Two distinct doctrines of quasi contract may be summoned to the support of the rule that usurious interest is recoverable. One is that an unjust enrichment resulting from the performance of an illegal contract raises an obligation to make restitution which may be enforced if the plaintiff is not in pari delicto; the other, that a benefit conferred under compulsion must be restored. The former doctrine seems to fit the case perfectly. Since the charging of usurious interest is prohibited, a contract to pay and receive it is illegal, at least to the extent of the usury. And since the borrower is presumed to be at the mercy of the lender when the contract is entered into, he is not in pari delicto (ante, Sec. 141). The latter doctrine - that a benefit conferred under compulsion must be restored - is not so clearly applicable. Admitting the presumption of duress at the inception of the contract, does it follow that duress continues throughout its performance? Conceivably it may, as where the borrower anticipates the necessity of borrowing again in the future. But under ordinary circumstances, as soon as the borrower receives the money his necessities are relieved and he is no longer at the mercy of the lender. If he nevertheless pays the excessive interest demanded of him, it would hardly seem that he does so under compulsion. As Professor Keener says,1 "While one attempting to borrow money may, because of his necessities, be somewhat restrained in the exercise of his volition, it seems difficult to say that a payment made by one who has the right to refuse to pay, is a payment made under compulsion."
1 Marvin. v. Mandell, 1878, 125 Mass. 562; Brundage v. Burke, 1895, 11 Wash. 679; 40 Pac. 343. See Cal. Civil Code, Sec. 1918.
2 Carter v. Carusi, 1884, 112 U. S. 478; 5 S. Ct. 281, (Dist. of Col.); Matthews p. Paine, 1885, 47 Ark. 54; 14 S. W. 463; Nichols v. Skeel, 1861, 12 la. 300, (forfeiture goes to school fund); Crosby v. Bennett, 1843, 7 Mete. (Mass.) 17; Ransom v. Hayes, 1867, 39 Mo. 445, (forfeiture goes to school fund). In Nichols v. Skeel, supra, it was also declared that the parties were in pari delicto. Upon that point see the following section.
3 Gross v. Coffey, 1896, 111 Ala. 468; 20 So. 428; Hadden p. Innes, 1860, 24 111. 382; Gist p. Smith, 1880, 78 Ky. 367; Woolfolk v. Bird, 1876, 22 Minn. 341; Blain v. Willson, 1891, 32 Neb. 302; 49 N. W. 224; Merchants Bank v. Lutterloh, 1879, 81 N. C. 142; Beach v. Guaranty Sav. Assn., 1904, 44 Or. 530; 76. Pac. 16. In Gross p. Coffey, supra, McClellan, J. said (p. 475): "At common law such recovery was allowed, and in many of the states the action is sustained. The ruling, however, at common law and in those states, except when their statutes expressly or impliedly authorize this action, goes upon the theory that a contract to pay usury is illegal and void, and not voidable merely; and the main difference between the statutes in the states referred to and our own lies in the fact that they either in terms declare, or have been construed and held to declare, such contracts absolutely void, while the statutes of Alabama do not so declare, but only provide that a usurious contract cannot, when the objection is properly taken to it, be enforced in respect to the usury or interest, but may be as to the principal, and have uniformly been held to render such contracts to that extent voidable at the election of the payor, but not in and of themselves illegal and void. ... So that, if the question were an open one in this court, we should not hesitate to declare that usury voluntarily paid, as it was in the case at bar, if paid at all, cannot be recovered back in an action of assumpsit. The promise to pay it is not illegal and void, but voidable only, at the election of the promisor. Not availing himself of the statutory defense, it cannot be said that his act in paying or the promisee's act in receiving usury is illegal."
An examination of the cases will show that the courts have frequently linked the two doctrines together in support of the right to recover. A typical judicial statement is that of the Supreme Court of New Jersey, in Brown v. Mcintosh:2
"No payment obtained through oppression or undue advantage is voluntary, and the law presumes every payment made to a person who is by statute forbidden to receive it, where the statute is for the protection of the payer, as made through oppression and undue advantage."
But the right has usually been regarded as resting chiefly upon the doctrine of benefits conferred under compulsion, and the cases may conveniently be treated under that head.
1 "Quasi-Contracts," p. 436. 2 1876, 39 N. J. L. 22, 26.