Hogg v. Ruffner - 66 U.S. 115 (1861)
U.S. Supreme Court
Hogg v. Ruffner, 66 U.S. 1 Black 115 115 (1861)
Hogg v. Ruffner
66 U.S. (1 Black) 115
1. To constitute usury, there must either be a loan upon usurious interest or the taking of more than legal interest for the forbearance of a debt or sum of money due. This is the common law definition of the term, and the statute of Indiana does not enlarge it.
2. Where a sum of money is due on a contract for the sale of land, and the vendor takes more than legal interest for the forbearance of the debt, it is usury.
3. But where the owner of land proposes to sell it for one price in cash, and for another price, double as large, on a long credit, and a purchaser prefers to pay the larger price for the sake of the longer time, the contract cannot be called usurious.
Nathaniel B. Hogg brought his bill in the circuit court against Benjamin Ruffner and several other defendants, who were collaterally interested. The bill avers that Ruffner made
his nineteen promissory notes, for two thousand dollars each, amounting in all to thirty-eight thousand dollars, payable to the order of John W. Brice and James L. Birkey, with interest from their date, and that these notes were delivered to Brice and Birkey; that in order to secure the payment of the notes, Ruffner executed three mortgages to Brice and Birkey, and that some of the notes and so much of the mortgages as secured them were assigned to the plaintiff. The bill prays for a decree against the defendant that he pay the sum due upon the notes, and in default thereof that the mortgaged premises be sold. The notes were to become due as follows: two on January 1, 1856, and two on the 1st of April in each of the years 1857-1865.
The answer of Ruffner is that the notes and mortgages were given on a contract usurious and corrupt. He was in debt as he asserts in the sum of twenty thousand dollars to Brice and Birkey, who took these nineteen notes for two thousand dollars each, with interest, payable as stated in the bill; that he, the defendant, gave the notes and mortgages solely for the debt of twenty thousand dollars, and being much embarrassed and pressed for money, and seeing no other means to prevent the sacrifice of his property by an oppressive and inexorable creditor, agreed to the corrupt and usurious contract, and gave his notes for the extra sum of eighteen thousand dollars for the forbearance of the twenty thousand which were due.
The true character of the contract as proved in the circuit court will be found stated in the opinion of MR. JUSTICE GRIER.
The circuit court held the notes which were due and to become due in the years 1861, 1862, 1863, 1864, and 1865, and which were given for the eighteen thousand dollars, to be usurious and void, and the remainder of the notes valid, as covering only the debt justly owing to the parties by whom they were taken. The court accordingly decreed payment of the notes which were already due, with interest and costs. From this decree both parties appealed.