Loan, in law, the delivery of an article to a borrower, who is to use it without paying therefor. The rights and obligations of the lender and of the borrower may be considered separately.

I. Eights Of The Borrower

I. Eights Of The Borrower.He has a right to receive and hold the thing borrowed, but only as the property of the lender. For many purposes his possession is, in the eye of the law, the possession of the owner, the borrower being for this purpose the agent of the owner. Still the possession of the borrower would confer upon him some of the rights of an owner as against every one but the owner. Thus he might maintain in his own name an action against a wrong doer. The borrower has a right to use the article borrowed, but he can no more lend it than he can give or sell it; and if he should do either of these, the owner may take it as his own property from the hands of the person to whom the borrower has delivered it. Neither can the borrower pawn the thing borrowed, nor, it is believed, can he hold it as a security for a debt due to him from the lender; nor can he use it except for purposes for which he borrowed it, or for those which naturally belong to it, or, as it is expressed in the code of Louisiana, for its " natural destination." It is important to determine what degree of care a borrower must take of the article borrowed; or, in other words, for what loss of or injury to it he is responsible.

A loan is a bailment, but it is one for the sole and exclusive benefit of the borrower; therefore it is one which binds the borrower to the utmost care of the thing, and to a responsibility for even slight negligence. How this care may be precisely defined, it would not be easy to say. The best definition, or that most generally accepted, is, such care as any person not fatuous would take of the thing if it were his own property under like circumstances. But he is not bound to take the greatest possible care, and therefore is not liable if the borrowed property were lost by robbery or violence, or theft, or any cause not reasonably to be anticipated, provided no imprudence or negligence of his own enters as a cause into the loss. If the thing is lost, and the borrower pays for it to the satisfaction of the lender, and the thing is afterward found, we should say that the lender may elect to keep the money (always supposing no fraud) or to return it and demand the thing lent. But it has been thought that this election lay with the borrower. As the borrower takes the thing to use, and the lender consents to this, the borrower is not liable for such injury as naturally results from the use of it; or, to use a common phrase, from the natural wear and tear of use.

But, on the other hand, he is bound to pay all the expenses or charges which naturally result from or accompany the use. So he is bound to pay, in the first place, all extraordinary charges which become unexpectedly necessary to the preservation of the thing. But of these expenses he may demand repayment from the lender, and he has a lien on the thing borrowed as his security for them. Thus, if A borrows a horse of B, A must see that he is properly fed, shod, and groomed, and all this at his own expense. So if the horse becomes suddenly ill, A must provide all proper medical advice and medicines, and for these also he must pay; but he may demand them of B, whether the horse lives or dies; and if he lives, A may keep the horse until B repays him these expenses, in the same way he would if it were pledged to him for the sum.

II. Rights Of The Lender

II. Rights Of The Lender.If a borrower keeps the thing borrowed after it is his duty to return it, his relation to the owner is changed at once; and it is therefore necessary to determine when he is bound to return it. Upon the important right of redemanding the thing lent at pleasure, the Roman civil law held a different doctrine from our own common law. By that law, if one lent a thing for an indefinite period, he might reclaim it when he would, or perhaps within any reasonable time. But if he lent it for a time certain, this was a valid contract, and the borrower had a right to retain it against the will of the lender during that time. The common law however does not regard it as a valid contract, for the reason that no consideration passes; and therefore the lender, however specific may have been the terms of the loan, may rescind and cancel them at his pleasure and demand a return of the thing. Now, we have seen that if the borrower keeps the thing after he was bound to return it, his relation to the lender changes totally; and this change takes place as soon as a definite period for which the thing was lent expires, whether the thing be demanded or not; and as soon as it is demanded, whether the period for which it is borrowed have expired or not.

Hence, as soon as it should be returned and is not, the borrower becomes at once liable for any loss or injury, although wholly without his fault; as if, for example, he had kept it when he should not, and then was robbed of it by overwhelming force. In fact, if he keeps it when he should return it, he holds it entirely without right, and is just as liable as if he had originally taken it without right. A lender has no right to compensation for want of the care or skill which he had no right to expect. Thus, it has been said in illustration of this rule, that if one lends a fiery horse to one who ought not to be supposed capable of using it with safety, the lender has no claim for compensation for damages caused by the want of the extraordinary skill or strength required. By the same reason, if a lender knows of defects or tendencies to mischief in the thing lent which are not obvious, and does not disclose them, he has no claim for damages thence resulting. And if he lends the thing for an illegal act, he is no longer a lender in the eye of the law, but an accomplice in the wrong done. - In all that we have said we have considered as a loan only that which is so by legal definition. But the common use of the word is very different.

Thus one is said to lend his money for so much per cent., or to lend an article for such a compensation. But the moment any compensation of any kind is paid by the borrower, it ceases totally from being a loan, and becomes a contract of hiring, which is an altogether different thing. The Roman civil law, in its exquisite classification, recognized another form of loan, under the name of mutuum, for which we have no word in English, either in law or in usage. A loan, in law, is a delivery for use by the borrower, as already defined; but a mutuum may be defined as a loan for consumption, and not for use. Thus one lends so much bread, or wood, or wine, which the borrower is to use at his pleasure, and in the use consume, and repay by an equal quantity of a similar article. But no compensation whatever is to be made, or this also would become, instead of a mutuum, a hiring. Such contracts cannot be uncommon in practice, and would undoubtedly be governed by the same rules as the contract of loan, varied only as the different nature of this contract required. It is obvious also that a contract might be in part a loan, and in part a mutuum.

Hence if A lent B a cask of wine for a certain occasion, B to use what he chose, and to repay that by a similar quantity, and to return the rest, this would be a mutuum as to all that was used, and a loan as to all the remainder.