Town of Danville v. Pace

• Decision Date: 08 April 1874
• Citation: 66 Va. 1
• Parties: TOWN OF DANVILLE v. PACE.--Two cases.
• Court: Virginia Supreme Court

66 Va. 1

TOWN OF DANVILLE v. PACE.--Two cases.

Supreme Court of Appeals of Virginia.

April 8, 1874

Absent, Bouldin, J.

1. The act of March 22, 1873, Code of 1873, ch. 57, § 36, p. 544, in reference to the defense of usury by corporations, is retroactive in its operation, and applies to contracts made by a corporation before the passage of the act; and this though suit has been brought upon such contract, before its passage. And the act is not in violation of the constitution of the United States or of that of Virginia.

These were two actions on the case, brought in June 1868 in the Circuit court of the town of Danville, and afterwards removed to Richmond, by James B. Pace against the town of Danville to recover interest due upon two certificates of debt issued by said town and purchased by said Pace. It appears that by the order of the council of the town of Danville there was sold at public auction, in September 1863, $20,000 of the bonds or certificates of debt of said town, payable in ten and twenty years, and bearing interest at the rate of six per cent. per annum, payable semi-annually, and of these Pace purchased two of $3,000 each, for which he gave $12,000 in Confederate States currency. Interest was paid up to and including January 1st, 1865. In June 1873, the defendant demurred to the declarations, and pleaded non assumpsit, and, in July, offered two pleas setting up usury in the debts, which pleas were, upon the motion of the plaintiff, excluded by the court; and the defendant thereupon excepted.

There were judgments in the cases in favor of the plaintiff for the amount of the interest due prior to the institution of the suit; and the town of Danville thereupon applied to a judge of this court for a supersedeas in each of the cases, which was allowed.

Ould & Carrington, for the appellant.

F. L. Smith, Marshall and F. L. Smith, Jr., for the appellee.

STAPLES J.

The plaintiff in the court below, who is the defendant in error here, is the holder of four notes or certificates of indebtedness, executed by the town of Danville in 1863, amounting in the aggregate to twelve thousand dollars, and maturing ten and twenty years after date, with interest thereon, payable semi-annually. In the year 1868 the plaintiff instituted actions of trespass on the case in the Circuit court of Danville, for the recovery of the interest which had accrued upon these notes from the 1st day of January 1865, to the 1st day of January 1868. The cases were subsequently removed to the Circuit court of Richmond. At the June term 1873 of that court, the defendant, in addition to the general issue, tendered two pleas of usury in writing, which, on motion of the plaintiff, were rejected; and the defendant excepted.

After the rejection of these pleas, it was agreed by the parties that a jury should be waived, and all matters of law and of fact submitted to the court upon the facts agreed: whereupon the court rendered judgment for the plaintiff. To that judgment a writ of error was awarded by a judge of this court.

The chief, if not the only question for our determination, is the right of the town of Danville to rely upon the defence of usury in these actions. The decision of that question depends upon an act passed March 22d, 1873, and found in the Revised Code of 1873, page 544. It is in these words: " No corporation shall hereafter interpose the defence of usury in any action; nor shall any bond, note, debt or contract of such corporation be set aside, impaired or adjudged invalid by reason of anything contained in the laws prohibiting usury." It is claimed by the counsel for the defendant, that this section applies only to causes of action arising, and contracts made, after its adoption; and consequently, the notes or certificates in controversy are not embraced by its provisions. The learned counsel relies strongly upon the well settled rule, that statutes are to be construed as prospective in their operation, unless the language plainly shows the intention of the legislature that they should have a retrospective effect. In support of this view he has cited numerous authorities, which undoubtedly sustain the proposition that the courts will not so construe a statute as to give it a retrospective operation, unless there is something on the face of the enactment putting it beyond a doubt that such was the purpose of the legislature. Upon this point there can be no solid ground for controversy. The question is, whether the present enactment furnishes unmistakable evidence of the legislative purpose to give it a retroactive operation and effect.

It will be observed that the words used are very comprehensive. " No corporation shall hereafter interpose the defense of usury in any action." The words, " any action," necessarily include suits instituted before as well as after the passage of the act. There is nothing in the context to give them a more limited operation. The defense is prohibited in all cases. In order to adopt the construction insisted on by the defendant, other words must be incorporated into the body of the act so as to make it read, " no corporation shall hereafter interpose the defense of usury in any action upon a contract hereafter made. " But clearly the legislature did not intend so to confine the effect of the enactment. Had such been the purpose, nothing would have been easier than to have used words appropriate to that object. If any doubt upon this point existed, it will be removed by reference to the next clause in the same section: " Nor shall any bond, note or debt, or contract of such corporation, be set aside, impaired or adjudged invalid by reason of anything contained in the laws prohibiting usury." No distinction is made between contracts entered into before and after the statute: whenever made, they shall not be adjudged invalid by reason of anything contained in the usury laws. The legislature having thus declared, in the most unequivocal terms, that no contract of a corporation shall be deemed invalid because it may be usurious, it is impossible for the courts, without the grossest perversion of language, to hold that those contracts only are meant which are entered into after the law is passed.

It must not be forgotten that the first clause of the section, already quoted, is a literal copy of a New York statute upon the same subject. The identity of language, used in both statutes, shows that the framers of our act had before them the New York law, and intended to adopt it without change or qualification. In Curtis v. Leavitt, 15 New York R. 1, a very noted case, this statute received a very careful consideration. All the judges agreed in giving it a retrospective effect, so that securities, to an amount exceeding a million of dollars, were held to be valid, though utterly void when issued, by reason of the usurious taint with which they were infected.

It is not to be supposed that the legislature incorporated into our laws an important statute of another state in entire ignorance of the interpretation given to it by the courts of that state. It must be presumed rather, that the legislature in adopting the precise phraseology, intended to adopt along with it the interpretation also.

I shall have occasion hereafter to refer to a number of cases in other states involving the constitutionality of statutes giving validity to antecedent usurious contracts. The language of some of these statutes is certainly not more comprehensive than that of our act; and yet the courts there experienced no difficulty in giving them a retrospective operation and effect. The limits assigned to this opinion will not justify any citations of these statutes. I must therefore content myself with this simple reference to them, satisfied that upon examination they will sustain the view I have taken.

The learned counsel who argued the case here for the defendant referred to the 18th section of chapter 16, Code of 1860. The learned counsel obviously did not attach much importance to this section, although it seems to have been relied upon elsewhere as decisive of the case. I do not give the exact words of the section, but it substantially provides that no new law shall be construed to repeal a former law as to any act done, or right accrued, under the former law, or in any way whatever to affect any act done, or right accrued, under the former law.

In construing this section, it is necessary to consider also the preceding one, which provides that this rule of construction shall not be adopted, if it would be inconsistent with the manifest intention of the legislature. In other words, the two sections taken together mean no more than that a new law shall not be construed to affect any right accrued under a former law, unless such is the manifest purpose of the legislature. A rule of construction which would always prevail in regard to vested rights of a civil character independently of any statutory enactment on the subject.

Now if the view already presented in regard to the statute of March 23, 1873, be correct, if that statute is plainly retroactive in its operation, and was so intended by the legislature, then the 18th section does not apply to it, because it would be inconsistent with the manifest purpose of the legislature to give it such application. To adopt any other rule would be to declare that one legislature having adopted a general statutory rule of construction, no succeeding legislature is authorized to depart from that rule.

It is worthy of observation that the provisions of the 18th section were taken from the revised statutes of New York and Massachusetts. The 35th section of the New York statutes although not identical with the language of the 18th, is substantially the same in its operation...