JAN. TERM, 1857. JONES V. MCLEAN. *JONES P456 V. McLEAN, SERV. ET AL. The rate of interest that a commission merchant may charge is regulated by legislative enactment, and not by the custom of merchants. The charge of a commission merchant for accepting a draft is but a legal compensation f ,r the benefit of his name and credit and in consideration of his risk, and is nt,t regarded as intetest: But a charge for paying such draft at maturity is reprded as interest oo the money advanced; and If the commission and interest together exceed the legal rate of interest, it will be deemi-d usurious. A mortgage or deed of trust, executed in this State to ecurea new ious demand, would be null and void, and a caul t of chsncery w,.uld not entertain a bill to fore•dose. against the plea to usury; but where the defendant by his answer does not insist that such mortg g• • , etc., be declared void for usury, but me ely that it be ope ird and the trans• ac• ion cleans . d of the usurious charges, the court should open t h e mortgage; cause . the acconnt between the two parties to be re-stated, purging it of usury; and render a decree for such amount as is legally and equitably due. Appeal from the Circuit Court of Lafayette County in Chancery. ON. SHELTON WATSON, Cir-H cuit Judge. Watkina & Curran and Gallagher, for the appellant. Pike & Cummin8, for the appellees. ENGLISH, C. J. This was a bill to foreclose several mortgages,determined in the Lafayette circuit court. The bill was originally filed in the name of James Dick, Harry R. W. Hill and Wm. J. McLean, as surviving partners of the firm of N. &J. Dick & Co., against Isaac N. Jones, Jason C.
JONES V. MCLEAN. VOL. 18: Wilson and others. After the bill was them until May, 1839, though it is more filed, the death of James Dick was sug-than probable, from the pleadings and gested, and the cause ordered to pro-evidence in the cause, that accounts. gress in the names of the surviv-current were made out and transmit-ing complainants. After this, Hill ted to him annually, showing the bal-4571 *departed this life, and his ex-ances against hint, etc. ecutors, John M. Bass and John Mem-About the 1st day of May, 1839, field, were made parties. James H. Wilson, an agent of the The original complainants were the house, came to Arkansas, for the pur-successors and survivors of the firms of pose of making a settlement with N. & J. Dick & Co., Dick & Hill, Hill, Jones, and securing the balance due McLean & Co., and W. & J. Dick & from him, etc. At which time it Co., a commission house of New Or-seems the balance against him, upon leans. The defendant Jones was a an *account as stated by the [*458 planter of Lafayette county, Arkansas. house, was $48,589.95. Upon this The case made for the complainants amount, Wilson, in making a settle-is eubstantially as follows ment with Jones, allowed him an ab-Jones commenced doing business solute credit for $6,181.19, on account of with the house of complainants at New notes, drafts, etc., turned over by bim Orleans, as far back as the year 1835, to Wilson for the benefit of the house, and continued to do business with it, thereby reducing his indebtedness to up to and after the time of filing the $42,408.76. For $5,000 of this amount, bill in September, 1848. He shipped Jones executed his bond with one Giles. his cotton to the house, drew drafts, as security. To secure the payment of etc., upon it, and received supplies for this bond and $37,408.76, balance due his plantation from it. upon the account stated, Jones also ex-There was a branch of the same house ecuted to the firm a mortgage upon his at Nashville, Tennessee, conducted un-plantation (improved public lands) in der the style of H. R. W. Hill & Co., Lafayette county, and forty-one slaves with which Jones had dealings before employed in the cultivation thereof, and after he commenced business with conditioned in the following words, the New Orleans house. His dealings etc : • with the Nashville house were confined " But this obligation is upon _the ex-mostly to its making advances to him, press condition that if I, the said Isaac by accepting or discounting his drafts, N. Jones, shall pay or cause to be paid etc. to eaid James Dick, etc., etc., surviv-On the 28th January, 1837, his acing partners of the firm of N. &J. Dick count with the Nashville house was & Co., the sum of $37,408.76, the closed to that date, and on crediting amount with and by which I stand in-him with a draft for $29,014.73, drawn debted to the said firm, etc., upon an by him on that day upon the New Or-account stated between myself and said leans house, there was a balance in his firm on the 1st of May, 1839, for divers favor of $21,477.57, which balance the goods, wares aud merchandise before Nashville house transferred to his that time sold and delivered to me at credit on the books of the New Or-my request : and for divers moneys leans house. laid out and expended for me, and in It does not appear that he had any .and about my business at my like re-settlement with N. & J. Dick & Co., quest : and for divers sums of money the New Orleans house, from the time loaned me and at my like request, all he commenced doing business with before said day : and also pay or cause
JAN. TERM, 1857. JONES V. MCLEAN. to be paid to said James Dick, etc., 24th of May, sign0 by me and a cer-etc., the further sum of $5,000, with in- tain James Giles, and payable to the. terest on the first mentioned sum at said N. & J. Dick & Co., for $5,000, to. the rate of eight per cent, per annum be void." from the 1st of May, 1839, and interest On the 12th day of March, 1841, Jones on the last mentioned sum at the rate executed a deed of trust to Jason C. of ten per cent. per annum, then this Wilson, reciting that he was indebted obligation, and also a note of hand to the surviving partners, etc., of the commonly called a written obligation firm of N. J. Dick & Co., in the sum bearing even date herewith, given by of $42,408.76, secured to be paid by the myself and a certain James Giles to the above mortgages, reciting them, and said firm of N. & J. Dick &Co., for the that a large portion of said debt re-said sum of $5,000 last mentioned to be mained unpaid, which he was desirous paid one day after the date thereof, of paying out of the produce of the with interest from the said 1st of May, plantation, etc., and conveying to and also said account stated , shall all Wilson the mortgaged property, and be void and of no effect, etc." the horses, cattle, etc., etc., on tba The mortgage is not dated but it ap- place, in trust to carry on the planta-pears to have been executed on the 24th tion, sell the crops and pay off said of May, 1839, the day on which the set- debt, only reserving enough every tlement between Wilson and Jones year to supply the place, and support seems to have been finally made. Jones' family. This trust not to inter-4591 *On the 14th January, 1840, fere with the mortgages, or the right of Jones executed another mortgage the survivors, etc., of N. & J. Dick & upon additional slave s, to secure the Co., to enforce the mortgages and cOl-same debts, as follows: lect their debt, etc. "Know all men, etc., that, I, Isaac On the 22d February, 1843, Jones, N. Jones, of etc., for and in considera- having perhaps procured titles to the tion of my indebtedness to N. & J. lands embraced in the first mortgage Dick & Co., of New Orleans, upon an and in the deed 'of trust to Wilson, account stated between us, on the 24th executed another deed to Wilson, con-day of May, 1839, and note of same veying to him the lands, by their date for $5,000, due one day after date, numbers, on the same trusts and con-for securing which I executed a mort- ditions, as in the original trust deed to gage of that date upon sundry slaves, Wilson . etc., etc., do hereby give, grant, sell *The above deeds were all exe- r460, and convey to the said N. J. Dick & cuted and recorded in Lafayette county, Co., etc., the following named slaves where Jones resided, and the property [here the names of eighteen negroes are was situated. stated], to have and to hold, etc., etc. The bill was filed ou the 18th of Provided, nevertheless, if I, the said Sept., 1848, setting out and exhibiting Isaac N. Jones, etc., shall pay to the the mortgages and deeds of trust, and said N. & J. Dick & Co., the amount praying foreclosure and t . ale of the specified in said account stated, and property for the payment of the bal-also the sum ot $5,000, with eight per ance due upon the debts. cent, interest upon said account stated, Complainants also exhibited with and ten per cent. per annum interest the bill accounts current, numbered upon said sum of $5,000, then this from 1 to 14, showing the state of obligation, said account stated, and Jones' accounts with the house as con-also a writing obligatory, dated said ducted by the several firms successively
JONES V. MCLE&N. VOL. 18 from the year 1835 to the date of the ported a balance against him of 818,- first mortgage, and after, to the time 790.56, as of 2d Nov., 1853, at which of filing the bill, and showing the bal- time a final decree was rendered against ance claimed to be due from Jones, him for that amount, the mortgages etc. foreclosed, and the property ordered to Jones admits, in his answer, the exe- be sold to satisfy the decree, etc. cution of the several deeds, etc., exhib-From this decree both parties ap-ited with the bill. He also admits pealed to this court. that he was_ largely indebted to the The grounds upon which complain-firm of N. & J. Dick & Co., at the date ants appealed are not urged by their of the first mortgage, but denies his counsel here, and their appeal may be indebtedness to have been as large as disposed of by a general remark, that therein stated. On the Contrary, he there is no error in the decree of which avers that when the mortgage was they have any just cause to complain. given, no aettlement was made, and the There seems to be no serious d ;spu te actual amount due from him to the between the parties as to the amounts house was not ascertained; but a sum with which Jones was charged for sup-large enough to cover the amount was plies and credited by proceeds of cot-inserted in the mortgage, and the ton, etc., etc., subsequent to the first whole matter was to remain open, sub- mortgage, by the master's report, and ject to future adjustment. He then the decree of the court below. proceeds to allege and specify various The controversy hPre relates to the errors, mistakes, omissions of credits, accounts current exhibited with the improper charges, and charges for ex- bill, which produced the balance cessive and usurious interest in the against Jones, for which the first mort-several accounts prior to the mortgage, gage was executed. exhibited with the bill; which errors, 1. The statement in Jones' answer, etc., etc., having been embraced in the that when the first mortgage was given amount of debt covered by the mort- no settlement was made, and the ac-gage, he prays that the mortgages may tual amount due from him not ascer-be opened, and the accounts re-stated, tained, but a sum inserted large eno.Igh etc. to cover the amount : and that the The cause was finally heard upon the whole matter was to remain open sub-pleadings and evidence at the May ject to future adjustment, is contra-term, 1853, and the court holding that dicted by the deposition of James H. the mortgages were uot succesafully Wilson, the agent of the house of' N. & impeached on account of any of the J. Dick & Co., who made the settle-matters alleged in the answer of Jones, ment, and took the mortgage. It is al-refused to open them, but ordered the so at variance with the recitals con-master to take and state an account of tained in the first as well as the second the payments made by Jones upon the mortgage, and the deed of trust to mortgage debts, etc., and to ascertain Jason C. Wilson. Nor is there any in-the balance due, etc. timation that such was the understand-The master, after allowing Jones ing of Jones in any of the letters read credits claimed by him on ac- upon the hearing addressed by him to ;count of proceeds of cotton, etc., a member of the firm in reference to his shipped by him to complain- indebtedness to the house after the ex-'''ants after the date of the first ecution of the first mortgage. It is mortgage, less the value of supplies more than probable, as above remarked, furnished him by complainants, re- from all the facts of the case, that ae-
JAN. TERM, 1857. JONES V. MCLEAN. counts current had been annually vancing money to meet them at ma-transmitted to him by the house, turity, and ten per cent. interest, etc. showing the state of his indebtedness, The rate of interest, however, is reg-etc., and that he made the settlement ulated by legislative enactments, and with James H. Wilson, and executed not by custom. We must therefore tbe first mortgage, upon an account look to the statutes of Louisiana, where 462' 1 ] stated to that*time. Such is our the accounts in question were con-'conclusion, at least, upon the plead-tracted and to be paid, to determine ings and evidence relating to this point, what rate of interest was legally whatever may have been the truth of chargeable upon them. By agreement the matter. And this conclusion dis-of the parties, these statutes are to be poses of most of the objections made by regarded as proven and in evidence. Jones to the accounts. From the civil code: "Art. 2,895. 2. There is one serious objection, Interest is either legal or conventional. however, made to the accounts by Legal interest is fixed at tip following Jones, which is not thus disposed of: rates, to-wit : At five per cent, on all that is, that upon the face of the ac-sums which are the subject of ju-counts, it appears that he was charged .1 'dicial demand, whence this is P463 with usurious interest, which was car-called judicial interest; and on sums ried into the mortgage. discounted by banks, at the rate es-At the foot of the debit side of his tablished by their charters. account with the Nashville house, "The amount of the conventional in-olosing 28th January, 1837, there is a terest cannot exceed ten per cent. The charge of "interest in our favor to date, same must be fixed in writing; and tes-8126.10," but upon what item in the timonial proof is not admitted in any account it is charged, or at what rate, case. does not appear on the face of the ac-"Art. 1,934. Interest upon interest count. cannot be recovered, unless it be added Upon the face of his accounts cur-to the principal, and by another con-rent with the New Orleans house, it tract made a new debt. No stipulation plainly appears that he was charged to that effect in the original contract is with ten per cent, interest upon various valid." items and the same rate of interest These statutes seem to have been in upon the annual balances against him, force in Louisiana from the time of the etc. He was also charged with two commencement of the accounts cur-and a half per cent, commissions for rent in question, until after the date of accepting drafts drawn by him upon the first martgage. We shall look to the house: the same per cent. for ad-the decisions of the supreme court of vancing money to pay them at ma-that State for the interpretation which turity, and ten per cent, interest upon they have received there. the commissions and sums so advanced. It is manifest that the charge of in-It appears from depositions read at terest at the rate of ten per cent. in the the hearing on the part of complain-several accounts was excessive and usu-ants, that, during the period of time rious, being double the rate allowed by covered by those accounts, it was the the statute. custom in New Orleans for commis-It has been held by the supreme sion merchants to charge planters two court of Louisiana, that the charge by and a half per cent. commissions for a commission merchant of two and a accepting drafts drawn in anticipation half per cent, for accepting a planter's of their crops, a like per cent, for ad-draft is but a legal compensation for
JONES v, MCLEAN. VOL. 18 the benefit of the name and credit of spects, to the one now before us. The the acceptor in the negotiation of the planter was charged two and a half per draft, and a consideration for the risk cent. for advancing, and eight per cent. incurred by the acceptance: and such interest, which he secured by mort-commission is not to be regarded as gage. The charge for advancing was interest. held usurious. See also the same It is not usurious, therefore, for the point, Patterson v. Leake, 5 La. An. R. merchant to charge two and a half per 547. cent, for accepting the draft; and the In this case, Jones was charged two highest legal rate of interest (or by and one-half per cent. for advancing, agreement in writing, the highest con-and ten per cent. interest upon the ventional rate) upon money advanced sums advanced, which, according to by him to pay the draft at maturity. the decisions referred to, was equiva-Laland v. Breaux, 5 La. Ann. Rep. lent to twelve and a half per cent. inter-506. est; and this excessive and usurious interest, was carried into the sum se-"But," say the rourt in the same cured by the mortgage. case, "in our opinion, the charge of two and a half per cent. commission Ten per cent. was the highest rate of tor advancing, together with eight per conventional interest allowed by the cent. interest from the date of the ad-law of Louisiana where the accounts vance, stands upon a very different were contracted, or by the statute of footing. Names do not alter the sub-our State where the mortgage was ex-stance of thin g s. To agree with a party ecuted. If, by the execution of the that you will make an advance of mortgage, Jones could have ratified in-money to him (or to his creditor hold-terest charged at the highest convening his draft, accepted by you for his tional rate upon the accounts, as in-46, 11 accommodation in con*sidera-sisted by the counsel for complainants, tion of a commission of two and a half it can hardly be pretended that he per cent, and which draft he has failed could, or did ratify and make legal, into pay), and that he shall restore, first, tere4 charged at twelve and a half per the money with eight per cent. inter-cent. est from the date of the advance, and The mortgages and deeds of . trust besides, a commission of two and a half having been executed iu this State to per cent. for advancing, is virtually secure a usurious demand, by our law and substantially to agree to lend him they would be null and void, and the money at an interest of ten and one-court of chancery would not enter-half per cent. But this the law for-*Min complainants' bill to fore- p 465 bids: having fixed eight per cent, as the cloe and enforce them against the plea highest rate which can be lawfully of usury. Ruddell et al. v. Ambler, stipulated. (By act of 1844, convention present term. interest was limited to eight per cent.) But Jones, in his answer, does not in-It must be observed that this charge sist that the mortgages, etc., shall be of two and one-half per cent, for ad-declared void for the usury, and the vancing, cannot be referred to the complainants turned out of court with-trouble of labor of the plaintiff in con-out any relief, but merely insists that ducting the planter's business," etc. the mortgages, etc., shall be opened, The case, from which we have quot-and t.he accounts cleansed of the usuri-ed, was between a sugar planter and ous charges, restated, etc. This the his factor, and is similar in many re-court below should have done, and so
JAN. TERA1, 1857. much of its decree as refuses to do this, which should have been decreed to th e must be reversed.' complainants. With a view to the rendering of such A decree will accordingly be entered decree here as the court below should here in favor of McLean and others for have made, we have appointed the that sum, as of the 2d of November, clerk of this court to act as master in 1853, to bear interest from that time chancery with directions to purge •the forward, at eight per cent, per annum accounts of usury, restate them, and *until paid. The mortgages and [4466 report the balance due complainants, deeds of trust will also be regarded as allowing them legal interest according securities for this balance, and fore-to the laws of Louisiana, only to the closed with an order of sale, etc. date of the first mortgage. The decree rendered here will be cer-From his report, which we find to be tified to the court below with instruc-correct, it appears that the balance due lions to enter it at its first term, etc., from Jones on the lst of May, 1839, was and appoint a commissioner to carry $43,148.68, instead of $48,589.95. From it into execution, and if the decree is this balance deduct the absolute cred-not satisfied by Jones, by payment of its allowed by Wilson, $6,181.19, and the debt, interest, etc., within thirty the remainder is 836,967.49, instead of days of the next ensuing term of the 842,408.76, the amount recited in the court, the property embraced in the first mortgage. Regarding the bond mortgages and deeds of trust, or a suf-for $5,000 as extinguished by this re-ficient amount thereof for the purpose, duction, the master, under our direc-must be sold by the commissioner, after tions, has treated the $36,967.49, as the the usual notice, on the first day of said true amount of debt secured by the term of said court, etc., to satisfy the mortgages, and allowed complainants decree, etc. interest thereon from the 1st of May, Absent, Hon. Thos. B. Hanly. 1839, at the rate of eight per cent, per annum, this being the rate which Jones Cited :-33-649; 43-353; 44-230; 46-66. agreed by the terms of the mortgages to pay upon the amount due upon the account stated. After allowing Jones credit for all payments made by him after the date of the first mortgage by proceeds of cotton, etc., less the value of supplies furnished him by complainants, it appears that the balance against him on 2d of Nov., 1853, the da!e of the final decree of the court below was $4,330.84, which is the amount 1. The law of the place where the contract is made controls. Moore v. Clopton, 22-125; Parse! v. Barnes, 25-261; Jacoway v. Denton, 25-625; Robards v. Brown, 40-423; Parsons v. Boyett, 44-230; Thurs-ton v. Peay, 21-86. But in usury the place of payment controls. Bowles v. Wilbur, 33-645. See Grider v. Driver, 46-50, on presumption of laws of other States. The maker of a usurious contract will not be compelled in equity to pay the sum really burrow_cl. Acts 1887, page 57, sec. 3.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.