The civil or criminal wrong of charging interest that is beyond the legal limit set by a State. The illegal profit which is required and received by the lender of a sum of money from the borrower for its use. In a more extended and improper sense, it is the receipt of any profit whatever for the use of money: it is only in the first of these senses that usury will be here considered.
To constitute a usurious contract the following are the requisites: 1. A loan express or implied. 2. An agreement that the money lent shall be returned at all events. 3. Not only that the money lent shall be returned, but that for such loan a greater interest than that fixed by law shall be paid.
There must be a loan in contemplation of the parties and if there be a loan, however disguised, the contract will be usurious, if it be so in other respects. Where a loan was made of depreciated bank notes to be repaid in sound funds, to enable the borrower to pay a debt he owed dollar for dollar, it was considered as not being usur-ious. The bona fide sale of a note, bond or other security at a greater discount than would amount to legal interest, is not per se, a loan, although the note may be endorsed by the seller, and he remains responsible. But, if a note, bond; or other security be made with a view to evade the laws of usury, and afterwards sold for a less amount than the interest, the transaction will be considered a loan and a sale of a man's own note, endorsed by himself, will, be considered a loan. lt is a general rule that a contract, which, in its inception, is unaffected by usury, can never be invalidated by any subsequent usurious transaction. On the contrary, when the contract was originally usurious, and there is a substitution by a new contract, the latter will generally be considered usurious. There must be a contract for the return of the money at all events; for if the return of the principal with interest, or of the principal only, depend upon a contingency, there can be no usury; but if the contingency extend only to interest, and the principal be beyond the reach of hazard, the lender will be guilty of usury, if he received interest beyond the amount allowed by law. As the principal is put to hazard in insurances, annuities and bottomry, the parties may charge and receive greater interest than is allowed by law in common cases, and the transaction will not be usurious.
To constitute usury the borrower must not only be obliged to return the principal at all events, but more than lawful interest: this part of the agreement must be made with full consent and knowledge of the contracting parties. When the contract is made in a foreign country the rate of interest allowed by the laws of that country may be charged, and it will not be usurious, although greater than the amount fixed by law in this.