1. Where a commission merchant in Baltimore advanced to a pork
packer in Peoria $100,000, for which he was to receive interest at
the rate of ten percent per annum, and a fixed commission for the
sale of the product, to be paid whether it was sold by the
commission merchant or not, it was properly left to the jury to
decide on all the facts whether or not the commissions were a cover
for usury, or were an honest contract for commission business, in
connection with use of money.
2. The express agreement of ten percent is not usurious, because
lawful in Illinois, though not so in Maryland. Andrews v.
13 Pet. 65, reaffirmed.
MR. JUSTICE MILLER delivered the opinion of the Court.
Plaintiffs in error were engaged in the business of packing pork
in Peoria, Ill., and the defendants were commission merchants at
Baltimore, in the fall of 1872, when the contract was
Page 93 U. S. 345
made which is the foundation of this suit. There had been
transactions between the parties the previous year in the line of
their business, and, with reference to the packing business of the
approaching season, this agreement was made by letter. The
substance of it is that defendants should advance to plaintiffs, as
it was needed, the sum of $100,000, which they were to invest in
the hog product at the rate of eighty percent of the money so
advanced, and twenty percent of the money put into the purchase by
plaintiffs. Defendants were to have interest on the money advanced
at the rate of ten percent per annum. The product was to be shipped
to them for sale, and they were to have two and a half percent
commission on the amount if sold within sixty days and one percent
commission for every thirty days it was carried thereafter. The
contract gave to plaintiffs the right to sell for themselves,
without sending to defendants, but the latter were to have their
commissions all the same.
When the product had all been sold out and an account rendered,
a balance was found to be due defendants, for which they brought
this suit and recovered a judgment of $7,054.48.
It appears by the bill of exceptions that this balance was
mainly if not wholly made up of the commissions charged on sales
not made by defendants of products which never came to their
possession, and the recovery was resisted on the sole ground that
these commissions were a device to cover usurious interest.
The charge of the court to the jury on this point was to the
effect that the transaction was not necessarily usurious; that
defendants, being engaged in the commission business, which
required the use of money, might loan their money at lawful rates
of interest to such parties and on such terms that it would bring
to them also the business which would grow out of the investment of
it; that if the contract was made only with the honest purpose of
securing, in addition to interest, the profits incidental to
handling the product as commission merchants, it was not usurious;
that on the other hand, such a contract might be used as a mere
evasive device to cover usurious interest, and it left it to the
jury to say from all the circumstances whether this were so.
Page 93 U. S. 346
There can be no question that on the general doctrine as to the
line which marks the division between an honest transaction and a
usurious cover, the charge of the court was correct, and that it is
in this class of cases the province of the jury in jury trials and
of the chancellor in suits in equity to determine, on a full
consideration of all the facts, whether it be the one or the
But counsel for plaintiffs argue that as to these commissions,
which defendants never earned by sale of the property or by
handling it, and as to which they were put to no cost or
inconvenience, there can be no other consideration but the use of
the money, and they are necessarily usurious.
It must be confessed that the argument has much force. But we
are of opinion that it is not so conclusive that the court ought to
have held as matter of law that it was usury.
It is to be considered that defendants were engaged in a
business which was legitimate, and in which both custom and sound
principle authorized the joint use of their money and their
personal service, increased in value by their character for
integrity and experience. To both these sources they looked for
their profits, and they were necessarily united.
It was a necessity of their trade, and it was lawful for them,
while loaning their money at a specified rate of interest, to
stipulate with the parties to whom it was loaned for the incidental
advantages of acting as commission merchants for the sale of the
property in which the money was to be invested by the borrower.
They had the right also to require, as a condition of the loan,
that it should be invested in such property as would require their
services in selling and handling it. All this is admitted.
We see no reason why the parties could not go a step further and
stipulate that if for any reason operating in the interest of the
borrower he should prefer to become his own broker or commission
merchant or to sell at home, he should pay the commission which the
other had a right to contract for and receive. Like the port pilot
and other instances, they were ready and willing to perform. They
had a place of business, clerks, and their own time and skill ready
to devote to the plaintiffs' business. In that business they had a
Page 93 U. S. 347
interest. They had loaned their money without requiring any
other security than the obligation of the other party except that
which might arise from the property coming to their hands. To make
this property a sufficient security, the contract required of the
plaintiffs that they should invest in the same property twenty
dollars of their own money to every eighty dollars borrowed of
defendants. The relinquishment of this right to control the sale of
the property was a good consideration for the commissions which
they would have made if they had sold it.
While it was possible to make such a transaction a mere cover
for usury, it was at the same time possible that the contract was a
fair one, in aid of defendants' business -- a business in which
they were actually and largely engaged and in which lending money
was the mere incident and not the main pursuit.
It was therefore properly left to the jury to say whether, under
all the circumstances, it was or was not a usurious transaction,
under instruction to which we can see no objection.
We do not think the express reservation of ten percent interest
makes the contract usurious because the law of Maryland forbids
more than six. The contract was quite as much an Illinois contract,
where ten percent is lawful, as a Maryland contract, and the former
is the law of the forum. The ruling of the court below was in
accord with what this court had held in Andrews v.
13 Pet. 65.