Plunkett v. Dillon

Citations

• 4 Del. Ch. 198

Syllabus

<p>A written agreement for the advance by Plunkett of $3000, to Dillon for the purchase of land to be improved by subdivision into building lots and by building on such lots, the title being taken by Dillon and being secured by Dillon’s judgment bond, stipulated for the payment, in addition to legal interest, of two-thirds of the profits on the venture, the money so advanced being at no substantial risk, and the parties by their acts treating it as a loan, Held, to be in fact an agreement for a loan, and not a partnership, and as such usurious.</p> <p>Such an agreement held also, to be hard and unconscionable, and, as such, while it remains executory, it will not be enforced by a co\\irt of equity.</p> <p>Whether a particular transaction is in fact a partnership or a loan, must depend, not on what the parties may say or choose to call it, but upon then-actual course of dealings in relation to it; and the obligations and responsibilities to which they do in fact hold each other. And in a conflict between the words and acts of the parties as to what was the real nature of the transaction, the conclusion to be drawn from their acts must prevail.</p> <p>It is an acknowledged exception to the Statute of Usury, that when the principal is put at risk, more than the legal rate of interest may be received; the excess, in such case, being allowed as a consideration for the risk of the principal in addition to the interest, which is the consideration for the forbearance of the debt. But the risk of the principal, to come within this exception, must be a substantial one. And in determining whether it be such the transaction will be subjected to the most searching scrutiny,</p> <p>The principle upon which equity deals with hard and unconscionable bargains is this; when the contract is already executed or the party can enforce his advantage at law without the aid of a court of equity, the latter will not interfere to set it aside or to restrain such party on the mere ground that