Regarding the transactions set forth in the plead*368ings as sales of exchange, there can be no doubt they are free from usury. Foreign exchange is a commodity which may be bought and sold like merchandize. Its price'is governed chiefly by the state of trade between the place where it' is negotiated and the place where it is payable. The sale of exchange is, in effect, a transfer of funds, which the drawer has, or is supposed to have, in another country, to the purchaser. Such funds are more or less valuable according to circumstances. Such value is chiefly affected by the state of trade between the country where the funds are owned, and that where they are held. To some extent, also, such value is affected by the time required to transfer funds from one country to the other, and the hazard incurred in making such transfer. Funds thus situated are the subject of commerce. The owner may sell them [368] for the best price he can obtain, without the hazard of having the sale avoided for usury. (Holford v. Blatchford, 2 Sandf. 149; Manice v. The New-York Dry Dock Co. 3 Edw. 143.)
But I agree with the learned assistant vice chancellor by whom this cause was first heard, that these transactions were not sales of exchange, but were loans. There was no price fixed upon the transfer, but the bills were delivered to the Banking Company, upon a contract to return the same amount, in kind, at a stipulated time. Can usury be predicated upon such a loan ? I think not. It was well said by the counsel for the plaintiff, upon the argument, that “ the statute of usury applies only to a loan of money, or to a transfer of something else as money, for the purpose, and as the means of obtaining money, on time.” A loan, therefore, to be usurious, must be in fact, if not in form, a loan of money. But here-, unless the transactions were made to assume the shape they bear, merely to disguise their true character, there was no loan of money, either directly or indirectly. The defendants loaned to the Banking Company their bills, payable in Paris; an article of commerce, having no standard price or value, but, like other commodities, subject to the vicissitudes and fluctuations of trad,e. They were to receive in return, not a specified amount in money, or money’s worth, but bills to the same amount, pay*369able at the same place. "Whether they would receive more or less than the value of their bills, with interest, would necessarily depend upon the comparative value of exchange, at the time of the loan, and when it should be repaid. It is very likely that, in the whole series of the transactions between the parties, the advantage was in favor of the defendants; but that no one could foresee this result, or that any one of the transactions would insure to the defendants more than the market value of their exchange, with legal interest, is entirely certain.
The object of the Banking Company in making the loan was undoubtedly, to raise money. Nor have I any doubt that the defendants knew this. If therefore, they had stipulated for the re-payment of the value of the bills loaned, with interest, in money, I am inclined to think the transactions would have been usurious. But this essential element of usury seems [369] to be wanting. Three things must unite to render any contract usurious. First. There must be a loan, either express or implied. Then there must be an agreement that the money lent, or which is the same thing, that which is lent for the purpose of raising money, shall be repaid, and that without condition, or contingency. And, lastly, there must be an agreement to pay a greater rate of interest than that allowed by statute. (Lloyd v. Scott, 4 Peters, 205.) If the contract provide for the payment of the loan with interest, at all events, it is enough to render it usurious, if in addition to the legal interest, it provide for the payment of excessive interest, upon a contingency. ''A stipulation even for a chance of advantage beyond legal interest, is illegal. (Cleveland v. Loder, 7 Paige, 557.) In Barnard v. Young, (17 Vesey, 44,) the plaintiff having borrowed a sum of money of the defendant, entered into a new agreement when the money became due, stipulating at a certain day to deliver in payment, as much stock as the money would have purchased at the time the agreement was made, or the money, at the option of the lender, and, in the mean time to pay lawful interest on the principal sum. In giving judgment the court said, “ the lender is at the election to have his principal and interest, or to have a given quantity of stock transferred to him. His *370principal never was in any hazard, as he was, at all events, ■sure of having that, with legal interest, and had a chance of an advantage if stock rose. It was usurious to stipulate for that chance. In fact, the stock did rise, and if the contract had heen performed he would have had principal and interest, and a very large premium.” So in White v. Wright, (3 Barn. & Bress. 273.) White, at the instance and for the accommodation of Wright, had sold £400 of 3 per cent stocks. The money .was lent to Wright. The lender reserved to himself the dividends upon the stock by way of interest, and the option of deciding within a year, whether he would have the stock replaced, or have the amount for which it had sold, repaid in money, with interest. It was held, that, inasmuch as the lender, after receiving interest on his money, might, in case of [370] a rise of stocks, require the borrower to replace the stocks sold, and thus obtain a premium for his money, besides principal and interest, the contract was usurious. Bailey, J. said, “ a party may lawfully lend stock, as stock, to be replaced, or he may lend the produce of it, as money, or he may give the borrower the option to repay either in the one way or the other. But he cannot legally reserve to himself a right to determine in future, which it shall be. It is not illegal to reserve the dividends by way of interest, for stock lent, although they may amount to more than the legal rate of interest on the produce of it; for the price of stock may fall, and then the borrower would be a gainer, but the option must be made at the time of the loan.”
The principle upon which these cases were decided is clearly applicable to that in hand. “ A party,” says Justice Bailey, “ may lawfully lend stock, as stock, to be replaced.” So, here, the defendants might lawfully lend exchange, as such, to be replaced in exchange. There can be no difference in principle, between a loan of British consols, and exchange on Paris, or London. They are alike the subjects of commerce. Each has its determinate market value, and that value is liable to the same changes which affect the price of other commodities. In short, .both are legal subjects of bargain and sale, as much so *371as cotton, or flour. The usurious element in the contracts in both the cases cited, is not to be found in the contracts under consideration. In each of those cases, the lender reserved to himself the right to have the thing lent returned, or to be repaid in money, the price for which it was sold. Here the defendants stipulated for no such advantage. They had no election; they were to have their exchange returned to them, whether it should be worth more or less, and the price agreed upon as a compensation for the loan; nothing more. The transactions may have been, and probably were, in the aggregate, more advantageous to the lenders than the borrowers. This, however, was not enough to render the contract illegal. They were merely contracts to loan exchange. The loan was to be repaid in kind. The case shows, that the price of that kind of exchange was subject to very material fluctuations. "Within the period of four months, while the transactions [371] in question were in progress, there was an actual variation of more than six per cent in the price of French exchange. If it happened, as it sometimes did, that the price of exchange, when the time to repay the loan arrived, was materially less than when the loan was made, the company were the gainers by the transaction. It was shown upon the argument, that in several instances the price of exchange had fallen so much, between the time of making the loan and the time of payment, that the exchange returned to the defendants was not worth the amount realized by the company upon the sale of the borrowed exchange, with interest. “ With regard to contracts to replace stock at a future day,” says Comyn, “ it is clear, that if the lender be not certain whether by the stocks being replaced at the given day, he shall be a gainer or loser, any gain which he may obtain by the replacing, will not taint the agreement with usury. But if, on the other hand, he has so made the agreement that he is secure from loss, and has a chance of gain, this, by taking away the contingency, deprives the transaction of legality.” (Comyn on Usury, 114.) Again the same writer says, “usury can only attach to a loan of stock where the party *372transferring it receives, or is likely to receive more than the legal rate, and can not by possibility, receive less.” (Id. 105.)
Suppose that, instead of exchange, the defendants had been dealers in flour, and the Banking Company, for the same purposes for which it borrowed the exchange, had borrowed of the defendants a thousand barrels of flour; that by the terms of the loan, the same number of barrels were to be returned, at the end of a year, and that the borrower should also pay upon the estimated value of the flour, interest, and one per cent under the name of commission. Assuming the transaction to be what upon its face it purported to be, who would pronounce it usurious 1 The lender, on the one hand, would take the risk of a depreciation in the price of flour, and the borrower on the other, would take the risk of an advance. JSTo one would pretend that usury could be predicated upon such a transaction. And yet, if I am right in assuming that exchange is, like merchandise, [372] the subject of bargain and sale, and. even the learned judge who has regarded the transactions in question as usurious, concedes that this is so, I can not see how this case is distinguishable from that supposed. Indeed, I understand it to be a general principle, applicable even- to loans of money, that where the lender assumes any risk or hazard, in respect to the money lent, the reservation of a higher rate of interest than that prescribed by law, will not render the contract illegal. (Comyn on Usury, 21; See also Tate v. Wellings, 3 T. R. 531; Pike v. Ledwell, 5 Esp. 164; Maddock v. Rumball, 8 East, 304; Clark v. Giraud, 1 Mad. 511; Spencer v. Tilden, 5 Cowen, 144; Cummings v. Williams, 4 Wend. 679.)
The assistant vice chancellor thinks the illustrations from loans of cotton, sugar and other merchandise, to be returned in kind, with compensation, are not pertinent, “ because,” he says, “ all merchandise fluctuates in value, while here the thing to be returned was equivalent to the thing loaned.” I confess I am unable to appreciate this distinction. Bills payable in Paris fluctuate in value in the same manner, and probably quite as much as cotton or sugar; and whéther the one or the other is the subject of the loan, the thing to be returned may, or may *373not be equivalent in value to the thing loaned. It is true that exchange is made to represent funds at the place where it is payable, and that the money in Paris, represented by the bills loaned, is equivalent to the money in Paris, represented by the bills to be returned in payment of the loan. This may not be the case with cotton or sugar. But has this distinction any proper bearing upon the question in hand ? 'Funds in Paris are not, in any practical or legal sense, money in ¡New-York. Such funds can no more be used as money in New-York, than can tea or coffee. Indeed, the latter articles approach nearer to a substitute for money, because they are more extensively in demand. But each, before it can be made to represent money, requires the transforming operation of a sale.
Upon a review of all the evidence in the case, I can see nothing which justifies even a suspicion, that the contracts in question were devised, or designed, to cover usury. On the contrary, every thing seems fair and bona fide. The con- [373] tracts were, each of them, bargains of hazard. That hazard was not very unequally divided between the parties. Neither, at the time of any single loan, could foresee with certainty to which of them it would prove most favorable. Whether the Banking Company would pay more or less than legal interest for their accommodation, no one could know. Whether the defendants were to obtain all, or but a part of the value of the bills loaned, in the bills they were to receive in repayment, was to depend upon a contingency yet in the future. In short, the most that can be pretended is, that the arrangement was such, that the defendants were likely, perhaps quite certain, to make a fair gain, but that there was also some chance that they might lose. Such a transaction, involving such contingencies, unless merely colorable, cannot be usurious. Upon this ground therefore, and without reference to the questions presented upon the pleadings, I am of opinion that the decree of the supreme court should be affirmed.
Gardiner, J.The defendants furnished the association with their drafts, payable in Paris at sixty days, the amount of which, *374the latter promised to return in fifty-five days from date, in similar drafts, (to he approved by the defendants,) adding interest at 7 per cent. This, in substance, was the agreement of the 16th of April, 1841.
The previous contracts between the parties, in addition to the terms above stated, contained a provision for a commission of l->- and 2 per cent, to be paid to the defendants. The several agreements, in form, were sales, or exchanges of the bills of the defendants, for other bills of a similar character, to be delivered by the association, within a stipulated period. There was no application or treaty for a loan of money.
The defendants were regular dealers in exchange, and their answer in response to the bill alledges, that the application to them by the Banking Co. was for the purchase of bills of exchange, and that the defendants in pursuance thereof, agreed to sell and did sell such bills accordingly. The answer in this re-[3Y4] spect, so far from being disproved, is sustained by the written agreement of the parties. The question then, arising upon the contracts prior to that of the 16th of April, in the form most favorable to the complainants, is simply, whether upon a sale of credit, made in good faith, the vendor can reserve or secure to himself more than Y per cent without rendering the agreement usurious. This question was substantially decided in the affirmative, in the case of the Dry Dock Bank, (3 Comst. 344,) and by previous adjudications in this state, to which reference is there made. It is not denied that a sale of exchange, in form, may be adopted as a cloak for an usurious loan. But the party impeaching an agreement upon this ground, must, by evidence, remove the covering from the transaction, and exhibit it as a loan of money. He makes no progress in this work when he stops with proving that he proposed to purchase bills, and subsequently put his proposition into the form of a written agreement. This is the • whole effect, as I think, of the complainant’s evidence, viewed in connection with the answer of the defendants. It is unnecessary, therefore, to consider the other questions presented by the defence, as the decree of the supreme court must be affirmed for the reasons suggested.
*375And, thereupon, for the reasons stated in the opinion of Gardiner, J. and without passing upon other questions, the decree of the supreme court was affirmed.