usury in the contract between Prentiss and the appellant, De Wolf, and also denying notice of the mortgage except by vague report, which report was accompanied with the suggestion, that the mortgage was void, as being affected with usury. Barry also answered, admitting the conveyance to himself by Prentiss, in trust to sell, which sale he had effected publicly, and in good faith, before the bill filed; and in pursuance of the sale had conveyed to the defendants, J. and R. M. Johnson; and alleged, that he was ignorant of the claim of the plaintiff, De Wolf, except so far as that claim was recognised in the deed of trust; and also set up the defence of usury between the mortgagor and mortgagee. The other defendant, R. M. Johnson, answered, recognising and adopting the answer of J. Johnson, and denying for himself all knowledge of the mortgage at the date of the conveyance to Barry. He also averred, that he was a creditor of Prentiss to the amount of nearly 500,000 dollars, for which he had no other security than the assignment to Barry, through which he derived title to the mortgaged premises. The cause went to hearing on the pleadings and proofs, and Prentiss was admitted as a witness on the part of the other defendants, subject to legal exceptions; but it did not appear by the transcript of the record, whether the decree of the Court below was grounded upon his testimony. It appeared by the other evidence in the cause, that the transaction originated in a loan made by De Wolf to Prentiss, in the State of Rhode Island, 1825. De Wolf V. Johnson. De Wolf Y. Johnson. 1825. in the year 1815, the repayment of which was secured by a mortgage upon the lands in Kentucky, which contract was afterwards waived by the parties, and a new contract entered into by them in the State of Kentucky, in the year 1817. The principal question of fact was, whether either, or both of those contracts, was void, under the usury laws of either of those States, and as this question is fully considered in the opinion of this Court, it has not been thought necessary to extract from the voluminous mass of testimony in the Court below, the general result of the evidence as bearing upon it. On the part of the appellants, it was contended: 1. That the original contract of 1815, if usurious, was not void according to the laws by which it ought to be governed; the laws of Rhode Island not avoiding the contract, or the securities given for it, but only forfeiting one third of the principal, and all the interest of the loan, as a penalty to be recovered by information or action of debt. 2. That the contract of 1817 was free from the taint of usury. 3. That if either, or both those contracts, were usurious, the defendants, J. & R. M. Johnson, could not take advantage of the usury, not only because they were not parties to the contract, but because, by the very terms of the deed of trust to Barry, under which they claim, they took the estate in controversy subject to the prior 1825. conveyance to the appellant. On the part of the respondents, it was insisted : 1. That the loan of 1815 was usurious and void. 2. That the transaction of 1817 was a device to secure the repayment of money advanced on an usurious agreement. 3. That money advanced on an usurious agreement cannot be secured, and the payment enforced in a Court of equity, at the instance of the lender, by force of any after agreement of the lender to relinquish the usury, and of the borrower to repay the money lent." a The act of Rhode Island of 1798, after prohibiting (s. 1.) the contracting for more than six per centum per annum for the loan of money, wares, goods, &c. provides, (s. 5.) "that a sum equal to one third part of the principal, and all the interest of every bond, mortgage, specialty, agreement, contract, promise, or assurance whatsoever, which shall be made after the passing of this act, for the payment of money, goods, wares, or other commodities to be lent on usury, wherein or whereby there shall be received, agreed for, or taken, for the forbearance or giving day of payment above the rate of interest expressed in the first section of this act, shall be forfeited by the creditor, one half of such forfeiture for the use of the State, and the other half for the use of him, her, or them, who will prosecute for the same. That the said forfeiture shall and may be recovered by information or action of debt, before any Court proper to try the same; that in the trial of every such information or action, the borrower or hirer of the money, goods, wares, or other commodities, on such usurious contract, shall be admitted a legal witness, if not interested in the event of such prosecution; provided, nevertheless, that all informations and actions for the recovery of such forfeiture, shall be brought and commenced De Wolf v. Johnson. Johnson. 1825. Mr. Jones and Mr. P. Hall, for the appellant, De Wolf argued, that contracts being to be governed by v. the laws of the country where they are made, as to their nature, construction, and effect, the oriMarch 14th. ginal contract of 1815 was not within the statute of Kentucky as to usury. The rate of interest is governed by the law of the country where the debt was contracted, and not according to that where the action is brought." That if there be no express reference to any other place, the law will intend that the contract was to be executed where it was made, and have a reference to the law of that State. Nor would taking a security upon lands in another country, vary the application of the rule. Thus, contracts made in England, secured by mortgage on estates in the West-Indies, are construed by the English law. So, where the debt was contracted within one year after such forfeiture shall have accrued. Provided The act of Kentucky of 1798 prohibits the taking above the rate of six per centum per annum as the interest for the loan of money, wares, or merchandise, and declares, that "all bonds, contracts, covenants, conveyances, or assurances, hereafter to be made for any money or goods so to be lent, on which a higher interest is reserved or taken than is hereby allowed, shall be utterly void." a Ord on Usury, 32. (d.) Rep. 4. Hicks v. Brown, 12 Blanchard v. Russell, 13 Mass. 322. 2 Washington's Rep. 282. Van Reimsdyke v. Kane, 1 b 2 Johns. Ch. Cas. 365. c De War v. Span, 3 Term Rep. 425. De Wolf V. Johnson. in Ireland, and the security given in England, it 1825. was held, that Irish interest should be allowed." If the contract be not void by the laws of the country where it was made, it can never become so by being carried into another country to be enforced; if valid in the country where it was made, it will be valid everywhere, unless some reason of policy oppose its execution. Usury is only malum prohibitum, and independent of statutory regulation, the parties may contract for whatever rate of interest they please. Unless the statute of usury which applies to the case, avoids the contract, the defendant cannot avail himself of this ground of defence. Penal laws are strictly local, and the statute of Rhode Island is merely a penal law. The respondents, seeking to avail themselves of usury in a contract made in that State, must show that it would be a good defence there. If the contract of 1815 were good under the law by which it ought to be governed, it would not be invalidated by the subsequent contract, even if that were void. But the contract of 1817 was, in fact, free from usury, and would have the effect of purifying the previous con a Champant v. Lord Ranelagh, 1 Equ. Cas. Abr. 289. b 3 Dull. Rep. 370. note. Cowp. Rep. 341. c 8 Wheat. Rep. 355. d Scoville v. Canfield, 14 Johns. Rep. 339. 4 Burr. Rep. 2251. 2 Mod. Rep. 307. Ord on Usury, 194. e Thompson v. Ketchum, 8 Johns. Rep. 189. 3 Esp. N. P. 163. f Swartwout v. Payne, 19 Johns. Rep. 294. |