigh, for the appellee.
On the part of the appellant, it was contended: 1. That this transaction was a loan, and not a discount of paper already in circulation. Paper of this sort is not entitled to the privilege of having the interest deducted in advance, on the whole amount of the note. Jones v. HakeJohns. Cas. 60; Wilkie v. Rosevelt, 3 Do. 66; Dunham v. Day, 13 Johns. Rep. 40; Dunham v. Goode, 16 Do. 367; Powell v. Waters, 17 Do. 176; Chitt. on Bills, 77, cites Rex v. Ridge, 4 Price's Rep. 66; N. York Fire Ins. Company v. ElyCow. Rep. 678. These cases fix the character of this transaction as a loan; and on the doctrine of taking interest in advance, Comyn on Usury, 81, and the cases there cited, and Marsh v. Martindale, 3 Bos. & Pull. 154, support the other branch of the proposition. There is an additional objection to this discount, because it was for eighteen months, when the charter allowed only one hundred and twenty days; as to the effect of which, Comyn on Usury, 81Cow. Rep. 678, above cited, and the same book, page 736, are conclusive.
2. The transaction was usurious. The sale of stock was connected with the loan, and inseparable from it. The stock was sold above the market price. The sale of stock was a mere sift to cover the usury, which will not avail. Davis v. HardacreCamp. 375; Jones v. Davidson, Holt, 256; Douglass v. M'Chesney109.
For the appellee it was contended: 1. That the Statute of Usury does not extend to a corporation. The expression in the law is " no person," & c. This term does not apply to a corporation. 2 East's Cr. Law, 927. The second section inflicts a penalty to be paid, one half to the Commonwealth, the other to the informer; which can only apply to a natural person. An artificial person can never be liable to indictment or penalty. The terms of all the Bank charters use words of restriction, not of grant, in imposing limits on the rate of interest which they are allowed to take. This plainly implies, that without that restriction, the Banks might take any rate of interest that they pleased, and therefore were not subject to the usury laws. Besides, the charters allow the Banks to take one half of one per cent. for thirty days, which exceeds the rate of six per cent. per annum. There was no necessity for applying the Statute of Usury to Banks. They were subject to a greater penalty, viz: the forfeiture of their charter. Fleckner v. U.S. Bank, 8 Wheat. 354.
2. As to the length of time the note had to run, the law only makes the directors liable to a penalty, and so far from exonerating the borrower, it declares that whoever shall borrow for more than one hundred and twenty days, shall be liable to pay the note at the expiration of that time, as if it were made payable then. 2 Rev. Code, 102, sec. 18. There was no stipulation here, to let the note run for eighteen months at all events. Stribbling had his option to renew it or not, and might have discharged himself by paying it at the end of sixty days.
3. A discount applies as well to accommodation paper, as to paper given for a real consideration. Beawes' Lex Merc. 410. The N. York cases all support this idea. This was the English law, where there is no express provision authorising discounts at all.
4. The burthen of proving the value of stock lies upon the borrower, not the lender. 2 Camp. Rep. 553. The price of the stock was fixed by Stribbling himself. The loan of $ 2,500 was not connected with the sale of Bank stock.
5. The jury, and not the Court, were the proper tribunal to decide whether the sale was a disguise for usury, and they have decided that question for the appellee. 3 Com. Law Rep. 97; 4 Mau. & Selw. 194, Castairs v. Steane; Doe ex dem. Metcalfe v. Brown, 3 Com. Law Rep. 109; 3 Barnew. & Ald. 664; 5 Com. Law Rep. 417, S. C. But, if the Court ought to have decided the question, they ought not to have decided it in the way asked by the appellant. It is absolutely necessary to have a communication for a loan, to render the sale of property connected with a loan usurious. The Bank, by its charter, was bound to sell its stock whenever par could be obtained. This ought to have great weight in ascertaining the intent of the Bank in making this contract.
In reply, it was said, that it did not appear judicially to the Court, that the Bank of the Valley was a corporation, and there fore, it could derive no benefit from the argument that the term " persons" did not apply to corporations. The charter of this Bank is a private law, which must be pleaded or given in evidence. 5 Com. Dig. 322, 323, (New Edition,) tit. " Parliament," R. 6, 7. Legrand v. Hampden Sidney College, 5 Munf. 324. Our law, 1 Rev. Code. 510, chap. 123, sec. 92, merely declares that private Acts may be given in evidence without being specially pleaded; but, they must be given in evidence, and the Court cannot take notice of them judicially. That this law is a private Act, appears from the cases of Kirk v. Nowell, 1 Term Rep. 125; Holland's Case, 4 Co. Rep. 76; The Prince's Case, 8 Co. Rep. 28.
This is a most important case, both for the amount of money, and the principles of law, involved in it; and it was argued with all the zeal, ability and research, which its importance merited. It is a suit by the Bank against Stribbling, on a promissory note for $ 8,800, payable at sixty days to Fr. Stribbling, or order, negotiable and payable at the Bank. There are six endorsers; and the last directs that the note be credited to the drawer. It was discounted at the Bank; protested for non-payment; and the maker sued. The declaration sets out the particulars of the case. The defendant, 1st, demurred generally to the declaration, and on argument the demurrer was overruled. 2d. He filed a special plea of usury, to which there was a replication and issue. 3d. He pleaded Nil Debet, and issue. 4th. Another special plea of usury, to which there was a demurrer. The Court thought the plea bad; but gave leave to amend, by adding the scienter. Thus amended, the Court received the plea. The plaintiff excepted to the opinion of the Court giving leave to amend, and took issue on the plea. The defendant filed another special plea of usury to the following effect: that before the making of the note, to wit, on the 14th day of February, 1821, at & c. it was corruptly, and against the form of the Acts of Assembly, & c. agreed between the Bank and the said Stribbling, that the Bank would discount for him two notes, one for $ 10,000, the other for $ 2,500, and would continue the said discount for eighteen months, provided Stribbling (and several others named) should be made drawers, and the notes should be endorsed by Sigismond Stribbling; the notes to be renewed every sixty days, and the discount to be paid thereon, to wit, interest in advance at the rate of one half of one per cent. for every thirty days; and provided that the said Stribbling would take in payment of the said discount, one hundred shares of stock of the Bank at $ 10,000, and the rest in money. The plea then states the giving and discounting the notes, with their various renewals; the receipt of the shares at par, & c.; all in execution and continuation of the corrupt agreement; and concludes with an averment, that at the original discounting, and at each renewal of the notes, there was uniformly paid in advance by Stribbling to the Bank, in execution of the said corrupt and unlawful agreement, a discount upon the notes, at the rate of one half of one per cent. for every thirty days; and he avers that the discount and interest contracted to be paid, and actually paid, by him to the Bank, at the renewal of the said notes, every sixty days, exceeds the rate of $ 6 for the forbearance and giving day of payment of $ 100 for one year; contrary to the Act of the General Assembly in that case made and provided; by means whereof, and by force of the said Acts of the General Assembly, the said last mentioned promissory note was, and is, void in law, and this, & c. To this plea there was a general demurrer, which the Court sustained.
The issues of fact were then tried by a jury, and all found for the plaintiffs; on which verdict, the Court rendered judgment.
In the progress of the trial, three exceptions to the opinion of the Court were taken; which will be further noticed hereafter, as also an exception to the opinion of the Court overruling a motion for a new trial. The demurrers to the declaration, and the last plea, were placed by the counsel for the defendant on the same ground, to wit, that the case disclosed by each was a...
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