Statement of the Case.

But the original answer is important only as alleging that the loan was usurious, and was consummated in the manner it was with intent to evade the statutes of Illinois relating to interest.

The plaintiff filed a general replication; and subsequently, the defendants, by leave of the court, amended their answer, stating more fully the grounds upon which they based the defence of usury. They also alleged that the contract of loan was and is a New York contract, and that by the statutes of that State it was usurious, in that the interest contracted to be received by the plaintiff, having regard to the amount actually advanced by it, was in excess of seven per cent per annum, the rate established by the laws of New York. Of those statutes they claimed the benefit.

[The facts proved, and which were relied upon to establish that the contract was usurious under the laws of New York, are stated in the opinion of the court, post pages 397-399.]

By a decree passed October 20, 1884, the court below found the amount due from Fowler to be only $2980.67 on the bonds, and $270.94, insurance and taxes paid by the plaintiff .with interest thereon; in all, $3251.61. At the foot of that decree were these orders:

"And thereupon the complainant entered its motion for a rehearing before a full bench.

"Whereupon, on said 20th day of October, of the year last aforesaid [1884] came the complainant, by its solicitor, and filed in the clerk's office of said court its motion and petition for a rehearing in this cause, which motion and petition are as follows," etc.

Following the above, in the transcript, are the written motion and petition for rehearing.

On the 8th of June, 1885, the succeeding term, the cause was set for hearing on the 29th of that month before what is called a full bench. Then appears an order, under date of June 30, 1885, entered as of October 31, 1884, granting the rehearing asked. To that order the defendants excepted.

By the final decree of January 11, 1887, the sum of $8150.79 was adjudged to be due the Trust Company, of which $7809.69 was found to be the sum actually advanced by it to Fowler,

Argument for the Equitable Trust Co.

and $341.10 was the amount of insurance and taxes on the property paid by the company, with interest on each sum, from the date of the decree, at the rate of six per cent per annum. The mortgaged property was ordered to be sold to raise the above aggregate amount found to be due, with such interest and the costs of the suit. From that decree each party has prosecuted an appeal; the defendants insisting that no decree, for any amount, should have gone against them, while the plaintiff insists that the decree should have been for a larger amount.

Mr. William L. Gross,' for the Equitable Trust Company, argued as to the defence of usury:

I. Usury is a local question. It is the lex loci contractus which governs in respect of usury. De Wolf v. Johnson, 10 Wheat. 367; Andrews v. Pond, 13 Pet. 64; Cromwell v. County of Sac, 96 U. S. 51, 62; Call v. Palmer, 116 U. S. 98; Latrobe v. Hulbert, 6 Fed. Rep. 209.

II. Allegata et Probata. The rule is general, and without exception, that an averment or plea of usury, must be proved as laid. Ewing v. Howard, 7 Wall. 499; Drake v. Watson, 4 Day, 37; Wilmot v. Monson, 4 Day, 114; Brown v. Mortgage Co., 110 Illinois, 235; Kihlholz v. Wolf, 103 Illinois, 362; Phillips v. Roberts, 90 Illinois, 492; Telford v. Garrels, 132 Illinois, 550; Beach v. Fulton Bank, 3 Wend. 573; Smith v. Brush, 8 Johns. 84. And if the defendant fails in proving the usurious contract in the way and manner in which he has charged it in his plea or answer, the defence must fail. Vroom v. Ditmas, 4 Paige, 526.

III. Intent is an essential ingredient. If the transaction, says the court, in Bank v. Owens, 2 Pet. 527, was in violation of the restriction in the bank's charter limiting its power to "take" more than 6 per cent interest, "it could only have been upon the ground of an intention" to evade the statute. So also: "In construing the usury laws, the uniform construc

1 This case was argued with Fowler v. Equitable Trust Co., post 408, and Fowler v. Equitable Trust Co., post 411.

Argument for the Equitable Trust Co.

tion in England has been, (and it is equally applicable here,) that to constitute usury within the prohibitions of the law, there must be an intention knowingly to contract for or to take usurious interest; for if neither party intend it, but act bona fide and innocently, the law will not infer a corrupt agreement. Where, indeed, the contract upon its face imports usury, as by an express reservation of more than legal interest, there is no room for presumption; for the intent is apparent; res ipsa loquitur. But where the contract, on its face, is for legal interest only, there it must be proved that there was some corrupt agreement or device, or shift, to cover usury; and that it was in the full contemplation of the parties.

The quo animo is, therefore, an essential ingredient in all cases of this sort." United States Bank v. Waggener, 9 Pet. 378, 399. See also Hotel Co. v. Wade, 97 U. S. 13, 23; Lloyd v. Scott, 4 Pet. 205; Palmer v. Call, 7 Fed. Rep. 737.

IV. Commissions by agent or broker. When an agent, authorized to loan money at lawful interest, exacts for his own benefit more than the lawful rate, without the knowledge or authority of his principal, the loan is not thereby rendered usurious. The loaner of the money must not only be a party to the usurious contract, but he must take the usury. Call v. Palmer, 116 U. S. 98. And when the evidence fails to show that the commission was paid to the loaner, the defence of usury, based thereon, will not be sustained. Grant v. Phoenix Life Ins. Co., 121 U. S. 105, 117.

Agent's commissions, as an element in usury defences, has often been before the Supreme Court of Illinois :

Ballinger v. Bourland, 87 Illinois, 513. There the agent procured a loan and charged a commission and expenses to borrower, but without the lender's knowledge and not for the lender's benefit, and the court said it was not usury. See also Colehour v. State Sav. Ins., 90 Illinois, 152; Boylston v. Bain, 90 Illinois, 283; Phillips v. Roberts, 90 Illinois, 492.

Payne v. Newcomb, 100 Illinois, 611. There the loan agent was required to learn the situation of the property offered as security, to examine and ascertain the title, and became per

Argument for the Equitable Trust Co.

sonally liable to the lender for any loss sustained through defective title or overvaluation of the security, and the court found he was the agent of the lender and his taking a commission from the borrower in excess of the legal rate rendered the contract usurious. But in Hoyt v. Pawtucket Institution for Savings, 110 Illinois, on page 394, it is expressly said that Payne v. Newcomb was not intended to decide that a broker loaning the money of others, could not take a commission from the borrower without rendering the loan usurious. See also Kihlholz v. Wolf, 103 Illinois, 362; Meers v. Stevens, 106 Illinois, 549; McGovern v. Union Mutual Insurance Co., 109 Illinois, 151.

Hoyt v. Pawtucket Institution for Savings, 110 Illinois, 390. Taylor was a loan broker in Chicago. Hoyt made application to the Institution for Savings for a loan of $5000 at 10 per cent, which being forwarded by Taylor to the Institution, at its residence in Rhode Island, was there accepted, and the loan was paid by the Institution, (less $250, one half-year's interest, deducted in advance,) by a draft to the order of Hoyt himself. Taylor charged Hoyt $250 for commissions for securing the loan, which was paid. This commission, and the agreement therefor, was without the knowledge of the, lender, and the Institution got no part thereof, and received no more than 10 per cent on the money loaned, as evidenced by the note given therefor. The court held: 1. Taking interest in advance was not usurious; and 2. That the commissions charged by Taylor did not make the transaction usurious, saying: "The Institution for Savings has never received, or agreed to receive, more than the legal rate of interest upon this loan, and whatever in addition thereto Hoyt has paid Taylor, has been in compensation for services of Taylor in procuring the loan for Hoyt, which was something entirely between themselves, independent of the Institution for Savings, with which the latter had no connection. We fail to discover anything of usury in the transaction."

Brown v. Mortgage Co., 110 Illinois, 235. Hale & Co., of Chicago, procured a loan from capitalists in Scotland, for Brown, of $4500 for 5 years at 9 per cent, and the latter gave

Argument for Fowler.

his note therefor. Brown paid Hale & Co., or the latter deducted from the sum loaned, a commission of $225, and this, it was charged, rendered the loan usurious. The evidence, the court said, did not show Hale & Co. to have been the agents of the lender, adding: "If they were not the company's agents, but were the agents of Brown, in that transaction, although he might have paid them an amount which, added to the current interest upon the note, largely exceeded legal interest, it would not prove usury in the loan. It cannot concern the lender what the borrower pays to his own agents. Kihlholz v. Wolf, 103 Illinois, 362; Phillips v. Roberts, 90 Illinois, 492. The burden of proving a transaction usurious rests upon the party alleging it. Boylston v. Bain, 90 Illinois, 283; Kihlholz v. Wolf, supra. In the next place, at the time this loan was made, it was lawful to exact 10 per cent per annum interest on money loaned. The note given bears interest only at the rate of 9 per cent per annum, and runs for 5 years. It has been held that it is not usurious to exact the payment of interest in advance. Mitchell v. Lyman, 77 Illinois, 525; Goodrich v. Reynolds, 31 Illinois, 490; S. C. 83 Am. Dec. 240; McGill v. Ware, 4 Scammon, 21. One per cent on $4500 (the amount borrowed) for 5 years makes just $225; and so in any view, interest has not been exacted beyond the rate of 10 per cent per annum -the then legal rate. McGovern v. Union Mutual Life Ins. Co., 109 Illinois, 151." See also Ammondson v. Ryan, 111 Illinois, 506; Cox v. Mass. Mutual Life Ins. Co., 113 Illinois, 382; Haldeman v. Mass. Mutual Life Ins. Co., 120 Illinois, 390; Mass. Mutual Life Ins. Co. v. Boggs, 121 Illinois, 119; Telford v. Garrels, 132 Illinois, 550; Sanford v. Kane, 133 Illinois, 199; Ryan v. Sanford, 133 Illinois, 291.

Mr. Robert G. Ingersoll and Mr. William Ritchie for Fowler argued as to the law which was to govern the construction of the contract:

These are all New York contracts, to be governed by the New York statutes, and the securities are, consequently, void.