Simpson v Bliss
| Jurisdiction | England & Wales |
| Judgment Date | 28 November 1816 |
| Date | 28 November 1816 |
| Court | Court of Common Pleas |
English Reports Citation: 171 E.R. 236
IN THE COURT OF COMMON PLEAS
236 SIMPSON V. BLISS H ST. *73. [273} First Sittings after Trinity Term, 56 Geo III. [1816], in London. July 5, 1816 simpson v. blisu (A. lays a wager of 25 guineas with B. upon the event of a horse race, and C. takes than is allowed by the statute, and which interest is taken wilfully and corruptly (i e. with a usurious intent, no matter in what shape), are usurious contracts 6. But it being the intention of law, whilst protecting from usury, not to endanger or impair contracts, necessary to commercial dealing, and common in the intercourse of men, the words of the statute do not apply to cases where the principal and interest are put in hazard upon a contingency, and where there is a risk that the lender may have less than his principal The reason is, because such contingency is the mam characteristic of contracts of trade ; and therefore, taking such advance of money out of the form of a loan, it renders it a new contract , and much mischief would ensue if such contracts could be shaken ; the Court, however, still exercising its discretion, with the assistance of a jury, whether the contingency be good and bona fide, or a mere shift to elude the statute. Now the main qualities of such contingencies must be two 1st, they must be lawful ; and, 2d, being fair and reasonable, must rebut the presumption, that they are only covers for usury Within this description such contingencies are not usurious, Martin v Ahdee, Show 8 ; Cfasterjietd v. Jansen, 1 Atk 301, and the cases there cited 7 But though contingencies being real, and of good faith, whether as wagers against events, or mercantile bargains, are not within the statutes against usury, yet tie mere circumstance of a contract ; having the form of such contingency, will not exempt it from the scrutiny of the Court, who, under the words of the statute " directly or indirectly, or by shift and contrivance," are bound to exercise a judgment, whether such be a real contingency, or a shift and device to cover usury. Thus in Reynolds v Clayton, 5 Co. 70, where the contingency on which the greater interest was received, was that the son of [262] the lender, a man in good health, should be alive at the end of six months. This was held to be an usurious contract ; the contingency in fact being scarcely any contingency at all , and, therefore, in the contemplation of the parties, a mere shift to cover usury In the case of Roberts v. Tremayne, Cro. Jac. 308, Doddendge took these distinctions in cases of contingencies-" First, if I lend 100 to have 120 at the year's end upon a casualty , if the casualty goes to the interest only, and not to the principal, it is usury : for the party is sure to have the principal again, come what will come But if the interest and principal are both hazarded, it is not then usury and it was, therefore adjudged in C" B in Dartmouth's case, where one went to Newfoundland and another lent him 100 for a year, to victual his ship, and if he returned with the ship he would have so many thousand of fish , and expresses at what rate, which exceeded the interest which the statute allows ; and, if he did not return, that then he would lose his principal, it was adjudged to be no usury. Secondly, if L secure both interest and principal, if it be at the will of the paity who is to pay it, it is no usury , as if I lend to one 100 for two years, to pay for the loan thereof 30 and if he pay the principal at the year's end, he shall pay nothing for interest, this is not usury, for the party hath his election, and may pay it at the first year's end, and so discharge himself."-See 3 Wil. 395. In the same manner, on account of their contingencies, contracts of bottomry and respondentia are equally exempt from the imputation of usury 8. The usage and custom of merchants exempt a contract from the quality of usury, though, by such custom, the interest be deducted from the principal, on discounting a bill of exchange, without waiting for the bill becoming due Mar^h v. Martindale, 3 B and P. 154 In such cases the additional sum seems to be considered in the nature of a compensation for the trouble to which the lender is exposed ; and, without such indulgence, it would not be worth while for a merchant to discount a bill But the rule rnnst be strictly confined to transactions of this kind, within the usage of trade ; for if discount be taken upon an advance of money, without the negotiation of a bill of exchange, it [263] will be usury, Barnes v CorUdffe, Noy, 41 , Yelv. 30 , and DaUons case, Noy, 171. So the length of the date of a bill may afford a presumption that the discount is intended for the cover of a loan ; and the strength of this presumption will be manifest, for if the practice be HOIS 873. SIMPSON V. BLISS 237 the risk of 10 guineas (part of the 25) as his share of it. A. wins the wager, but before he receives the money from B. he pays C 10 guineas, as his portion of the bet. B. never paid the wager to A., and all hope of obtaining it was lost. Held, that A. was entitled, notwithstanding the statutes of gatiling, to carried to any great length, the interest will annihilate the principal Thus, suppose a bill for 10,000, drawn at twenty years and discounted, the interest would absorb the whole sum, and the lender would have nothing to advance, though he would be entitled to 10,000 at the expiration of the bill . therefore, if bills be drawn at a longer date than is usual in the course of business, it ought to be construed a device, Hammett v. Yea, 1 B. and P. 151. But it is lawful for a banker to take the customary commission and exchange on bills or notes, and reasonable incidental expenses over and above the interest and discount, Winch v Fenn, 2 T. R 52; Barclay v Walmsley, 4 East, 44. But an agreement in discounting a bill of exchange, that the plaintiff should take, in part payment, another bill, which had time to run, as cash, although the full discount was taken, was held to be usurious, Parr v Elutson, 1 E. R. 92 See likewise Hammett v Yea, 1 B and P. 144, where such part discount in bills of thirty days (not being a term of the loan, but for the...
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