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In the year 1730 the Earl of Peterborough, then Lord Mordaunt, granted bond at London after the English form, to Dr. William Abercromby, the condition whereof bore, “That the sum of £.210 was then advanced to the Lord Mordaunt, and if he should happen to survive the Earl of Peterborough his grandfather, he was to pay to the Doctor, within the space of two months after the Earl's death, the sum of £.840, or if the Lord Mordaunt died in the lifetime of the Earl, the obligation was to be void.”
Upon the death of the Earl of Peterborough, which happened in about five years after the date of the bond, an action was brought against the Lord Mordaunt, now Earl of Peterborough, for payment, for whom it was alleged, 1mo, That the bond was usurious; 2do, Supposing it not to fall directly under the law of usury, it was reducible on fraud and circumvention. It was thought material to know what the practice of England was in cases of this nature, as in all cases contracts are to receive their construction from the law of the country where they were made, in whatever country action be brought upon them; and it was made appear from a variety of reports, that by the practice of England no more than the principal sum and interest is given upon such unconscionable bargains; one of which particularly deserves notice, as it was the first, and was thereafter followed.
It is 2d Vernon, fol. 14. Hilary 1686, Berny versus Pitt, Esq. where the plaintiff, a young man, who had a narrow allowance from his father, on whose death a great estate was to descend to the plaintiff in tail, having, in the year 1675, borrowed £.1000 Sterling from the defendant, became bound, in case he survived his father, to pay the defendant £.5000 Sterling within a month after his father's death, with interest thereafter; but that if the plaintiff did not survive his father, nothing was to be repaid. The plaintiff's father having died in the year 1679, he brought his bill to be relieved of this fraud and working upon his necessity when in straits; which came first before the Lord Nottingham, who decreed the plaintiff to pay the £.5000 with interest; but the cause coming to be re-heard before Lord Chancellor Jeffries, it was insisted, that the inserting the clause that the defendant should lose his money if the plaintiff died before his father, did not in reason difference the case from any other bargain made by the plaintiff or other tenant in tail, to be performed at their father's death; for that in these cases, if the tenant in tail died before the father, the debt would be lost of course, and therefore the expressing it particularly made the bargain rather worse, as being done to colour a bargain which appeared to the defendant himself unconscionable: And though there was no proof of any practice used by the defendant to draw the plaintiff into this security, yet merely in respect of the unconscionableness of the bargain, the Lord Chancellor discharged the Lord Nottingham's decree; and as the report further bears, decreed the defendant to refund to the plaintiff all the money he had received from him, except the £.1000 originally lent, and interest thereof.
Some of the Lords were of opinion, that even abstracting from the practice of England, the pursuer had claim to no more than the sum truly lent, and interest thereof; for that the further demand, to which the pursuer saw at last proper in this case to restrict his claim, of a consideration on account of the risk the pursuer run, was, in other words, to pray that the Court might make a new contract for him, because the contract he had made for himself was an unjust one, whereof he could not ask full implement. Others seemed to think, that should a question of the like kind arise upon a contract in this country, it were just to allow a consideration for the risk; for that as the relief arises from equity, it ought to go no further than equity carries it, and equity could never refuse some consideration for the chance of the absolute loss of the money.
But as all agreed that the practice of England was to be the rule in this case, and that the defender was no otherwise entitled to his relief than upon payment, the Lords, on the 12th July, 1745, “repelled the objection of usury, and unanimously found that the bond in question should only subsist for the principal sum and interest, and that upon payment thereof against the term of Whitsunday next, the same should be discharged; but in case payment were not then made, they decerned for the whole sum in the bond, the same being redeemable at any time by the defender upon payment of the principal sum and interest, and expenses hereafter incurred by the pursuer.”
Kilkerran, No. 4. p. 364.
*** D. Falconer's report of this case is No. 23. p. 4894. voce Fraud.
