The Federal Reporter with Key-Number Annotations, Volume 250: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States, August-October, 1918. Page: 64
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250 FEDERAL REPORTER
tract was under consideration by a federal court or the courts of an-
other state, the contract would be regarded as and declared to be void;
and a person suing upon such a contract would, in the federal court or
the court of the other state, be refused relief upon his contract. If,
however, the usury laws of the state did not stop with a mere declara-
tion of the criminal character of such contracts, but undertook to in-
dicate what would be the result upon the contract itself, this latter
provision would fix and determine the rights of the parties and the
federal courts or the courts of another state having before them such
rights would accordingly adjudicate. In the instant case the parties
have by their contracts fixed their rights as between each other. If
the contracts are usurious, these rights are not as declared in the in-
struments which have passed between them, but are modified by the
laws of the state to which those contracts are subject. The courts of
the United States having jurisdiction of the parties will administer
their rights as these rights have been fixed by the laws of the state
under which the contract was made.
The conclusion having heretofore been reached that the contract un-
der consideration should be governed by the laws of the state of Mis-
sissippi, the next inquiry which arises is whether the contract is usuri-
ous, and the extent to which it is usurious. In determining whether or
not the contract is usurious, the inclination of courts is to assume that
the parties did not intend to violate the law The instrument will be so
construed as to save the contract from illegality if possible. If the
facts which are assumed to constitute usury are outside of the written
instrument, such a construction or interpretation of them will be giv-
en as will, if possible, bring about a like result. These rules, however,
will not be permitted to negative the plain language and purpose of
the law; nor will the mere absence of an intent to violate the law ex-
cuse the persons entering into the usurious contract from the conse-
quences of acts which constitute a violation of the law. In order to
constitute usury, it is not necessary to have a corrupt intent as distin-
guished from the intent presumed from the acts which constitute the
usury. Applying these rules to the instant case, it may very well be
concluded that there was no intention upon the part of Oscar Smith
& Sons Company to violate the law. There was no corrupt purpose in
the doing of that which is here under investigation. This is indicated
by the manner in which the parties have testified. Nevertheless it is
the fact that they have received, as compensation for the use of money,
values in excess of the rate which may be charged in Mississippi with-
out violating the law. They intended to do the things which constitute
a violation of the Mississippi law, and they are therefore chargeable
with the illegal intent contemplated by the usury statute.
The extent to which usury has been contracted for becomes the next
question. If the interest exceeds 10 per cent., but does not exceed 20
per cent., the consequence of the usurious contract is that all interest
will be lost. If the interest contracted for is 20 per cent. or more, the
entire debt is lost. That is to say, if the parties have entered into a
contract by which the promisee is to receive for tie use or forbear-
ance of money a sum equal to or in excess of 20 per cent. per annum
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The Federal Reporter with Key-Number Annotations, Volume 250: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States, August-October, 1918., legislative document, 1918; Saint Paul, Minnesota. (digital.library.unt.edu/ark:/67531/metadc38821/m1/79/: accessed August 17, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.