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Opinion of the Court.

a much larger rate was, in fact, exacted and secured by the company, taking into consideration the amount of the loan, and the sum actually received under the contract.

By the thirteenth section of a statute of Illinois, in force on and after February 12, 1857, entitled "An act to amend the interest laws of this State," it was provided: "Where any contract or loan shall be made in this state, or between citizens of this state and any other state or country, bearing interest at any rate which was or shall be lawful according to any law of the state of Illinois, it shall and may be lawful to make the amount of principal and interest of such contract or loan payable in any other state or territory of the United States, or in the city of London, England; and in all such cases such contract or loan shall be deemed and considered as governed by the laws of the state of Illinois, and shall not be affected by the laws of the state or country where the same shall be made payable." Gross's Stats. Illinois, 1869, 371, c. 54, § 13.

And by another act, in force on and after February 16, 1857, entitled "An act for the encouragement and security of loans. of money," it was provided: "§ 14. It shall be lawful for any person or corporation borrowing money in this state, to make notes, bonds, bills, drafts, acceptances, mortgages or other securities, for the payment of principal or interest, at the rates authorized by the laws of this state, payable at any place where the parties may agree; although the legal rate of interest in such place may be less than in this state; and such notes, bonds, bills, drafts, acceptances, mortgages or other securities shall not be regarded or held to be usurious; nor shall any securities taken for the same, or upon such loans, be invalidated in consequence of the rate of interest of the state, kingdom or country where the paper is made payable being less than in this state, nor of any usury or penal law therein. § 15. No plea of usury nor defence founded upon an allegation of usury shall be sustained in any court in this state, nor shall any security be held invalid on an allegation of usury where the rate of interest reserved, discounted or taken does not exceed that allowed by the laws of this state, in consequence


Opinion of the Court.

of such security being payable in a state, kingdom or country where such rate of interest is not allowed. § 16. It shall be lawful for all parties loaning money in this state, to take, reserve or discount interest upon any note, bond, bill, draft, acceptance or other commercial paper, mortgage or other security, at any rate authorized by the laws of this state, whether such paper or securities for principal or interest be payable in this state, or in any other state, kingdom or country, without regard to the laws of any other state, kingdom or country; and all such notes, bonds, bills, drafts, acceptances or other commercial paper, mortgages or other security, shall be held valid in this state, whether the parties to the same reside in this state or elsewhere." Gross's Stats. Illinois, 1869, 372, c. 54.

These statutory provisions were in force at the time of the contract of loan involved in this case. And although the above acts of February 12, 1857, and February 16, 1857, were repealed by the act approved March 31, 1874, in force July 1, 1874, they remained in full force and effect as to rights acquired or causes of action existing under them, and before the repealing act went into operation. Rev. Stats. Illinois, 1874, pp. 1012, 1023, 1046, c. 131, § 5, paragraphs 297 and 299, and § 6. And by the act approved March 25, 1874, in force July 1, 1874, entitled "An act to revise the law in relation to the rate of interest," this provision of former acts was reenacted and preserved: "When any bond, bill, draft, acceptance, mortgage or other contract shall have been or shall be made in this state, or between citizens of this state, or a citizen of this state and any other state, territory or country, bearing interest at a rate lawful by the laws of this state, may be made payable in any other state, territory or country, such contracts shall be governed by the laws of this state." Rev. Stats. Illinois, 1874, 615, c. 74, § 8.

The contract of loan in question having been made between a citizen of Illinois and a corporation of another State, and the bonds having been executed in Illinois and secured by mortgage upon real estate there situated, the defence of usury, in a court of the United States sitting in and administering the

Opinion of the Court.

laws of Illinois, cannot be sustained upon the ground simply that the rate of interest, exacted or reserved, was in excess of that allowed by the law of the State in which the bonds are made payable.

3. We come now to consider whether, according to the law of Illinois, there was usury in this loan.

The statutes of Illinois, in force when this loan was made, fixed six per cent per annum as the rate of interest upon the loan or forbearance of any money, goods or things in action, with liberty to parties to stipulate or agree that ten per cent per annum be taken and paid. But it was provided that if any person or corporation in that State should contract to receive a greater rate of interest or discount than ten per cent upon any contract, verbal or written, such person or corporation should forfeit the whole of the interest contracted to be received, and should be entitled only to recover the principal sum due to such person or corporation. Gross's Stats. Illinois, 1869, 2d ed. pp. 370-1, c. 54; Rev. Stats. Illinois, 1874, p. 614, c. 74.

The contract was for a loan to Fowler of $9000, at ten per cent interest per annum. Seven per cent of the interest was evidenced by coupons attached to the nine bonds of $1000 each, and secured with the bonds by the deed of trust. The remaining three per cent, according to the testimony of Johnston, the company's local agent at Springfield through whom the loan was made, was "discounted" at the time the loan was finally negotiated. The amount received by Fowler in cash from the company was $7809.69. It was paid by a draft of Johnston on the company in favor of Fowler of date February 23, 1874.

In addition to the interest exacted for the loan, Fowler paid Johnston, as his commissions, the sum of $100. In reference to these commissions, and the relations held by him with the Trust Company, Johnston testified: "I had an agreement with the defendant that upon the completion of this loan he was to pay me a commission of one hundred dollars. After the loan was completed and after the draft exhibited had been delivered to the defendant, he paid me this one hundred dollars. The draft for $7809.69 exhibited herein was for the full


Opinion of the Court.

value of this $9000 loan on the day it was negotiated and
closed, as before stated and shown, and no deduction from
said full value of this loan on that day was made by me on
account of my said commission or on any other account what-
ever. The agreement under which this commission was paid
me by the defendant was unknown to the complainant, and
no part of said $100 belonged to or was paid to the complain-
ant. The expense of the abstract of title furnished by the
defendant, and the acknowledging and recording of the trust
deed, was of course paid by the defendant, but no deduction on
account therefor was made from the present value of this loan
on the day named.
In the negotiation of this loan,

from its inception to its completion, I acted as the medium of
communication between the complainant and the defendant.
I was not authorized, neither did I attempt to accept or reject
the defendant's application for this loan-I did, however,
recommend its acceptance by the complainant-nor did I
pass on the question of title to the real estate, all these mat-
ters having been submitted to and decided by the complainant
in New York, nor for what I did in connection with this loan
was I paid by the complainant anything, nor was I authorized
by the complainant to do anything in connection with this
loan more than I did and as I have shown."

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On cross-examination Johnston said: "This was the first loan I made for complainant. Afterwards I made other loans, not only to these parties, but to others. I had an understanding with the complainant company a short time before this loan was made. This loan and all other loans I made were in pursuance of this understanding. The complainant furnished me with the blank Exhibit F' [the application for the loan] in this case and blank Exhibit D,' [the report of the loan as negotiated with the borrower,] and gave me instructions as to how they should be filled up, which I accordingly followed in filling up such blanks. When I procured an application in this way I forwarded the same to the company for their consideration, acceptance or rejection. In my endorsement on this application recommending the loan, in signing my name as agent, I understood myself as agent of the company in this

Opinion of the Court.

matter. Complainant acted through me in making this loan. In my arrangement with complainant for making these loans it was the understanding that complainant was to pay me nothing whatever for my services, and that I was to procure whatever pay I had from the borrower."

In reference to Johnston's agency for the Trust Company, it further appears that before this loan was made, one Rockwell, an officer or agent of the Trust Company, went to Springfield, Illinois, to get some one to act as its agent at that place. He asked Fowler to suggest some one to loan money for the company on real estate. Fowler recommended Johnston, who, upon being introduced to Rockwell by Fowler, was appointed. To the written application for the loan, the following was appended: "I have examined the within application, believe the statements to be correct, and recommend a loan to applicant of $10,000 on the security offered. R. P. Johnston, Agent."

The bonds having been executed by Fowler, they were transmitted by Johnston to the company, at their New York office, in a communication headed " Agency of Equitable Trust Company, Springfield, Ills., Feb. 23, 1874," and signed by him as "Agent."

It is to be observed that out of the principal sum loaned the Trust Company retained, by way of discount, what was claimed to be the present value of such amount as would pay, in advance, three per cent of the stipulated interest for the whole period of the loan, five years. In view of this feature in the case there was much discussion at the bar as to whether it was permissible, in Illinois, for the lender to exact and receive interest in advance upon a loan made at the highest rate allowed by its laws. In view of numerous decisions of the Supreme Court of that State, it is not necessary to examine this question upon principle; for it is the settled doctrine of that court that the mere taking of interest in advance does not bring a loan within the prohibition of usury. In Goodrich v. Reynolds, 31 Illinois, 490, 498, it was said : "The remaining plea sets up usury in this, that the interest was made payable semi-annually. It has long been settled, such reserva

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