Sinclair of Barrack v. Sutherland of Little Torbol
1718.
February. Case No. No. 28.
Usurious paction.
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Murray of Clairden and Sutherland of Ham, were conjunctly bound, anno 1700, to pay £.1600 Scots by bond, which came by progress into the person of Sinclair of Barrack. In November 1714, the aforesaid principal sum and all the bygone annual-rents being due, Barrack demanded his money from Clairden, and Sutherland of Little Torbol, the representative of Ham, the other obligant; but they not being ready at the time, agreed, upon the creditor's superseding any demand till Candlemas 1715, to pay him the whole sum, with the annual-rents thereof due at that term, and failing of payment, to accumulate all the interests, with the principal sum which should be due at Candlemas, extending to the sum of £.2854; which accumulated sum was to bear interest from the said term of Candlemas: And in the terms of that agreement, a bond is extended, and duly signed the last day of November 1714; wherein the interest is computed to the Candlemas thereafter, payment of the whole sum is superseded till that term, and the accumlated sum bears interest then, and no sooner. Sutherland of Little Torbol being charged upon this bond, obtained suspension upon the head of usury, in respect that here was a paction, making annual-rent bear annual-rent before it fell due, expressly against our laws, Lord Stair, Lib. 1. Tit. 15. § 8. near the end; for though accumulations præteriti temporis are allowed, accumulations futuri temporis are undoubtedly usurious: And there is this reasion in it, If pactions be sustained, making annual-rents not yet due bear interest, it shall be in the power of creditors directly to stipulate compound interest by making such a general paction as this, “That every term's interest bear interest from the time it falls due;” which is expressly in the face of the law, that allows only of simple interest. Nor is there any thing in the act 28, 1621, against the suspender; which was only intended to rectify a common abuse of retaining a term's annual-rent from the debtor at the time of lending the money: It allows indeed the annual-rent to be added to the principal, both to be payable at one term; but it does not permit the annual-rent which is added to be accumulated with the principal into a capital, bearing annual-rent after the term of payment.
In answer to this it was observed, That by putting off the accumulation till Candlemas, the debtors, in place of losing, had a visible advantage: For if the principal sum and bygone annual-rents due at making the bond the last of November 1714, had been accumulated at that date into a principal sum bearing annual-rent from the date, as lawfully they might have been, the debtors would have paid interest for fourteen years annual-rents, from November to Candlemas; which interest is saved to them every penny, by putting off the accumulation to Candlemas, notwithstanding the date of the bond. This being premised, if the matter be considered to the bottom, it will be found, that our severe laws against usury, tend only to curb the exorbitancy of lenders of money, who profiting of the borrowers their necessity, would urge them to harder conditions, and higher usury than the law allows: Wherefore it may be taken as a certain rule, “That any paction of what nature soever, is not usurious, or reprobated as such by our law, unless it impose higher interest on the debtor, and harder conditions, than the creditor in law could demand.” From this view of the matter, it will be clear, that the argument used by the other party will by no means hold in this case, since the reason of reprobating the provision of annual upon annual, is, that thereby the creditor has by the primary and original obligation a greater interest than the law allows; whereas in the case now in hand, the creditor has not exacted so much as by law he might have done, by making the debtors pay or accumulate at the date of the bond, as has already been observed: And indeed it would be extraordinary to imagine, that the judges by interpretation (for their is no express statute determining it to be usurious) should annul a paction, for the relief of a debtor, when the debtor can complain of no hardship thereby, but on the contrary, must acknowledge himself eased of greater severities, which by law he would be subject to. This much the pursuer has to say upon the head of equity, which must justify him, though he had not the forementioned act to speak in his favours; which at the time of lending the money, and making of bonds, allows the annual to be added to the principal, and of consequence, the whole to bear annual-rent after the term of payment; which is precisely the present case.
