2 Wilcox v. Howland, 23 Pick. 167; Hamilton v. Le Grange, 2 H. Bl. 144; 8. c. 4 T. R. 613; Newal v. Jones, Mood. & M. 449; Eaton v. Bell, 5 B. & Al. 34; Mowry v. Bishop, 5 Paige, 98; Ex parte Bevan, 9 Ves. 223. In this case, Lord Eldon said: " As to the question of compound interest, it is clear you cannot a priori agree to let a man have money for twelve months, settling the balance at the end of six months; and that the interest shall carry interest for the subsequent six months; that is, you cannot contract for more than five per cent, agreeing to forbear for six months. But, if you agree to settle accounts at the end of six months, that not being part of the prior contract, and then stipulate that you will forbear for six months upon those terms, that is legal. So this is legal between merchants, where there is no agreement to lend to either, but they stipulate for mutual transactions, each making advances; and that, if at the end of six months the balance is with A., he will lend to B.; and vice versa. That sort of transaction has taken place. I admit, generally, that cannot be applied to the case of a real security; and you may not, when the debt comes to a certain sum, take a real security and five per cent. I do not know, if that would do in a mercantile transaction. It is not enough to say in this case, that these accounts have been settled from half year to half year; and therefore it is legal to take interest in this way; for the transactions may be evidence of previous agreement." See also Morgan v. Mather, 2 Ves. Jr. 20; Marsh v. Martindale, 3 Bos. & Pul. 154; Comyn on Usury, sect. 14, and cases cited; Caliot v. Walker, 2 Anstr. 495; Bainbridge v. Wilcocks, Baldw. 538; Kellogg v. Hickok, 1 Wend. 521.
4 Ibid.; Eaton v. Bell, 5 B. & Al. 34; Newal v. Jones, Mood. & Mt 449; Wilcox v. Howland, 23 Pick. 167; Tylee v. Yates, 3 Barb. 222.
§ 730. Ignorance of the law will not excuse a party from the penalties of usury, if his contract be, in fact, usurious.2 For if more than a legal rate of interest is intentionally taken, it is usury, whether the party be ignorant or not what was the legal rate.3 But where there was no intention to evade the law, a mere mistake of fact, resulting from accident, by which more than legal interest is allowed or taken, will not utterly vitiate the contract, but only afford a ground to reduce the sum to the legal rate.4 Thus, where an agreement was made on the 23d of May, 1617, to lend £20 for a year, and the scrivener, in drawing up the bond for repayment, made it payable on the 24th of May next ensuing; it was held, that, as this was purely a mistake of fact, and the parties had no corrupt intention, the agreement was not usurious.5 So, also, if a mistake be made in the calculation of interest, or indeed as to any fact connected with the contract which gives it the appearance of usury, it may be explained, and will not vitiate the contract.6 But a mistake of law will not save an usurious contract. And if a greater rate of interest than is legal be reserved or taken by a party to a contract, on the mistaken supposition of a legal right so to do, the contract will be void for usury.7
§ 731. If there be an agreement to take more than legal interest, it is of no consequence that no unlawful excess of interest is taken, for it is equally void whether there be an actual payment or only a promise to pay.8
1 Wilcox v. Howland, 23 Pick. 167; Hastings v. Wiswall, 8 Mass. 455; Doe v. Warren, 7 Greenl. 48. 2 Lloyd v. Scott, 4 Peters, 205.
3 Bank of Salina v. Alvord, 31 N. Y. 473 (1865).
4 Buckley v. Guildbank, Cro. Jac. 678; Ballard v. Oddey, 2 Mod. 307; Nevison v. Whitby, W. Jones, 396; Bush v. Buckingham, 2 Vent. 83; Glasfurd v. Laing, 1 Camp. 149; Comyn on Usury, sect. 2.
5 Buckley v. Guildbank, Cro. Jac. 678. See also Nevison v. Whitby, W. Jones, 396; s. c. Cro. Car. 501.
6 Maine Bank v. Butts, 9 Mass. 49, 55; Bank of Utica v. Smalley, 2 Cow. 770; N. Y. Firemen Ins. Co. v. Ely, 2 Cow. 678; Gibson v. Stearns, 3 N. H. 185. 7 Maine Bank v. Butts, 9 Mass. 49, 55.
8 Hammond v. Hopping, 13 Wend. 505; Clark v. Badgley, 3 Halst. 233.
§ 732. Again, a contract may be to be performed at the place where it is made, or elsewhere. And if the latter, it may be for a rate of interest which is illegal at the place where it is made, and legal where it is to be performed, - or the converse. And in this respect the rule as to usury is, that the law of the place where a contract is made governs its construction, unless it be to be performed in a different place, - in which case the law of the place of performance governs.1 If, therefore, a contract stipulate for a rate of interest which is illegal at the place where it is made, it will be void for usury, unless its terms contemplate the performance thereof at a different place, where the rate of interest secured is legal.2 Nor does it make any difference as to this rule, that by the terms of the agreement the debt is to be secured by a mortgage on real property in a different place,- the law of the place where it is made will govern.3 If it do not manifestly appear that the contract is made with reference to the laws of another place, and in view of a performance elsewhere, the lex loci contractus governs; and a contract void thereby is void everywhere.4 But where a contract is to be executed in a different place from that wherein it is made, and a higher rate of interest is permitted in the place of performance than in the place of making, the parties may stipulate for the highest interest, without rendering their contract usurious.6 So, also, it seems that a higher rate of interest than that allowed by either place may in some cases be secured by the contract, provided the amount above the legal interest be merely a mode of calculating the difference of exchange, or be claimed as damages for some non-performance by the debtor, and the transaction appear to be entirely bond fide and not a mere cover for usury.1