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mining whether the contingency be a real
one, or a mere shift and device to cover
usury."

Similar views were expressed in the subsequent case of Mathews v. Missouri, Kansas, & Texas Trust Co. [69 Minn. 318], 72 N. W. 121, where the supreme court of Minnesota again reached the conclusion that the notes and mortgage, forming a contract between the same trust company and one Mathews, were usurious and void.

The next question for our consideration is

noney any charge above ten per cent shall ne usurious; and section 2217 provides that "whenever it satisfactorily appears to a court that any bond, will, note, assurance, pledge, conveyance, contract, security, or evidence of debt has been taken or received in violation of the provisions of this act, the court shall declare the same to be void, and enjoin any proceedings thereon, and shall order the same to be canceled and given up." As was said in De Wolf v. Johnson, above 1856]cited, it does not, in general, comport with a negotiation for a loan of money that any-one not free from difficulty. Can a borrower thing should enter into the views of the par- of money upon usurious interest successfully ties, but money, or those substitutes which, seek the aid of a court of equity in cancelfrom their approximation to money, circu- ing the debt without making an offer to relate with corresponding, if not equal, facil-pay the loan with lawful interest? ity. Still, however, like every other case, it is open to explanation, and the question always is whether it was or was not a subterfuge to evade the laws against usury. The books contain many cases where artful contrivances have been resorted to, whereby the lender is to receive some other advantage or thing of value beyond the repayment of the loan with legal interest. Sometimes the agreement has taken the form of the purchase of an annuity. More frequently there is a collateral agreement whereby the borrower is to purchase an article of property and to pay therefor more than its intrinsic value. It has been frequently held that to constitute usury, where the contract is fair on its face, there must be an intention knowingly to contract for or to take usurious interest, but mere ignorance of the law will not protect a party from the penalties of usury. Lloyd v. Scott, 4 Pet. 205 [7: 833].

Undoubtedly the general rule is that courts of equity have a discretion on this subject, and have prescribed the terms on which their powers can be brought into ac tivity. They will give no relief to the borrower if the contract be executory, except on the condition that he pay to the lender the money lent with legal interest. Nor, if the contract be executed, will they enable him to recover any more than the excess he has paid over the legal interest. Tiffany v. Boatman's Sav. Inst. 18 Wall. 375 [22: 868].

But what, in such a case, is held to be the law by the courts of the state of Minnesota? Under the statutory provision already cited, that whenever it satisfactorily appears to a court that any bond, bill, note, assurance, pledge, conveyance, security or evidence of debt has been taken or received in violation of the provisions of this act the court shall declare the same to be void, and enjoin any The precise character of the contract be- proceeding thereon, and shall order the same tween the present parties is not clear. It to be canceled and given up, the supreme has some of the features of a loan of money; court of Minnesota has repeatedly held that in other respects it resembles a contract of a plaintiff suing to cancel a Minnesota conlife insurance. But our examination of its tract for usury need not offer to repay the various provisions and of their legal import money loaned. Scott v. Austin, 36 Minn. has led us to accept the conclusion of courts 460; Exley v. Berryhill, 37 Minn. 182; Mathbelow, that the scheme embodied in the ap-ews v. Missouri, Kansas, & Texas Trust Co. plication, notes, and mortgage was merely a colorable device to cover usury. The supreme court of Minnesota has more than once had occasion to consider this very question. In the case of Missouri, Kansas, & Texas Trust Co. v. McLachlan, 59 Minn. 468, that court said:

[69 Minn. 318] 72 N. W. 121.

*Under statutes providing that, in cases of[358) usury, the borrower is entitled to relief without being required to pay any part of the usurious debt or interest as a condition thereof, it has been held by the courts of New York and of Arkansas that courts of equity are constrained by the statutes, and must grant the relief provided for therein without applying the general rule that a bill or other proceeding in equity, to set aside or affect a usurious contract, cannot be maintained without paying or offering to pay the amount actually owed. Williams v. Fitzhugh, 37 N. Y. 444; Lowe v. Loomis, 53 Ark. 454.

"The peculiar and unusual provisions of this contract themselves constitute intrinsic evidence sufficient to justify the finding of the existence of every essential element of usury, viz., that there was a loan; that the money was to be returned at all events, and that more than lawful interest was stipulated to be paid for the use of it. The only one of these which could be seriously claimed to be lacking was that the money was not to But it is strenuously argued, and of that be paid back at all events, but only upon a opinion was Circuit Judge Sanborn in the [357 contingency, to wit, the continuance of the present case, that Federal courts, in the exlife of McLachlan; but the facts warrant the ercise of their equity jurisdiction, do not reinference that this contingency was not bona ceive any modification from the legislation fide, but was itself a mere contrivance to of the states or the practice of their courts cover usury. The mere fact that the contract having similar powers, and that consequenthas the form of a contingency will not ex- ly no act of the legislature of Minnesota empt it from the scrutiny of the court, which could deprive the Federal courts sitting in is bound to exercise its judgment in deter-equity of the power or relieve them of the

duty to enforce and apply the established | mortgagor twelve months to redeem, after a principle of equity jurisprudence to this sale under a decree of foreclosure, and to case, that he who seeks equity must do his creditor three months after that, conequity, and to require the appellees to pay ferred a substantial right; and it was so to the appellant what they justly owe for held, and that such right of redemption aftprincipal and lawful interest as a condition er sale was as obligatory on the Federal of granting the relief they ask. courts *sitting in equity as on the state[360] courts; and that their rules of practice must be made to conform to the law of the state so far as may be necessary to give full effect to the right. The opinion of the court was delivered by Mr. Justice Miller, who said:

We think it a satisfactory reply to such a proposition that the complainants in the present case were not seeking equity, but to avail themselves of substantive right under the statutory law of the state. It seems to be conceded, or, if not conceded, it is plainly evident, that if the cause had remained in the state court where it was originally brought, the complainant would have been entitled, under the public policy of the state of Minnesota, manifested by its statutes as construed by its courts, to have this usurious contract canceled and surrendered without tendering payment of the whole or any part of the original indebtedness. The defendant company could not, by removing the case to the Federal court, on the ground that it was a citizen of another state, deprive the complainants of such a substantive 359]ight. With the policy of the state legislation the Federal courts have nothing to do. If the states, whether New York, Arkansas, Minnesota, or others, think that the evils of usury are best prevented by making usurious contracts void, and by giving a right to the borrowers to have such contracts unconditionally nullified and canceled by the courts, such a view of public policy, in respect to contracts made within the state and sought to be enforced therein, is obligatory on the Federal courts, whether acting in equity or at law. The local law, consisting of the applicable statutes as construed by the supreme court of the state, furnishes the rule of decision.

In Clark et al. v. Smith, 13 Pet. 195 [10: 123], it was said that "when the legislature declares certain instruments illegal and void, there is inherent in the courts of equity a jurisdiction to order them to be delivered up, and thereby give effect to the policy of the legislature; that the state legislatures have, certainly, no authority to prescribe the forms or modes of proceeding in the courts of the United States; but having created a right, and at the same time prescribed a remedy to enforce it, if the remedy prescribed is substantially consistent with the ordinary modes of proceeding on the chancery side of the Federal courts, no reason exists why it should not be pursued in the same form as in the state courts; and that the undoubted truth is that when investigating and decreeing on titles in this country the court must deal with them in practice as it finds them, and accommodate the modes of proceeding to the nature of the case, and to the character of the equities involved in the controversy, so as to give effect to state legislation and state policy; not departing, however, from what legitimately belongs to the practice of a court of chancery."

The question in Brine v. Hartford F. Insurance Co. 96 U. S. 627 [24: 858], was whether a state statute which allowed to the

"It is denied that these statutes of Illinois (giving the right to redeem) are of any force in cases where the decree of foreclosure is rendered in a court of the United States, on the ground that the equity practice of these courts is governed solely by the precedents of the English chancery court as they existed prior to the Declaration of Independence, and by such rules of practice as have been established by the Supreme Court of the United States, or adopted by the circuit courts for their own guidance. And treating all the proceedings subsequent to a decree which are necessary for its enforcement as matter of practice, and as belonging solely to the course of procedure in courts of equity, it is said that not only do the manner of conducting the sale under a decree of foreclosure, and all the incidents of such a sale, come within the rules of practice of the court, but that the effects of such a sale on the rights acquired by the purchaser and those of the mortgagor and his subsequent grantees are also mere matters of practice to be regulated by the rules of the court, as found in the sources we have mentioned.

"On the other hand, it is said that the effect of the sale and conveyance made by the commissioner is to transfer the title of real estate from one person to another, and that all the means by which the title to real property is transferred, whether by deed, by will, or by judicial proceedings, are subject to, and may be governed by, the legislative will of the state in which it lies, except where the law of the state on that subject impairs the obligation of a contract. And that all the laws of a state existing at the time a mortgage or any other contract is made, which affect the rights of the parties to the contract, enter into and become a part of it, and are obligatory on all courts which assume to give remedy on such contracts.

"We are of opinion that the propositions last mentioned *are sound; and if they are in[361] conflict with the general doctrine of the exemption from state control of the chancery practice of the Federal courts, as regards mere modes of procedure, they are of paramount force, and the latter must to that extent give way. It would seem that no argument is necessary to establish the proposition that where substantial rights, resting upon a statute which is clearly within the legislative power, come in conflict with mere forms and modes of procedure in the courts, the lat ter must give way, and adapt themselves to the forms necessary to give effect to such rights. The flexibility of chancery methods, by which it molds its decrees so as to give

See same case below, 6 App. D. C. 34.

appropriate relief in all cases within its ju- tolls, etc., and to restrain the District from
risdiction, enables it to do this without vio-prescribing regulations for such market, etc.
lence to principle. If one or the other must Affirmed.
give way, good sense unhesitatingly requires
that justice and positive rights, founded both
on valid statutes and valid contracts, should
not be sacrificed to mere questions of mode
and form." See also, to the same effect, the
case of Holland v. Challen, 110 U. S. 15 [28:
52].

Of course, these views are not applicable to cases arising out of interstate commerce, where the policy to be enforced is Federal. Nor has it been found necessary to consider whether the agreement between these parties was, as a contract of life insurance, void because the defendant had not complied with the statutes of Minnesota.

The decree of the Circuit Court of Appeals, affirming that of the Circuit Court, is accordingly affirmed.

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COMPANY,

DISTRICT OF COLUMBIA.

(See S. C. Reporter's ed. 361-371.)

Rules of Washington Market Companypower to incur pecuniary liabilities-statute of frauds.

1.

2.

The power to establish rules and regulations with respect to the Washington Market Company, incorporated by the act of Congress of May 20, 1870, is given by § 16 to the city government, and not to the market company. The governor, either with or without the sanction of the board of public works of the District of Columbia, had no authority un

der the organic act of February 21, 1871, to incur a pecuniary liability with respect to the improvement of the market grounds, the erection of market buildings, and the operation of the market, which were within the province of the legislative assembly. 8. A court of equity will not release an individual from the operation of the statute of frauds, which requires that interest in lands be created by an instrument in writing, and impose an equitable lien upon land in

Statement by Mr. Justice White: *The Washington Market Company was in-[362] corporated by act of Congress approved May 20, 1870 (16 Stat. at L. 124, chap. 108). Authority was conferred upon the company to construct suitable buildings and operate public market on the site of the "Center Market Space," situated in the northwest section of the city of Washington, between Seventh and Ninth streets and B street and Pennsylvania and Louisiana avenues. exception of the sixteenth section, the provisions of the statute related solely to the public market thus authorized, and the operation and duration of the franchise.

With the

The sixteenth section is as follows:
"Sec. 16. And be it further enacted, That
the city government of Washington shall
have the right to hold and use, under such
rules and regulations as the said corporation
may prescribe, the open space at the inter-
section of Ohio and Louisiana avenues with
Tenth and Twelfth streets, as a market for
the purchase and sale of the following art-
icles: to wit, hay, straw, oats, corn, corn
meal, seed of all kinds, wood for sale from
the wagon, cattle on the hoof, swine on the
hoof, country produce sold in quantities
from the wagon, and such other bulky and
coarse articles as the said corporation may
designate. And from and after sixty days
from the passage of this act marketing
of the products named herein shall be ex-
cluded from Pennsylvania and Louisiana
avenues and the sidewalks and pavements
thereon."

The present litigation was begun on Jan-
uary 17, 1892, by the filing, on behalf of the
Washington Market Company, of a bill in
the supreme court of the District, the de-
fendant *named therein being the District of[363)
Columbia. The bill averred that the com-
plainant was vested by the section above
quoted with authority to establish the rules
and regulations therein referred to for the
government of the wholesale market author-
ized to be established. It was also averred
that, under authority of what was claimed to
be a contract arising from correspondence
had with the District, complainant, in 1871,
entered into possession of a part of the open
market space referred to in said section 16,
and, in 1886, of the entire space. The cor-
respondence relied on is set out in the
margin. It was alleged that the complain-[364]
†Washington Market Company,
November 8, 1871.
Decided Jan- Hon. Henry D. Cooke, Governor of the District

favor of one who makes improvements thereon, knowing that the title is in another,especially where the money is expended under an express understanding with reference thereto, had with the owner,--but will leave the party to the remedies, if any, which a court of law provides.

[No. 83.]

Argued December 9, 12, 1898. uary 3, 1899.

ON APPEAL from a diet cof the moist af

Appeals of the District of Columbia affirming the decree of the Supreme Court of said District dismissing a suit in equity brought by the Washington Market Company against the District of Columbia, seeking a decree against the District for losses occasioned by it to the market company by the abolition of

of Columbia.

Sir In section 16 of the charter of this comtersection of Ohlo and Louisiana avenues with Tenth and Twelfth streets Is assigned as a market for cattle and bulky and coarse articles to be sold in quantities from the wagon, and the marketing of such products in Pennsylvania

and Louisiana avenues is prohibited.

Notwithstanding this prohibition dealers are continuing to occupy Louisiana avenue in de

ant graded the grounds and made valuable | acts of interference by the District and also structures thereon; that it had operated and by recent public assertions of an exclusive was still operating a wholesale market there- right to possess and regulate said market, on, and that it had received and was receiv- the receipts from the operation of the same 365]ing the sources of revenue mentioned in the had been greatly diminished, so that the exalleged contract, except as to certain charges penses of maintaining the market had been which, it was averred, defendant had wrong-largely in excess of the sum received from its fully abolished. operation. It was prayed that an account might be taken and the District decreed to pay the losses occasioned by it; that the grain, and wood, and suitable stables, pens, and cattle yards, as soon as the concrete paving company, now occupying the western portion of said ground, shall vacate the same; all to be done to the satisfaction of the District authorities, and in such manner as to furnish creditable accommodations for a wholesale market.

It was charged that, not only by the abolition of tolls, above referred to, but by other fiance of law and to the great injury of prop- | erty holders on that avenue. This company has been unable to enforce the prohibition because the open space above referred to has not been properly prepared to enable dealers to occupy the grounds for market purposes as provided in the law.

By the act of Congress the Washington Market Company is entitled to establish the rules and regulations which shall govern the market upon the open space, but it is a question whether or not it was the intention of Congress that this company should derive any income therefrom.

Under these circumstances, to meet a pressing public necessity, this company proposes, with your permission, properly to grade the grounds and to place thereon suitable platforms of inexpensive construction, which will enable the marketmen to do business on the open space as contemplated by the act, charging them for the use of their stands such sums as you and the District authorities may prescribe, not to exceed the interest on the actual outlay and the actual expenditures for keeping the market In order.

There can be no possible objection to this course of action, and we trust you will give it your approval at once, as there is a necessity for immediate action.

We have the honor to be, very respectfully,

T. C. Connelly, Hallett Kilbourn, Adole Cluss, Wm. E. Chandler, Committee of the Washington Market Company.

Approved, subject to such regulations as the legislative assembly may hereafter prescribe. H. D. Cooke, Governor.

Washington Market Company, April 8, 1872. To the Governor and Board of Public Works of the District of Columbia :

The Washington Market Company is now in possession of the open space at the intersection of Ohio and Louisiana avenues with Tenth and Twelfth streets, in accordance with the sixteenth section of the act of Congress of May 20, 1870, and the arrangement made with the governor of the District, as per agreement of November 8, 1871, as follows.

(Here follows a copy of the letter and approval printed above.)

Since taking possession of the open space thus assigned for a wholesale market the company have purchased from the District authorities the buildings thereon belonging to the city of Washington, have suitably graded the surface, and have also commenced the erection of structures thereon necessary for wholesale market purposes, having already completed an open market or platform shed on the north side of B street over 200 feet long; also an open platform shed 200 feet long on the north side of the grounds, with eating-house and storehouses, and have in addition made arrangements to erect a large open building for loads of hay,

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The market company also to charge such reasonable rent for storage as may be agreed upon with the parties using their buildings.

The company will also keep an office open at all hours of the day and night for the accommodation of dealers, where produce can be measured and weighed, and will furnish suitable watchmen to take charge of the market and collect the revenues thereof.

From the revenues collected the market company will retain sufficient to pay all expenses of managing and keeping in repair and good condition the buildings and grounds, with ten per cent annually on the cost of improvements (which are to be made at the company's charge), and the company shall pay over to the District authorities the residue or balance of the reve nne by them collected.

If by authority of Congress the company should at any time be dispossessed of the use and occupancy of the market grounds, it shall be entitled to receive a fair compensation for its buildings and improvements thereon.

Washington Market Company, By M. G. Emery, President. Board of Public Works, District of Columbia, Washington, April 26, 1874. The Washington Market Company:

In reply to your communication of April 8, 1872, I have to inform you that the board have this day passed the following vote: "To approve the arrangement with the Washington Market Company proposed in the company's letter of April 8, 1872, relative to the open space at the intersection of Ohio and Louisiana avenues and Tenth and Twelfth streets, used as a wholesale market: this arrangement not to prejudice any lawful future action of the board, of the legislative assembly, or of Congress." Very respectfully,

Alex. R. Shepherd, Vice President.

District might also be restrained from pre-examine the contentions urged in the order scribing or attempting to prescribe rules and in which they have been made. regulations for said market, from interfering with the sources of revenue mentioned in the contract, and from forcibly ousting or resort [366]ing to legal proceedings to obtain possession of the premises. General relief was also prayed.

The answer of the District asserted the invalidity of the alleged contract; averred that the District alone was entitled to occupy said market space and to establish rules and regulations respecting the conduct of the market; and further averred the legality of any action taken by or on its behalf respecting said market space and the tolls imposed in the operation of the market.

The court entered a decree dismissing the bill; and, on appeal, its action was affirmed by the court of appeals of the District. 6 App. D. C. 34. An appeal was then taken to this court.

Mr. William Birney for appellant. Messrs. S. T. Thomas and A. B. Duvall for appellee.

[366] *Mr. Justice White, after making the foregoing statement, delivered the opinion of the court:

As to the claim that the market company is the corporation empowered by section 16 of the charter to establish rules and regulations with respect to the market therein authorized.

We do not find in the text of the statute anything justifying a construction of the words "rules and regulations" as employed in section 16, which would attach to them a less broad signification than is given to the word "regulations" in the second section, in which section, with reference to the public market authorized to be constructed and maintained by the Washington Market Company, it was provided that "the municipal government of said city shall at all times have the power to make and enforce such regulations with regard to said market and the management thereof as in their judg. ment the convenience, health, and safety of the community may require." The fact that the power to establish and enforce regulations with respect to the market to be erected by the market company was vested in the municipality, and the further fact that a voice in the establishment of the amount of rent to be paid for stalls in the market of the company was expressly conferred upon the District authorities, prevents the inference that, with reference to the market which the city itself was "to hold and use," the city was deprived of the power to make rules and[368] regulations, or that a broad and comprehensive authority to establish such rules and regulations was vested in the market company. The grammatical structure of the sentence also supports the view that the corporation referred to in the sixteenth section was the city government, for the nearest antecedent to the word "corporation" is the city government of Washington, the market company not being named at all in the section.

As respects the alleged contract stated in the bill to have been initiated in 1871 and perfected in 1874.

It is difficult to determine precisely the theory upon which appellant predicates its right to relief at the hands of a court of equity. In the bill what is termed a "title to possession" of the market grounds is as serted to be in complainant, and its right not only to prescribe rules and regulations with respect to the market is averred, but also a right to the sources of revenue mentioned in the alleged contract. Despite, however, the position thus taken in the pleadings, and the fact that the complainant demanded that the District be compelled to account for the losses which, it is alleged, the complainant had sustained by claimed wrongful interferences of the District, counsel, in the argument at bar, bases the right to relief solely upon the prayer for general relief contained in the bill. In consequence of this abandonment of the specific grounds stated in the bill, the argument at bar is that while the market company, under the [367] section above referred to, had not obtained a general power to regulate and control the market, it was by said section vested with the power to locate and assign stands therein, and that the facts averred and shown by the proofs established an implied contract by which the District constituted the company an agent to manage and control the market and collect and disburse the revenues therefrom. And it is then argued that from these facts such a situation resulted as that it would be inequitable to permit the Dis-to this course." Upon this letter was placed trict to interfere in any wise with the possession, control, and management of the market without antecedently "reimbursing appellant for moneys expended as its agent in the administration of the wholesale market of Washington city."

Disregarding the fact that the claims asserted in the pleadings on the one hand and at bar on the other are divergent, we shall

By the written proposal concerning the use and occupancy of the open market space, bearing date November 8, 1871, addressed to the governor of the District, the Washington Market Company stated: "This company proposes, with your permission, properly to grade the grounds and to place thereon suitable platforms of inexpensive construction, which will enable the marketmen to do business on the open space as contemplated by the act, charging them for the use of their stands such sums as you and the District authorities may prescribe, not to exceed the interest on the actual outlay and the actual expenditures for keeping the market in order." And it was added: "There can be no possible objection

the following indorsement: "Approved, subject to such regulations as the legislative assembly may hereafter prescribe. H. D. Cooke, governor."

Irrespective of what may have been the power possessed by the governor concerning the market grounds or market, it is clear that there is nothing in this proposal of the mar'ket company, or in the qualified approval of

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