Scott v. Lloyd
34 U.S. 418

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U.S. Supreme Court

Scott v. Lloyd, 34 U.S. 9 Pet. 418 418 (1835)

Scott v. Lloyd

34 U.S. (9 Pet.) 418

Syllabus

Scholfield applied to Moore to raise or borrow $5,000, securing him on an annuity or ground rent on sufficient real estate for one year. Moore proposed to let him have the money for ten years on the same security. After much discussion, the parties agreed to divide the difference, and that S. should keep the money for five years. A deed for sufficient real property in Alexandria, in the District of Columbia, securing the annuity was executed by S., and the annuity or ground rent was paid for some years. Scholfield, after the execution of the deed securing the annuity to Moore sold and conveyed the estate, subject to the annuity or rent charge, to Lloyd, and subsequent to the conveyance he gave notice to Lloyd not to pay the rents to Moore on the allegation that there were fraud and usury in the transaction, and that the grant of the annuity was therefore void. At the time this notice was given, Scholfield agreed in writing to indemnify and save Lloyd from loss if a distress should he made for the rent, and he would resist the same by a writ of replevin. This was done by Lloyd. Lloyd and others, as creditors of Scholfield, became afterwards possessed in absolute property by releases from and agreements with Scholfield of all his, Scholfield's, interest in the reversion of the estate on which the rent was secured or any benefit or advantage from the suit, and was discharged by the insolvent law of Virginia, but no release of Scholfield by Lloyd from his responsibility to save him harmless for the resistance of the distress and the action of replevin was executed. On the trial of the action of replevin in the circuit court, Scholfield was examined as a witness in favor of Lloyd to show that the original contract between him and Moore was usurious. Held that he was an interested and incompetent witness.

The statute against usury not only forbids the direct taking more than six percentum per annum for the loan or forbearance of any sum of money, but it forbids any shift or device by which this prohibition may be evaded and a greater interest be in fact secured. If a larger sum than six percent be not expressly reserved, the instrument will not of itself expose the usury, but the real corruptness of the contract must be shown by extrinsic circumstances which prove its character.

The court was requested to say to the jury that the facts given in evidence in the trial of the case did not import such a lending as would support the defense of usury. By the court:

"The court was asked to usurp the province of the jury and to decide on the sufficiency of the testimony, in violation of the well established principle that the law is referred to the court, the fact to the jury."

The statute declares

"that no person shall on any contract take, directly or indirectly, for loan of any money . . . above the value of six, for the forbearance of one hundred for a year."

It has been settled that to constitute the offense, there must be a loan, upon which more than six percent interest is to be received, and it has been also settled that where the

Page 34 U. S. 419

contract is in truth for the borrowing and lending of money, no form which can be given to it will free it from the taint of usury if more than legal interest be secured.

The ingenuity of lenders has devised many contrivances by which, under forms sanctioned by law, the statute may be evaded. Among the earliest and most common of these is the purchase of annuities secured upon real estate or otherwise. The statute does not reach these, not only because the principal may be put in hazard, but because it was not the intention of the legislature to interfere with individuals in their ordinary transactions of buying and selling or other arrangements made with a view to convenience or profit. The purchase of an annuity or rent charge, if a bona fide sale, has never been considered as usurious though more than six percent profit be secured. Yet it is apparent that if giving this form to the contract will afford a cover which conceals it from judicial investigation, the statute would become a dead letter. Courts therefore perceived the necessity of disregarding the form and examining into the real nature of the transaction. If that be in fact a loan, no shift or device will protect it.

Though this principle may be extracted from all the cases, yet as each depends on its own circumstances and those circumstances are almost infinitely varied, it ought not to surprise if there should be some seeming conflict in the application of the rule by different judges. Different minds allow a different degree of weight to the same circumstances.

The covenants in the deed from Scholfield granting the annuity to Moore secure the payment of ten percent forever on the sum advanced. There is no hazard whatever in the contract. Moore must, in something more than twenty years, receive the money he has advanced with the legal interest on it, unless the principal sum should be returned after five years, in which event he would receive the principal with ten percent interest. The deed is equivalent to a bond for five thousand pounds, amply secured by a mortgage on real estate, with interest at ten percent thereon, with liberty to repay the same in

five years. If the real contract was for a loan of money without any view to a purchase, it is plainly within the statute.

An instruction to the jury which would separate the circumstances of the case from each other, and the object of which is to induce the court, after directing the jury that they ought to be considered together, to instruct them that, separately, no one in itself amounted to usury, ought not to have been given.

In the course of the trial of the cause in the circuit court, the counsel for the plaintiff objected to a question put by the defendant's counsel to a witness as being a leading question. By the court:

"Although the plaintiff's counsel objected to this question and said that he excepted to the opinion of the court, no exception is actually prayed by the"

party and signed by the judge. This Court cannot consider the exception as actually taken, and must suppose it was abandoned.

An action of replevin was instituted in March, 1825, by John Lloyd in the Circuit Court of the United States for the County

Page 34 U. S. 420

of Alexandria, against Charles Scott, bailiff of William S. Moore, and a declaration was filed in the common form at September rules of the same year. In November, 1827, the defendant filed the following avowry.

"Charles Scott, bailiff, &c., at suit, John Lloyd, and the said Charles Scott, by Robert J. Taylor, his attorney, comes and defends the force and injury, when, &c., and as bailiff of William S. Moore well acknowledges the taking of the said goods and chattels, in the said place, when, &c., and justly, &c.; because he says that before the said time when the said, the taking of the said goods and chattels, is supposed to have been made, one Jonathan Scholfield was seized in his demesne in fee of four brick tenements, and a lot of ground, whereon they stood, on the east side of Washington Street and north side of Duke Street in the Town of Alexandria and county aforesaid, whereof the said place, when, &c., is, and at the said time, when, &c., was parcel, and being so seized, as aforesaid, of the said tenements, and lot of ground, he the said Jonathan and Eleanor his wife, afterwards, and before the said time, when, &c., to-wit, on 11 June, 1814, at the county aforesaid, by their certain indenture dated on the said 11 June, 1814, and here now to the court shown, in consideration of the sum of $5,000 by the said William paid to the said Jonathan granted, bargained, and sold to the said William one certain annuity or yearly rent of $500, to be enuring out of, and charged upon, the said four brick tenements and lot of ground, whereof the said place, when, &c., is parcel, to be paid to the said William, his heirs and assigns, by equal half-yearly payments of $250 each, on 10 December and on 10 June in every year forever thereafter. To hold the said annuity or rent, so as aforesaid charged and payable, to the said William S. Moore his heirs and assigns, to his and their only proper use forever, and the said Jonathan Scholfield, for himself, his heirs and assigns, did by the said indenture, among other things, covenant with the said William S. Moore his heirs and assigns, that he, the said Jonathan Scholfield, his heirs and assigns, would well and truly satisfy and pay to the said William S. Moore his heirs and assigns, the said annual rent of $500, by equal half-yearly payments,

Page 34 U. S. 421

as aforesaid forever, and that if the said rent should not be punctually paid as it became due, then that on every such default it should be lawful for the said William S. Moore his heirs and assigns, from time to time, to enter on the said four tenements and lot of ground, so as aforesaid charged, of which the said place, when, &c., is parcel, and to levy by distress and sale of the goods and chattels there found, the rent in arrear, and the costs of distress and sale, of which said rent, so as aforesaid granted, the said William became and was seized under the said deed, and by the perception thereof -- that is to say, on 11 December in the year 1814 at the county aforesaid, and has since remained and yet is seized thereof."

"And afterwards, that is to say on 29 October in the year 1816, at the county aforesaid, the said Jonathan Scholfield and Eleanor, his wife, by their certain deed of bargain and sale, under their seals, dated on the day and year last mentioned, bargained, sold, and conveyed to the said John Lloyd, his heirs and assigns forever certain tenements and lots of ground in the said Town of Alexandria, whereof the said four brick tenements and lot of ground before mentioned, including the said place where, &c., is and was parcel, subject by the terms of the said deed to the payment of the said annuity or rent of $500 to the said William S. Moore his heirs and assigns, under and in virtue of which said bargain, sale, and conveyance to him the said John entered upon the said tenements and lots of ground so to him bargained, sold, and conveyed, of which the said place where, &c., is, and was parcel, and became thereof seized and possessed, that is to say on the said 29 October in the year 1816, at the county aforesaid, and ever since has continued, and yet is so seized and possessed, and became, after the said bargain, sale, and conveyance to the said plaintiff as aforesaid and after his entry, seizin, and possession of the premises, including the said place where, &c., and whilst he so continued seized and possessed as aforesaid, the sum of $250 of the annuity or rent aforesaid, for the half-year ending on 10 June in the year 1824, and the further sum of $250 of the said annuity or rent for the half-year ending on 10 December in the year 1824, became and remained in

Page 34 U. S. 422

arrear and unpaid to the said William S. Moore, he, the said Charles Scott, as bailiff of the said William and by his command and authority at the said time when, &c., entered on the said place where, &c., being parcel of the said four brick tenements and lot of ground, so as aforesaid charged, with the said annuity or rent, and liable to the distress of the said William, and took and carried away the said goods and chattels in the declaration mentioned, then and there being found in the said place where, &c., parcel of the said four tenements and lot of ground, as a distress for the said rent so in arrear as aforesaid, to the said William, as he lawfully might, and this he is ready to verify, &c.; wherefore the said Charles prays judgment for the sum of $1,000, being double the value of the said rent so in arrear and distrained for as aforesaid, with full costs of suit, &c., according to the statute in that case provided."

"The plaintiff's attorney thereupon filed four several pleas, the first of which was: "

"And the said John, by Thomas Swann, his attorney, prays oyer of the said indenture from the said Jonathan Scholfield and Eleanor, his wife, to the said William S. Moore in the said cognizance mentioned, and the same is read to him in these words, to-wit; which being read and heard, the said John saith that the said Charles, as bailiff of the said William S. Moore for the reasons before alleged, ought not justly to acknowledge the taking of the goods and chattels aforesaid, in the said place, in which, &c., because he saith that before the making of the said indenture, that is to say, on 11 June in the year 1814, at the county aforesaid, it was corruptly agreed between the said Jonathan Scholfield and the said William S. Moore that the said William S. Moore should advance to him the said Jonathan, the sum of $5,000, and in consideration thereof that he the said Jonathan and the said Eleanor, his wife, should grant, by a deed of indenture, duly executed and delivered to him, the said William, his heirs and assigns forever, a certain annuity or rent of $500, to be issuing out of, and charged upon a lot of ground and four brick tenements, and appurtenances thereon erected, on the east side of Washington Street, and on the north side of Duke Street, in the Town of Alexandria, bounded as follows:

Page 34 U. S. 423

beginning at the intersection of said Streets; thence north, on Washington Street, eighty-seven feet, more or less, to the partition wall between the fourth and fifth tenements from Duke Street; thence, east parallel to Duke Street and with said partition wall one hundred and twelve feet to an alley; thence with the line of the said alley eighty-seven feet to Duke Street; thence on Duke Street, west, to the beginning; to be paid to the said William, his heirs and assigns, by equal half-yearly payments of $250, on 10 December and on 10 June forever thereafter."

"And it was further corruptly agreed that he, the said Jonathan, in and by the said deed of indenture, should, for himself, his heirs, executors, administrators, and assigns, covenant with the said William, his heirs and assigns, that he would well and truly pay to him, the said William, his heirs and assigns, the said annuity or rent of $500 by equal half-yearly payments, on 10 June and 10 December in each year forever thereafter, as the same should become due, and that if the same should not be punctually paid, that then it should be lawful for the said William, his heirs and assigns, from time to time, on every such default, to enter on the premises charged, and to levy by distress and sale of the goods and chattels there found, the rent in arrear, and the costs of distress and sale, and if the same should remain in arrear and unpaid for the space of thirty days after any day of payment as aforesaid, and no distress sufficient to satisfy the same could be found on the premises, that then it should be lawful for the said William, his heirs and assigns, to enter upon the premises charged, and from thence to remove and expel the said Jonathan, his heirs and assigns, and to hold and enjoy the same as his and their absolute estate forever thereafter; and it was further corruptly agreed between the said Jonathan and him, the said William, that he the said Jonathan should enter into these further covenants in the said indenture, that is to say, a covenant that he the said Jonathan, at the time of the execution of the said indenture, was then, in his own right, seized in fee simple in the premises charged, free from any condition or encumbrance, other than such as were specified in a deed from the said Jonathan to Robert J. Taylor, dated the ___ day of _____; and that he, the said Jonathan, his heirs and assigns, would forever

Page 34 U. S. 424

thereafter, keep the buildings which then were or thereafter might be erected on the premises charged, fully insured against fire in some incorporated insurance office, and would assign the policies of insurance to such trustee as the said William, his heirs or assigns, might appoint, to the intent that if any damage or destruction from fire should happen, that the money received on such policies might be applied to rebuilding or repairing the buildings destroyed or damaged, and that he, the said Jonathan, his heirs and assigns, would execute and deliver any further conveyance which might be necessary, more completely to charge the premises before mentioned with the annuity aforesaid, and to carry into full effect the intention of the said parties; and lastly that he and his heirs would forever warrant and defend the annuity or rent, so agreed to be granted to the said William, his heirs and assigns, against any defalcations and deductions for, or on account of, any act of him, his heirs or assigns; and the said William did further corruptly agree that he would, in the said indenture, covenant for himself, his heirs and assigns, with the said Jonathan, his heirs and assigns, that if the said Jonathan, his heirs or assigns, should at any time thereafter, at the expiration of five years from the date of the said indenture, pay to the said William, his heirs or assigns, the sum of $5,000, together with all arrears of rent, and ratable dividend of the rent for the time which should have elapsed between the half-year's day then next preceding, and the day on which such payment should be made, he, the said William, his heirs and assigns, would execute and deliver any deeds or instruments which might be necessary for releasing and extinguishing the rent or annuity thereby agreed to be created, which, on such payments being made, should forever after cease to be payable."

"And the said John saith that afterwards, to-wit, on the same day and year aforesaid, at the county aforesaid, the said William, in pursuance and in prosecution of the said corrupt agreement, did advance to the said Jonathan the said sum of $5,000, and the said Jonathan and Eleanor his wife, and the said William, did then and there make, seal, and duly deliver to each other, respectively, the said deed of indenture, as their several acts and deeds, which said deed was duly acknowledged by the said Eleanor, and admitted to record. And

Page 34 U. S. 425

so the said John saith that the said deed of indenture, in the said cognizance mentioned, was made in consideration of money advanced upon and for usury, and that by the said indenture there has been reserved and taken above the rate of six in the hundred, for the forbearance of the said sum of $5,000 so advanced as aforesaid, for the term of one year, and that the said John is ready to verify; whereupon he prays judgment; if he ought to be charged with the rent aforesaid, by virtue of the indenture aforesaid; and for as much as the said Charles hath acknowledged the taking of the said goods and chattels, he, the said John, prays judgment and his damages, on occasion of the taking and unjust detaining of the said goods and chattels, to be adjudged to him, &c."

The second plea is in all respects like the first, except it states that the agreement was that Moore should "lend" to Scholfield $5,000. It then states that the parties agreed a deed should be made containing all the covenants set forth in the first plea. It then avers that in pursuance and in prosecution of this corrupt agreement, Moore did advance to Scholfield the sum of $5,000, and that Scholfield and wife, and Moore made and executed the deed aforesaid in pursuance of this corrupt agreement, which was duly acknowledged and admitted to record. And that the deed was made in consideration of "money lent upon and for usury," and that by it there has been reserved and taken above the rate of six in the hundred, for the forbearance of the sum of $5,000 so lent as aforesaid, for the term of one year. This plea concludes as the first does.

The third plea is more general than the first and second. It states that before the making of the indenture -- that is to say on 11 June, 1814 -- it was corruptly agreed between Scholfield and Moore that he, Moore should "advance" to him, Scholfield, the sum of $5,000 upon the terms and conditions, and in consideration of the covenants and agreements in the indenture mentioned and contained, and that in pursuance of this corrupt agreement and in the prosecution and fulfillment of the same, Moore did advance to Scholfield the sum of $5,000, and they, Scholfield and Moore did make, seal, and duly deliver the deed to each party respectively as their act and deed. And that the deed was in consideration

Page 34 U. S. 426

of money advanced upon and for usury, and that by the indenture there has been taken and reserved above the rate of six in one hundred for the forbearance of the sum of $5,000, so advanced as aforesaid for the term of one year. This plea concludes as the first does.

The fourth plea is like the third, except it is stated that the agreement was to "lend" $5,000 upon the same terms stated in the third plea. It then avers that in pursuance and in execution of the corrupt agreement in the indenture mentioned, Moore did "lend" to Scholfield the sum of $5,000; that the deed was duly executed by the parties and recorded; that it was made in consideration of money lent upon and for usury, and that by the said deed there has been reserved and taken above the rate of six in the hundred for the forbearance of the sum of $5,000, so lent as aforesaid, for the term of one year. This plea concludes as the others do.

To each of these pleas there was a special demurrer, and particular causes of demurrer assigned.

The circuit court, in November, 1828, gave judgment for the defendant, and the plaintiff prosecuted a writ of error to this Court. 29 U. S. 4 Pet. 205.

At the January term, 1830 of the Supreme Court, the judgment of the circuit court was reversed and the case was remanded to the circuit court with instructions to overrule the demurrers to the second and fourth pleas and to permit the defendant to plead, and for further proceedings, &c., 29 U. S. 4 Pet. 231.

On the coming of the mandate into the circuit court in November, 1830, the demurrers were withdrawn and there was a general replication to the pleas filed in November, 1827. The case was then, on the application of the defendant, removed to Washington, and a transcript of the record of proceedings, with the original papers, was transmitted to the Clerk of the Circuit Court for the County of Washington.

At November term, 1832, of the circuit court, the cause came on for trial, and a verdict and judgment were entered in favor of the plaintiff.

The defendant sued out this writ of error.

On the trial, the counsel of the defendant filed four bills of exception.

Page 34 U. S. 427

These exceptions are set forth at large in the opinion of the Court, and the evidence given on the trial of the cause is particularly stated in the first exception.

The material parts of the deed from Jonathan Scholfield and wife, to William S. Moore referred to in the pleas of the plaintiff in the circuit court, were:

"The indenture is dated 11 June, 1814, and is from Scholfield and wife, of Alexandria, in the District of Columbia. It recites that in consideration of $5,000 in hand paid by William S. Moore of the same town, he grants, bargains and sells to the said William S. Moore his heirs and assigns forever, one certain annuity, or rent, of $500, to be issuing out of and charged upon a lot of ground [describing the premises], to be paid to the said William S. Moore his heirs and assigns, by equal half-yearly payments of $250 on 10 December and on the 10 June forever hereafter, to hold the said annuity or rent to the said William S. Moore his heirs and assigns, to his and their own proper use, forever. And the said Jonathan Scholfield, for himself, his heirs, executors, administrators and assigns, does hereby covenant with the said William S. Moore his heirs and assigns, as follows -- that is to say that he the said Jonathan Scholfield, his heirs and assigns, will well and truly pay to the said William S. Moore his heirs and assigns the said annuity or rent of $500 by equal half-yearly payments on 10 June and 10 December in each year forever hereafter, as the same shall become due, and that if the same be not punctually paid, then it shall be lawful for the said William S. Moore his heirs and assigns, from time to time, on every such default, to enter on the premises charged and to levy by distress and sale of the goods and chattels there found the rent in arrear and the costs of distress and sale, and if the same shall remain in arrear and unpaid for the space of thirty days after any day of payment as aforesaid, and no distress sufficient to satisfy the same can be found on the premises charged, then it shall be lawful for the said William S. Moore his heirs and assigns, to enter on the premises charged and from thence to remove and expel the said Jonathan Scholfield, his heirs and assigns, and to hold

Page 34 U. S. 428

and enjoy the same as his and their absolute estate forever thereafter. And further that he, the said Jonathan Scholfield, is now in his own right seized in fee simple in the premises charged aforesaid, free from any condition or encumbrance other than such as are specified and provided for in a deed from the said Jonathan Scholfield to Robert I. Taylor dated the day before the date hereof, and that he the said Jonathan Scholfield, his heirs and assigns, will forever hereafter keep the buildings and improvements which now are or hereafter may be erected on the premises charged fully insured against fire in some incorporated insurance office, and will assign the policies of insurance to such trustees as the said William S. Moore his heirs or assigns may appoint, to the intent that if any damage or destruction from fire shall happen, the money received on such policies may be applied to rebuilding or repairing the buildings destroyed or damaged. And that he, the said Jonathan Scholfield, his heirs and assigns, will execute and deliver any further conveyance which may be necessary more completely to charge the premises before described with the annuity aforesaid, and to carry into full effect the intention of the parties hereto."

"And lastly, that he and his heirs will forever warrant and defend the annuity or rent hereby granted to the said William S. Moore his heirs and assigns against any defalcation or deduction for or on account of any act of him, his heirs or assigns."

"And the said William S. Moore, for himself and his heirs and assigns, does hereby covenant with the said Jonathan Scholfield, his heirs and assigns, that if the said Jonathan Scholfield, his heirs or assigns, shall at any time after the expiration of five years from the date hereof pay to the said William S. Moore his heirs or assigns, the sum of $5,000, together with all arrears of rent, and a ratable dividend of the rent for the time which shall have elapsed between the half-year's day then next preceding and the day on which such payment shall be made, he the said William S. Moore, his heirs or assigns, will execute and deliver any deed or instrument which may be necessary for releasing and extinguishing the rent or annuity hereby created, which, on such payments' being made, shall forever after cease to be payable. "

Page 34 U. S. 438

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