regulations are made by statute 30 Geo. II, c. 24. And so if a landlord distrains goods for rent, or a parish officer for taxes, these for a time are only a pledge in the hands of the distrainors, and they are bound by an implied contract in law to restore them on payment of the debt, duty and expenses, before the time of sale: or, when sold, to render back the overplus. If a friend delivers any thing to his friend to keep for him, the receiver is bound to restore it on demand; and it was formerly held that in the mean time he was answerable for any damage or loss it might sustain, whether by accident or otherwise; (x) unless he expressly undertook (y) to keep it only with the same care as his own goods, and then he should not be answerable for theft or other accidents. But now the law seems to be settled, (2) that such a general bailment will not charge the bailee with any loss, unless it happens by gross neglect, which is an evidence of fraud; but, if he undertakes specially to keep the goods safely and securely, he is bound to take the same care of them, as a prudent man would take of his own. (a)

In all these instances there is a special qualified property transferred from the bailor to the bailee, together with the possession. It is not an absolute property, because of his *contract for restitution; the bailor having still left in [*453] him the right to a chose in action, grounded upon such contract. And, on account of this qualified property of the bailee, he may (as well as the bailor) maintain an action against such as injure or take away these chattels. The tailor, the carrier, the innkeeper, the agisting farmer, the pawnbroker, (20) the distrainor, and the general bailee, may all of them vindicate, in their own right, this their possessory interest, against any stranger or third person. (b) For, being responsible to the bailor, if the goods are lost or damaged by his wilful default or gross negligence, or if he do not deliver up the chattels on lawful demand, it is therefore reasonable that he should have a right of action against all other persons who may have purloined or injured them; that he may always be ready to answer the call of the bailor.

3. Hiring and borrowing are also contracts by which a qualified property may be transferred to the hirer or borrower: in which there is only this difference, that hiring is always for a price, or stipend, or additional recompense; borrow. ing is merely gratuitous. But the law in both cases is the same. They are both contracts, whereby the possession and a transient property is transferred for a particular time or use, on condition to restore the goods so hired or borrowed, as soon as the time is expired or use performed; together with the price or stipend (in case of hiring) either expressly agreed on by the parties, or left to be implied by law according to the value of the service. By this mutual contract, the hirer or borrower gains a temporary property in the thing hired, accompanied with an implied condition to use it with moderation, and not to abuse it; and the owner or lender retains a reversionary interest in the same, and acquires a new property in the price or reward. Thus if a man hires or borrows a horse for a month, he has the possession and a qualified property therein during that period; on the expiration of which his qualified property determines, and

(y) 4 Rep. 84.

(z) Lord Raym. 909. 12 Mod. 487.

(2) Co. Litt. 89. (a) By the laws of Sweden the depositary or bailee of goods is not bound to restitution, in case of accident by fire or theft, provided his own goods perished in the same manner; "jura enim nostra" says Stiernhook, dolum præsumunt, si una non pereunt." (De jure Sueon. l. 2, c. 5.) (b) 13 Rep. 69.

(20) [A pawn differs from a mortgage (which by special contract may be made even of a personal chattel) and also from a lien, which confers no right of sale or appropriation. On breach of the condition the thing mortgaged becomes at law the absolute property of the mortgagee; but in case of a pawn, non-payment at the time only authorizes the pawnee to sell, and so long as the chattel remains in his hands unsold, the debtor may re-entitle himself by payment or tender of the debt. 2 Str. 919; 1 P. Wms. 261; 1 Salk. 522. The pawnee is bound to keep the pledge with ordinary care; and if he does this, he may recover the debt, notwithstanding the loss of the pledge. And as the security is collateral to the debt, he may commence an action for the debt without giving up the pledge. Bac. Abr. Bailment, b.

In addition to these common law liabilities, pawnbrokers are regulated in their dealings by statutes, which fix the rate of interest to be taken by them, and prescribe the mode of dis posing of the bailments when not claimed within the time limited.]

the owner becomes (in case of hiring) entitled also to the price for which the horse was hired. (c)

*There is one species of this price or reward, the most usual of any but concerning which many good and learned men have in former times [ *454] very much perplexed themselves and other people, by raising doubts about its legality in foro conscientiæ. That is, when money is lent on a contract to receive not only the principal sum again, but also an increase by way of compensation for the use; which generally is called interest by those who think it lawful, and usury by those who do not so. For the enemies to interest in general make no distinction between that and usury, holding any increase of money to be indefensibly usurious. And this they ground as well on the prohibition of it by the law of Moses among the Jews, as also upon what is said to be laid down by Aristotle, (d) that money is naturally barren, and to make it breed money is preposterous, and a perversion of the end of its institution, which was only to serve the purposes of exchange and not of increase. Hence the school divines have branded the practice of taking interest as being contrary to the divine law both natural and revealed; and the canon law (e) has proscribed the taking any, the least, increase for the loan of money, as a mortal sin.

But in answer to this, it hath been observed, that the Mosaical precept was clearly a political, and not a moral precept. It only prohibited the Jews from taking usury from their brethren the Jews; but in express words permitted them to take it of a stranger: (f) which proves that the taking of moderate usury, or a reward for the use, for so the word signifies, is not malum in se; since it was allowed where any but an Israelite was concerned. And as to the reason supposed to be given by Aristotle and deduced from the natural barrenness of money, the same may with equal force be alleged of houses, which never breed houses; and twenty other things, which nobody doubts it is lawful to make profit of, by letting them to hire. And though money was originally used only for the purposes of exchange, yet the laws of any state *may be well

justified in permitting it to be turned to the purposes of profit, if the [*455] convenience of society (the great end for which money was invented) shall require it. And that the allowance of moderate interest tends greatly to the benefit of the public, especially in a trading country, will appear from that generally acknowleged principle, that commerce cannot subsist without mutual and extensive credit. Unless money, therefore can be borrowed, trade cannot be carried on; and if no premium were allowed for the hire of money, few persons would care to lend it; or at least the ease of borrowing at a short warning (which is the life of commerce) would be entirely at an end. Thus, in the dark ages of monkish superstition and civil tyranny, when interest was laid under a total inderdict, commerce was also at its lowest ebb, and fell entirely into the hands of the Jews and Lombards: but when men's minds began to be more enlarged, when true religion and real liberty revived, commerce grew again into credit: and again introduced with itself its inseparable companion, the doctrine of loans upon interest. And, as to any scruples of conscience, since all other conveniences of life may either be bought or hired, but money can only be hired, there seems to be no greater oppression in taking a recompense or price for the hire of this, than of any other convenience. To demand an exorbitant price is equally contrary to conscience, for the loan of a horse, or the loan of a sum of money: but a reasonable equivalent for the temporary inconvenience which the owner may feel by the want of it, and for the hazard of his losing it entirely, is not more immoral in the one case than it is in the other. Indeed the absolute prohibition of lending upon any, even moderate interest, introduces the very inconvenience which it seems meant to remedy. The necessity of individuals will make borrowing unavoidable. Without some profit allowed by law, there will be but few lenders; and those principally bad men, who will break through the law, and take a profit; and then will endeavour (d) Polit. l. 1, c. 10. This passage hath been suspected to be spurious. (f) Deut. xxiii, 20.

(c) Yelv. 172. Cro. Jac. 236. (e) Decretal, l. 5, tit. 19.

to indemnify themselves from the danger of the penalty, by making that profit [ *456 ] exorbitant. A capital distinction must therefore be made between a moderate and exorbitant profit; to the former of which we usually give the name of interest, to the latter the truly odious appellation of usury: the former is necessary in every civil state, if it were but to exclude the latter, which ought never to be tolerated in any well regulated society. For, as the whole of this matter is well summed up by Grotius, (g)" if the compensation allowed by law does not exceed the proportion of the hazard run, or the want felt, by the loan, its allowance is neither repuguant to the revealed nor the natural law; but if it exceeds those bounds, it is then oppressive usury; and though the municipal laws may give it impunity, they can never make it just."

We see that the exorbitance or moderation of interest, for money lent, depends upon two circumstances; the inconvenience of parting with it for the present and the hazard of losing it entirely. The inconvenience to individual Tenders can never be estimated by laws; the rate therefore of general interest must depend upon the usual or general inconvenience. This results entirely from the quantity of specie or current money in the kingdom; for the more specie there is circulating in any nation, the greater superhnity there will be, beyond what is necessary to carry on the business of exchange and the common concerns of life. In every nation or public community, there is a certain quantity of money thus necessary, which a person well skilled in political arithmetic might perhaps calculate as exactly, as a private banker can the demand for running cash in his own shop: all above this necessary quantity may be spared or lent, without much inconvenience to the respective lenders; and the greater this national superfluity is, the more numerous will be the lenders, and the lower ought the rate of the national interest to be; but where there is not enough circulating cash, or barely enough, to answer the ordinary uses of the public, interest will be proportionably high: for lenders will be but few, as few can submit to the inconvenience of lending.

*So also the hazard of an entire loss has its weight in the regulation

[ *457 ] of interest: hence, the better the security the lower will the interest be; the rate of interest, being generally in a compound ratio, formed out of the inconvenience, and the hazard. And as if there were no inconvenience, there should be no interest but what is equivalent to the hazard, so, if there were no hazard there ought to be no interest, save only what arises from the mere inconvenience of lending. Thus, if the quantity of specie in a nation be such, that the general inconvenience of lending for a year is computed to amount to three per cent.: a man that has money by him will perhaps lend it upon a good personal security at five per cent., allowing two for the hazard run; he will lend it upon landed security or mortgage at four per cent., the hazard being proportionably less; but he will lend it to the state on the maintenance of which all his property depends, at three per cent., the hazard being none at all. (21)

But sometimes the hazard may be greater than the rate of interest allowed by law will compensate. And this gives rise to the practice of, 1. Bottomry, or respondentia. 2. Policies of insurance. 3. Annuities upon lives.

And first, bottomry (which originally arose from permitting the master of a ship, in a foreign country, to hypothecate the ship in order to raise money to refit) is in the nature of a mortgage of a ship; when the owner takes up money

(g) Dej. b. p. l. 2, c. 12, § 22.

(21) [This proportion between the inconvenience and the two descriptions of hazard is entirely arbitrary, and only put for an example.

In this disquisition upon the principles which regulate the rate of interest, and on all subjects connected with political economy, the author writes with the information only of his age, his reasoning is open to much observation, but as the subject is only collateral, and could not be explained satisfactorily except at considerable length, I think it better to content myself with this notice.

COLERIDGE]

to enable him to carry on his voyage, and pledges the keel or bottom of the ship (partem pro toto) as a security for the repayment. In which case it is under stood, that if the ship be lost, the lender loses also his whole money; but, if it returns in safety, then he shall receive back his principal, and also the premium or interest agreed upon, however it may exceed the legal rate of interest. And this is allowed to be a valid contract in all trading nations, for the benefit of commerce, and by reason of the extraordinary hazard run by [*458] the lender. () And in this case the ship and tackle, if brought home, are answerable (as well as the person of the borrower) for the money lent. But if the loan is not upon the vessel, but upon the goods and merchandise, which must necessarily be sold or exchanged in the course of the voyage, then only the borrower, personally, is bound to answer the contract; who, therefore, in this case is said to take up money at respondentia. These terms are also applied to contracts for the repayment of money borrowed, not on the ship and goods only, but on the mere hazard of the voyage itself; when a man lends a merchant 1,000l. to be employed in a beneficial trade, with condition to be repaid with extraordinary interest, in case such a voyage be safely performed: () which kind of agreement is sometimes called foenus nauticum, and sometimes usura maritima. (j) But as this gave an opening for usurious and gaming contracts, especially upon long voyages, it was enacted by the statute 19 Geo. II, c. 37, that all monies lent on bottomry or at respondentia, on vessels bound to or from the East Indies, shall be expressly lent only upon the ship or upon the merchandise; that the lender shall have the benefit of salvage; (k) and that if the borrower hath not an interest in the ship or in the effects on board, equal to the value of the sum borrowed, he shall be responsible to the lender for so much of the principal as hath not been laid out, with legal interest and all other charges, though the ship and merchandise be totally lost. (22)

Secondly, a policy of insurance is a contract between A and B, that upon A's paying a premium equivalent to the hazard run, B will indemnify or insure him against a particular event. This is founded upon one of the same principles as the doctrine of interest upon loans, that of hazard; but not that of inconvenience. For if I insure a ship to the Levant, and back again, at five per cent; here I calculate the chance that she performs her voyage to be twenty to one against her being lost; and, if she be lost, I lose 1000l. and get 57. Now this is much the same as if I lend the merchant, whose whole for

(h) Moll. de jur. mar. 361. Malyne, lex mercat. b. 1, c. 31. quæst. jur. privat. l. 3. c. 16. (i) 1 sid. 27.

(j) Molloy, ibid. Malyne, ibid.

Bacon's Essays, c. 41. Cro Jac. 208. Bynkeran. (k) See book I, page 291.

(22) [The general nature of a respondentia bond is this; the borrower binds himself in a large penal sum, upon condition that the obligation shall be void, if he pay the lender the sum borrowed, and so much a month from the date of the bond till the ship arrives at a certain port, or if the ship be lost or captured in the course of the voyage. The respondentia interest is frequently at the rate of forty or fifty per cent, or in proportion to the risk and profit of the voyage. The respondentia lender may insure his interest in the success of the voyage, but it must be expressly specified in the policy to be respondentia interest: 3 Burr. 1391; unless there is a particular usage to the contrary. Park Ins. 11. A lender upon respondentia is not obliged to pay salvage or average losses, but he is entitled to receive the whole sum advanced, provided the ship and cargo arrive at the port of destination; nor will he lose the benefit of the bond, if an accident happens by the default of the borrower or the captain of the ship. Id. 421. Nor will a temporary capture, or any damage short of the destruction of the ship defeat his claim. 2 Park, 626, 627; 1 M. and S. 30.

Where bottomry bonds are sealed, and the money paid, the person borrowing runs the hazard of all injuries by storm, fire, &c., before the beginning of the voyage, unless it be otherwise provided. As, that, if the ship shall not arrive at such a place at such a time, &c., then the contract hath a beginning from the time of sealing; but if the condition be, that if such ship shall sail from London to any port abroad, and shall not arrive there, &c., then, &c., the contigency hath not its beginning till the departure. Beawes Lex. Mere. 143; Park, 626. A lender on bottomry or respondentia is not liable to contribute in the case of general average, nor is he entitled to the benefit of salvage. Park, 627, 629; 4 M. and Slew. 141. See, however, Marshal on Insurance, 6 ch., book 2. In the case of hypotheention the lender may recover the ship itself in the admiralty court, but not in bottoniry or respondentia. See & Moore, 397,

tunes are embarked in this vessel, 1007. at *the rate of eight per cent. [*459] For by a loan I should be immediately out of possession of my money, the inconvenience of which we have supposed equal to three per cent: if therefore, I had actually lent him 1007., I must have added 37. on the score of inconvenience, to the 57. allowed for the hazard, which together would have made Sl. But, as upon an insurance, I am never out of possession of my money till the loss actually happens, nothing is therein allowed upon the principle of inconvenience, but all upon the principle of hazard. Thus, too, in a loan, if the chance of repayment depends upon the borrower's life, it is frequent (besides the usual rate of interest) for the borrower to have his life insured till the time of repayment; for which he is loaded with an additional premium, suited to his age and constitution. Thus, if Sempronius has only an annuity for his life, and would borrow 1007. of Titius for a year; the inconvenience and general hazard of this loan, we have seen, are equivalent to 5., which is, therefore, the legal interest; but there is also a special hazard in this case; for, if Sempronius dies within the year, Titius must lose the whole of his 100%. Suppose this chance to be as one to ten: it will follow that the extraordinary hazard is worth 10l. more, and, therefore, that the reasonable rate of interest in this case would be fifteen per cent. But this the law, to avoid abuses, will not permit to be taken; Sempronius therefore gives Titius, the lender, only 57., the legal interest; but applies to Gaius, an insurer, and gives him the other 10l. to indemnify Titius against the extraordinary hazard. And in this manner may any extraordinary or particular hazard be provided against, which the estab lished rate of interest will not reach; that being calculated by the state to answer only the ordinary and general hazard, together with the lender's inconvenience in parting with his specie for the time. But, in order to prevent these insurances from being turned into a mischievous kind of gaming, it is enacted by statute 14 Geo. III, c. 48, that no insurance shall be made on lives, or on any other event, wherein the party insured hath no interest; that in all policies the name of such interested party shall be *inserted; and nothing more [*460] shall be recovered thereon than the amount of the interest of the

insured.

This does not, however, extend to marine insurances, which were provided for by a prior law of their own. The learning relating to these insurances hath of late years been greatly improved by a series of judicial decisions; which have now established the law in such a variety of cases, that (if well and judiciously collected) they would form a very complete title in a code of commercial jurisprudence: but, being founded on equitable principles which chiefly result from the special circumstances of the case, it is not easy to reduce them to any general heads in mere elementary institutes. (23) Thus much, however, may be said; that being contracts, the very essence of which consists in observing the purest good faith and integrity, they are vacated by any the least shadow of fraud or undue concealment; and, on the other hand, being much for the benefit and extension of trade, by distributing the loss or gain among a number of adventurers, they are greatly encouraged and protected both by common law and acts of parliament. But as a practice had obtained of insuring large sums without having any property on board, which were called insurances, interest or no interest, and also of insuring the same goods several times over; both of which were a species of gaming without any advantage to commerce, and were denominated wagering policies: it is therefore enacted by the statute 19 Geo. II, c. 37, that all insurances, interest or no interest, or without farther

(23) [This task was accomplished by Mr. Justice Park in his masterly treatise on the subject, which was followed by Mr. Serjt. Marshal's excellent work; and see 3 Chitty's Commercial Law, 445 to 536.]

See also Duer and Phillips on Insurance, and the several treatises on Maritime and Mercantile Law and Contracts. Also Angell on Fire and Life Insurance.

The subject is too broad to make any notes upon the text, reasonable in length, of much value.