The next statutory limitation of the freedom of contract, and a very important one, is the Moneylenders Act of 1900.1 Since the repeal of the Usury Laws in 1854 (by 17 & 18 Vict., c. 90) there had been no restriction whatever on usurious bargains, except certain recognised principles of Equity, whereby bargains with expectant heirs and reversioners might be set aside on the ground of undue influence and unfair advantage taken by the moneylender of the weakness and necessities of the person raising the money. The Moneylenders Act (1900) applies only to professional moneylenders, viz., those who make moneylending their sole or primary business, or advertise themselves as such; bankers, pawnbrokers, registered societies, and bodies specially incorporated by Act of Parliament are expressly excluded (sect. 6).

Section 2 of the Act requires every moneylender to register the name in which he carries on business, and all the addresses at which he carries on the business; and also imposes penalties on any unregistered moneylender who carries on the business at all, and also on any registered moneylender who carries on business in any other than his registered name. or in an unregistered place.

Section 4 imposes penalties on any moneylender or his agent who, "by any false, misleading, or deceptive statement, representation or promise, or by any dishonest concealment of material facts, fraudulently induces or attempts to induce any person to borrow money, or to agree to the terms on which money is, or is to be, borrowed." The effect at Civil law of non-compliance with any of the above penal provisions will presently be noted.

Section 1 (1) provides that where proceedings are taken in any Court, either by or against a moneylender, in respect of a loan, "and there is evidence which satisfies the Court that

1 63 & 64 Vict., c. 51.

the interest charged in respect of the sum lent is excessive, or that the amounts charged for expenses, inquiries, fines, bonus, premium, renewals, or any other charges are excessive, and that, in either case, the transaction is harsh and unconscionable, or is otherwise such that a Court of Equity would give relief "-then "the Court may re-open the transaction, and take an account between the parties," and "re-open any account already taken, and may relieve the borrower from payment of any sum in excess of the sum adjudged by the Court to be fairly due in respect of such principal, interest and charges, as the Court, having regard to the risk and all the circumstances, may adjudge to be reasonable"; that the Court "may order the creditor to repay any excess that has been paid or allowed in account by the debtor"; and "may set aside or revise or alter any security given or agreement made in respect of money lent by the moneylender; and if the moneylender has parted with the security, the Court may order him to indemnify the borrower or other person sued."

These last words of sub-sect. (1) are meant as a sort of corollary of sub-sect. (5), by which it is provided that "nothing in the foregoing provisions of this section shall affect the rights of any bona fide assignee or holder for value without notice." In other words, the bonâ fide purchaser for value of a negotiable instrument from a moneylender can recover upon it from the debtor: but then, if the original bargain were such as between borrower and lender, the Court would cancel or reduce the debt, it will to the same extent indemnify the borrower as against the lender.

Partly in consequence of sub-sect. (5), it is provided by sub-sect. (2) that any Court having jurisdiction for money lent may (notwithstanding any agreement to the contrary) entertain any application by the borrower, even before the time for payment has arrived.

A few cases will illustrate the working of the Act. In Litchfield v. Dreyfus it was held by Farwell, L.J., that a retired art dealer, who lent money to a few old customers and friends in the curio trade, was not a "moneylender" within the meaning of the Act.

The case of Victorian Daylesford Syndicate v. Dott illustrates the working of sect. 2 (1) of the Act. The defendant in this case practised as an unregistered moneylender. In so doing he rendered himself liable to certain penalties. What was more to the point in this case was that the whole contract was vitiated by the illegality. It was held that sect. 2 (1) of the Moneylenders Act of 1900 applies to a moneylender who has not registered his name under the Act; and the result is that he cannot make any valid "agreement in the course of his business as a moneylender with respect to the advance and repayment of money, or take any security for money in the course of his business as a moneylender." In this case the defendant's claim was dismissed; and, on the suit of the plaintiffs, the securities already received by the defendant were ordered to be returned.

The case of Saunders v. Newbold3 illustrates the application. of sect. I of the Moneylenders Act. In this case the House of Lords, affirming the decision of the Court of Appeal, held that the relief which sect. I of the Act extends to the borrower is not limited to cases in which before the Act the Court of Chancery would have given relief; and that the policy of the Act is to enable the Court to prevent oppression, leaving it to the discretion of the Court to weigh each case upon its own merits, and to look behind a class of contracts which peculiarly lend themselves to an abuse of power. In this case it was found that the probable risk of non-payment was slight, and that the rate of interest would have amounted to 418 per cent. per annum : the 2 L. R. [1905], 2 Ch. 624.

1 L. R. [1906], 1 K. B. 590.

8 L. R. [1906], A. C. 461.

debtor was required by the Court to repay the principal, plus 10 per cent. interest, minus the amount already repaid.

In Carringtons Limited v. Smith1 it was held that, although the rate of interest was high, that fact did not of itself render the transaction "harsh and unconscionable" within the meaning of sect. I of the Moneylenders Act; and that, having regard to the risk and to all the circumstances of the case, amongst which the Court was entitled to consider that the defendant understood the transaction, and without any misrepresentation or pressure by the plaintiffs, had voluntarily agreed to pay the interest asked, 75 per cent. per annum was a reasonable rate of interest, and not excessive" within the meaning of the Act.

There are a few miscellaneous statutory restrictions on the right of freedom of contract, apart from the Criminal law. For instance, under the Workmen's Compensation Act 1906, contracting out of the Act is prevented by sect. 3 (1), except under certain restrictions prescribed in the sub-section "but save as aforesaid, this Act shall apply notwithstanding any contract to the contrary.

By the Conveyancing and Law of Property Act 18813 it is provided by sect. 15 (1) and (2) that a mortgagee out of possession shall, on the same terms on which he would have been bound to re-convey, assign and convey the mortgage to any third person at the direction of the mortgagor; and, moreover (sub-sect. 3), that this section shall apply and have effect "notwithstanding any stipulation to the contrary."

But it should be remembered that most of the restrictions on the right of freedom of contract are statutory; and that every extension of the Criminal law involves, at least indirectly, some statutory interference with the right of freedom of contract.

R. L. MARSHALL.

1 L. R. [1906], 1 K. B. 79.

2 6 Edw. VII, c. 58.

8 44 & 45 Vict., c. 41.

43

III. THE RATING OF RAILWAYS AND CANALS.

IN

SOME DIFFICULT PROBLEMS.

Na case heard so long ago as the year 1851, and called for the purpose of differentiation "the second Tilehurst Case," the Court delayed giving judgment in the hope "that Parliament might interpose to relieve the judges from the difficult position in which they were placed when called upon to administer the existing law with respect to the rating of railways," and, it might have been added, of canals. That pious wish must have found a ready response in the minds of all who found themselves called upon to consider the difficulties and the conflict of railway and canal rating cases. What was chaos then is—with very little modification and some extension-chaos now; for if some of the less important questions have been settled, the vital problems still await solution, and, indeed, the very difficulty which caused the Court to delay in the delivery of its judgment is one which still has to be considered with very great doubt and with no prospect of certainty.

The question which formed the subject of the most recent case is the one with which we shall first concern ourselves, as it is of the greatest importance and is still open to a considerable amount of argument. It deals with the broad question as to what principle of rating should be applied when a railway or canal runs through many parishes. The cases may be said broadly to be divided into two classes: (A) Those which support the parochial system, and (B) those in which the mileage system has been applied. But distinctions have been drawn which permit of no definite classification. Much of the confusion which has arisen has found its origin in the antagonism of these two principles and the difficulties which result if either of the systems

The Leeds and Liverpool Canal Company v. The Assessment Committee of the Wigan Union. This case has not been reported, but it was heard in the Divisional Court in May of this year (1913), and the appeal was dismissed.