Richmond. Jany 24. 1820
The court of Appeals has given judgement in one of the usury cases [Taylor. v. Bruce] and I hasten to apprise you of the result. I should have done it with more pleasure had the decision been different. I do not understand the particular nature of the transaction in which you are indorser for Col. Nicholas. I must therefore give you an outline of the case of Taylor & Bruce leaving to you the application of the principle—with a promise however on my part to answer any farther inquiries you may wish to make with alacrity & pleasure.
The appellant as admr of E. B. Holloway brought his bill in chancery charging that the late house of Holloway & Hanserd of which the intestate was a member being pressed for money, applied to the appellee who know their situation for a loan, which they obtained at a high rate of usury. To cover the loan from the operation of the statute negotiable notes were given with Allison and Atkinson indorsers. The bill is for a discovery of facts from Bruce & for relief from the usurious interest.
The answer denied any communication with Holloway & Hanserd for a loan & averred it to be a fair purchase of notes which were in market for a bona fide consideration—seeking to bring the case within the rule of Hansborough v. Baylor 2. Muns. Rep. in which it was decided that a purchase of bonds from an assignee at any discount was not usurious. A fact however existed in Taylor & Bruce which was wanting in that case and which was much insisted on in this. Bruce bought the notes of H&H from one Mertons a broker. and as it was admitted on all sides that had Bruce bought the notes from H&H directly it would have been usury—an effort was made to shew that he bought them of Mertons knowing him to be their agent. This fact was not admitted in the answer, but Judge Roane thought was so evasively denied as to amount to an admission.
Upon the case thus made out Brooke and Coalter were of opinion that it was a sale of negotiable paper allowed by law—& not a loan of money, and were therefore for dismissing the bill. The court consisted of but three, poor Judge Fleming being absent by sickness & Cabell not sitting from a remote interest in the question to be decided. Judge Roane delivered one of the ablest opinions I ever heard from him—maintaining that the whole transaction had every badge of fraud, usury, & rapacity which any such transaction ever can have. That usury must always be collected from circumstances or the statute is nugatory & inoperative. That it was a loan of money & the negotiable notes a mere evasion—which evasion was sought to be continued & supported by a prevaricating & equivocating answer—which refuted itself by the very affirmatives with which its negatives were pregnant. He was therefore for reversing the decree, and making the appellee disgorge the whole interest—being allowed the principal by the statute.
It will be remarked that the judgement of the court was pronounced by two Judges against the opinion of the third. and it has always been understood by the court that the concurrence of two will not settle the law tho’ it decide the case. The principle therefore is still open to discussion. I believe Judge Rs opinion will finally prevail. The statute is a dead letter under the reasoning of the other Judges.
So far from repealing the statute against usury under the reasoning of Bentham I think the times call for the interposition of the Legislature to bind with cords which cannot be broken the rapacious usurers by which society is infested. This must be done by altering the nature of the evidence. Even admitting promissory notes & public stock may be fair subjects of trade or speculation, where is the impropriety of making every transfer of such property at a or discount very far above or below the market price at the time of the transaction prima facie evidence of a loan? which evidence the person charged with usury may rebut by circumstances or proof? The statute requires amendment—and I should like to have it well considered before the alteration is made. Do you know what the result of the experiment in France was, to dispense with any statutory rate of interest? The last edition of the Code civil, fixed the rate & interdicted all greater interest—which I think is conclusive that it was found necessary. The advocates for its repeal in Virginia have generally been governed by a notion quite too elementary & abstracted, that society have no right to interfere in private contracts. has the same right that it has to prevent gaming—drunkenness, smuggling &c.
I did not learn ’till within a few days that Mr Corrêa had ceased to act in his diplomatic capacity—he is in Philadelphia—He told me last summer that this was his last winter in the U. S. He sails in the spring for Rio Janeiro where I am glad to learn he is in high favor with his court. He has already been exalted to a high order of nobility with a title which I do not remember. He seems to anticipate, as well he may—a proud destiny for the mighty empire whose foundations are already laid in Brazil. How much it is to be regretted that they have not our institutions & love of Liberty—toleration—peace &c
The fates have conspired against the Central University—or rather against Virginia for the defalcation in the treasury is humiliating to us all.
F. W. Gilmer.
MoSHi: Francis Walker Gilmer Papers.