October 25, 2012

Tardeveau and Innes v. Smith's Ex'r, Lincoln, 1807

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Tardeveau and Innes v. Smith's Ex'r.

COURT OF APPEALS OF KENTUCKY

3 Ky. 183; 1807 Ky. LEXIS 45; 1 Hard. 183

September, 1807, Decided

PRIOR HISTORY:  [**1]  This was a suit brought in the Danville district court by Smith's executor against the firm of Tardeveau Brothers, and Innes, their security. It was founded on a bond, with a penalty in the usual form, dated the 29th May, 1788, and conditioned as follows: "Whereas, the above bound Tardeveau Brothers are indebted to the said James Smith two likely negroes, between the ages of fifteen years and twenty-five, to be sound and healthy; which said negroes ought to have been delivered in the month of January last past, but from some circumstances it hath been inconvenient for said Tardeveau Brothers to pay the said negroes, and the said James Smith being willing to wait until the 29th May, 1791, on receiving a reasonable hire for said negroes: Now, if the said Tardeveau Brothers, shall well and truly pay, or cause to be paid, to the said James Smith, his heirs or assigns, two likely negro male slaves, sound and healthy, between the ages of fifteen and twenty-five years, on or before the 29th May, 1791, and also the sum of twelve pounds per annum for each of said slaves, to commence from the first of January last past, until the said slaves shall be paid to the said James Smith, as a compensation [**2]  for their services, until paid, then the above obligation to be void," etc.

On the trial of the cause in the Lincoln circuit court, to which court it was transferred on the change of the judiciary, the defendants moved the court to instruct the jury, "That the hire of the negroes specified in the writing obligatory, on which the suit was founded, was usurious, and as such not recoverable; and that it would be proper to find legal interest on the value of the negroes, as it would otherwise be a greater compensation than the law contemplated."

This motion was overruled by the court, and judgment being given for the plaintiff, the defendants appealed. The errors assigned in the cause went only to question the propriety and legality of the opinion of the court in overruling the aforesaid motion.

COUNSEL: ALLEN for the appellants.--It is the duty of the court to instruct the jury whenever it is asked for, unless the instruction desired be not law. 2 Wash. 272.

The proper criterion for damages is the value of the property when it should be paid, with interest from the time the cause of action accrued.  [**3]  Pope v. Campbell, in this court, 1 where the contract was for young negroes, 2 Bur. 1011; a contract for stock, 1 Stra. 406; 8 Term Rep. 162; 1 Wash. 3.
1 Ante, 34.

An agreement between the parties to set the hire of a negro against interest of money, is usurious and void as respects that part of the contract. Reed v. Lansdale, in this court. 2 This is an attempt to do the same thing. The act of assembly is designed to guard against imposition. It expressly mentions the cases of forbearance. 3 This bond, on the face of it, is for forbearance. The right to receive hire for a slave is on account of the risk the owner runs of the life of his slave. It is the same principle which authorizes a man, on a money contract, to take more than legal interest where the principal was at risk. Here, the title to the negroes remaining in the Tardeveaus; they risked the lives of the negroes; Smith risked nothing. It is therefore illegal and unconscientious for him to receive the compensation for the risk run by his debtor. It is true that the contract expresses that it is for hire, but the fact is apparent that it is for forbearance. There can be no hiring where the party pretending [**4]  to hire out has no title to the property, and can run no risk of its life.
2 Ante, 8.
3 Acts of 1st Sess. 1798, ch. 75, sec. 1, p. 75, 1 Brad. 75.

If the contrary doctrine be maintained, how would you settle partial payments? By the common law, partial payment went first to sink the principal, and then the interest. 4 It is altered by our statute. 5 In case part of the principal was discharged, would you calculate interest on the residue, or apportion the hire? The inconvenience and uncertainty that would result from attempting to apportion the hire, will show that it ought not to be allowed.
4 But see 1 Dal. 378; Wythe, 147, etc.
5 Acts of 1799, ch 17, sec. 1, p. 40.

TALBOT for the appellee.--The statute against usury was intended to guard against frauds in loans, and not to restrain men in making real and bona fide contracts, which are not for loans, nor intended to cover a lending. For the true exposition of the statutes against usury, I refer to 5 Bac. (old ed.) 406 to 410, title, Usury, letters, B. C.; Cowp. 115, which fully support the position I have taken.

This is a real contract, and a stated compensation for the breach of that [**5]  contract, and is intended to place the party in the situation he would have been in if the failure to pay had not taken place. A jury should in all cases give such damages as in conscience will remunerate the plaintiff for the failure of the defendant to perform his contract.

If there be a failure to transfer profitable property, more than six per cent. should be given; if unprofitable, less. This is an attempt to restrain a man from making a contract which is fair in itself, and equitable in its application. In the case of Talbot v. Buford, which was in two several shapes before this court some years since, and which was as obstinately defended as any suit ever was in this country, there was a clause in the contract similar to the one now in question, and under which several hundred pounds were eventually recovered. It is true the point now in question was not made in that cause; but if it had been thought a tenable point, it would not have escaped the attention of those concerned.

In the case of Pope v. Campbell, the attention of the court was drawn to the time or age at which the negroes were to be valued. No question was there made between their hire and interest. Negroes [**6]  of their ages (ten years) were not worth more per year than interest on their value. The cases cited from Strange and Bur were decided on questions to the form of action, and not on the quantum of compensation. The case of Reed and Lansdale was the case of a loan, and therefore does not apply. The case of partial payment put by Mr. Allen could never be made a question; in this action, it could not be pleaded so as to bring it in.

But if the contract were usurious, the appellant could not take take advantage of it without pleading it. 5 Bac. Ab. (old ed.) 420, sec. 12, 13; 423, sec. 17, 18.6
6 7 Bac. (Gwil. ed.) 208.

LITTELL, on the same side.--A man who has a legal or equitable right to property has also a right to its profits. If he could only claim its price he should have have interest as the profits of the price. If he could have a specific performance, he is entitled to the real profits of the thing he could have in specie. 7 If the doctrine contended for by the appellant be correct, a man who held a negro which he ought to pay over to another, might hire that negro out for twenty-five per cent. of his value and pay the debtor six per cent. of it, leaving himself [**7]  a balance of nineteen per cent. made on the property of another, when he could only make six per cent. by the loan of his own property.
7 2 East's Rep. 211-213.

ALLEN, in reply.--If we could not by plea avail ourselves of a partial payment, it shows that the measure of damages which I have contended for is correct; for we should have to resort to equity to get a discount, and chancery would only allow us our payments, with interest thereon.

The statute against usury is not confined to the cases of lending. It extends to the cases of forbearance. This is a case of forbearance in terms. If the contrary doctrine be supported, it will materially injure securities. They must stand by while their principal and his creditor are litigating any point in the cause; and if at length the principal fail, they must pay a sum which they could not have foreseen nor guarded against. Here the security might, by pleading the usury below, have avoided the whole. He has not done it, but only wishes to get clear of that part which is oppressive. If there had been no stipulation for hire, nothing more than legal interest, together with the value of the negroes, could have been recovered,  [**8]  and the parties can not by contract legally stipulate for more for forbearance than the law would give. 

OPINION

 [*186]  OPINION OF THE COURT.--After reciting the case as before stated, it proceeded: This court are called on to decide whether this contract be within the statute of usury. To make it so, it is clearly essential that the substance of the transaction should have been a lending and borrowing. And if it was so understood by the parties, no shift nor contrivance, however disguised, can avail to evade that statute. But if, on the other hand, it was not a borrowing or lending, the converse of the proposition is equally true, that it can not be brought within the statute. 1 On the part of the appellant, no evidence was exhibited to show that a lending was in the contemplation of the parties. And as the contract itself does not  [*187]  import a loan, this court can not presume it to have been a loan. Therefore, the contract on its face not importing a loan, and whether it was a mere colorable transaction to disguise a loan or not, being a fact which it was the peculiar province of a jury to decide, the circuit court of Lincoln were right in refusing to give the direction [**9]  prayed for.

1 1 Ves. Jr. 531.

It has been contended by the counsel for the appellant that this case amounted to usury, because the plaintiff below recovered more damages than the value of the property covenanted to be delivered to him at the time that covenant was broken, together with legal interest thereon, up to the time of the rendition of the judgment. But, as in the case of annuities (a usual mode of borrowing in England 2), if the annuity was really purchased, and not used as a cover to a loan, it is immaterial how low it was purchased; how good a bargain on the one side, or how bad on the other.

2 Cowper, 770.

So, in this case, if it were really as it appears to be, a contract for the actual sale and purchase of negroes, the parties had a right to stipulate the damages that should accrue upon the breach of this contract,  [**10]  and also those that had previously existed; and whether a good or a bad bargain for either, neither a court of common law nor a court of equity could relieve against it.

For the non-performance of this contract the verdict of the jury must have been in damages, the amount of which would or might have been uncertain. And it was as competent to the parties to contract for the liquidation of those damages, in such an event, as to contract for the subject-matter of the contract itself; and where a precise sum is fixed and agreed upon between them, that very sum is the ascertained damage, and a jury is confined to it.

Judgment affirmed.

A motion was made for a reconsideration of the case and overruled.

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