1854. JAMES v. RICE. Argument. nothing herein contained shall extend to the loan or forbearance of any money upon security of any lands, tenements, or hereditaments, or any estate or interest therein." In Connop v. Meaks (a), bills having been given payable at three months and dishonoured, a warrant of attorney was given as security; and the bills being upon usurious terms, the question was, whether the warrant of attorney was protected by the 3 & 4 Will. 4, c. 98, s. 7: and the Court held that it was. In Ex parte Knight (b), a bill which was good by the statute was held not to be invalidated by the deposit of goods as a collateral security, whether that deposit could be sustained or not; and it was intimated, that probably the deposit would be illegal. So far that case is against me, but it is not supported by the other cases on the subject. Vallance v. Siddel (c) decided, that a bill or note payable "on demand" was within the Act. In Berrington v. Collis (d) it was decided, that a loan at usurious interest upon the security of the deposit of a lease, that being the principal security, would not be brought within the Act of Will. 4 by a bill or note at three months, given collaterally for the same debt. In Holt v. Miers (e), Parke, B., says, that if a warrant of attorney were taken as security for the debt at usurious interest, it would be void; "but if taken bonâ fide to secure the bill of exchange, or if the latter were given as the original security for the usurious interest, it would have been good." So, in Doe d. Haughton v. King (ƒ), where the collateral security was a mortgage of freeholds, it was held to be valid. Again, in Bell v. Coleman (g), deeds having been deposited as a collateral security subsequently to discounting bills at more than 5l. per cent., the deposit was held good; (a) 2 A. & E. 326. (c) 6 A. & E. 932. (d) 5 Bing., N. S., 332. (e) 5 M. & W. 174. and it was decided, that it was not invalidated by a renewal of the acceptances at usurious interest afterwards made, although the 2 & 3 Vict. c. 37, had passed in the meantime. In Follett v. Moore (a), the document in question was not a promissory note, but an agreement to pay 500l. on demand, and interest at the rate of 77. per cent., and also to deposit a lease, and it was therefore held to be void. Clack v. Sainsbury (b) decided that the 3 & 4 Will. 4, c. 98, is not repealed by the subsequent statutes of the 1 Vict. c. 80, or 2 & 3 Vict. c. 37, and that, therefore, short bills at usurious interest are still legal; and this was also held in the case of Nixon v. Phillips (c), which also decided that such a bill was good, though secured by a mortgage on land, Pollock, C. B., stating the ground to be the great difference in value between a short loan and a loan for a long period. In this case the deposit was a collateral security, and it has been held, that such a deposit may be made to extend by parol to subsequent advances (d). The case most against my view is Lane v. Horlock (e); but that case is under appeal to the House of Lords. The lender there obtained information as to the real estates of the borrower, and then advanced the money upon short bills, and took as a further security a warrant of attorney, upon which a judgment was immediately entered up, under which the lands were sought to be affected; but the Court treated the transaction as a device to evade the statute, and there (a) 4 Exch. 410. (b) 11 C. B. 695. (c) 7 Exch. 188. (d)" If the original bargain did not look to future advances, no future advance can be a charge, unless the subsequent transaction is equivalent to the original transaction. If it is equivalent to a re-delivery of the 209. (e) 1 Drew. 587. 1854. JAMES V. RICE. Argument. 1854. JAMES V. fore void. Where it is bonâ fide a short loan, and not like an ordinary mortgage which may endure for a long time, the transaction is within the policy of the statutes, notwithstanding there may be a deposit of deeds as a colArgument. lateral security: Ex parte Warrington (a). RICE. Jan. 16th. Judgment. The VICE-CHANCELLOR observed, that he had to act as counsel for the Defendant, and would therefore reserve his judgment. VICE-CHANCELLOR SIR W. PAGE WOOD:- When this case came on, it was ex parte on the part of the Plaintiff, the bill being taken pro confesso. But a point was raised, which is of considerable importance'; and it became necessary for the Court, owing to the form in which decrees pro confesso are now made, to consider whether it was right to make any decree at all in this case. The bill is for the purpose of establishing a security on land. The loan was originally upon a promissory note payable on demand at a higher rate of interest than what was formerly the legal rate of interest, and also, by way of further security, there was an equitable mortgage of lands. If the case had rested on the statutes alone, independently of the dicta of the common law Judges upon them in the cases which have been cited, I should have thought the construction to be this:-There was, first, the statute 12 Anne, c. 16, which invalidated all contracts for the loan of money at a higher rate of interest than 5l. per cent. Then followed the statute 3 & 4 Will. 4, c. 98, which enacted, in respect of promissory notes and bills having three months only to run, that they should not be invalidated by reason of a higher rate of interest being (a) 3 De G., Mac., & G. 159. reserved. Then came the statutes 1 Vict. c. 80, and 2 & 3 Vict. c. 37, which extended the time of payment to twelve months, and also extended the enactment to all contracts for the loan or forbearance of money above the sum of 107sterling; but the latter provided that nothing therein contained should extend to the loan or forbearance of any money upon security of any lands, tenements, or hereditaments, or any estate or interest therein. The scheme of the legislature was this: First, all such contracts were invalidated by the statute of Anne; then, by a later statute, particular securities, such as a promissory note payable in three months, were excepted, leaving every other contract subject to the general law. Then came the statute of 2 & 3 Vict. c. 37, which applied to all contracts for the loan of money, and not merely to promissory notes and bills; and it then, for the first time, became necessary to provide, that contracts which affected land should be still liable to the statute of Anne. I should not have considered, because a promissory note for three months was taken out of the operation of the statute of Anne, that, in a case where there was such a promissory note, and also a further security upon land for the same loan, that further security could in any way be supported, though the promissory note would be good. But the dicta of the common law Judges in the cases on this subject have thrown some doubt upon this part of the question. The first case in which it came under the consideration of the Court was the case of Doe v. King (a), in which the contract was held valid, not on account of the statute, but from the particular nature of the transac tion. There a promissory note was given, which was perfectly good, being for interest at the rate of 5l. per cent. only. (a) 11 M. & W. 333. 1854. JAMES V. RICE. Judgment. 1854. JAMES v. RICE. Judgment. It was discounted, and then a mortgage was made as a security for the whole amount of the note and interest, as from the date of the note, which of course secured a larger sum than that advanced on the note, which was only the amount minus the discount, so that the amount actually advanced was less than that expressed in the mortgage deed by the discount. The Judges, on a verdict, finding that the object of the contract was merely discounting the promissory note, and that the mortgage was only a collateral security, said, that, on that finding, independently of the statutes, they considered that the mortgage was merely a security for the note, and that there was no usurious contract at all, and that the mortgage was good; and accordingly judgment was given in ejectment against the mortgagor. In giving judgment, Parke, B., said that he did not wish it to be understood, that, even if the case had to rest on the protection afforded by the statutes it might not be supported, because, the promissory note being protected, the subsequent statute of 2 & 3 Vict. c. 37, not being then passed, there was nothing to invalidate the security on land, for the statutes of 3 & 4 Will. 4, c. 98, and 1 Vict. c. 80, did not contain the clause which was inserted in the statute 2 & 3 Vict. c. 37; and if the promissory note for a debt and usurious interest were good, the payee was at liberty to take afterwards a collateral security on land for that which was a good debt under the former statutes. The same eminent Judge seems to have expressed a similar opinion in the case of Nixon v. Phillips (a). But in neither of these cases was it necessary for the determination of the cases before him. The main question has never been decided, except in Lane v. Horlock (b), which I am told is now under appeal to the House of Lords. That case goes to the extent that such a security on land is invalid, and somewhat further with respect to the particular nature of the security which was there given. Looking at (b) 1 Drew. 587 (a) 7 Exch. 188. |