Falk v. Levy

FRANK, Circuit Judge. The district judge correctly held that the notes given in 1931 and 1937 were usurious and therefore void. 2 London v. Toney, 263 N.Y. 439, 189 N.E. 485, 91 A.L.R. 1100; Ganz v. Lancaster, 169 N.Y. 357, 62 N.E. 413, 58 L.R.A. 151. Appellant argues that, even if the 1931 note was void, it was an executory contract of accord, or a new contract, and that, whichever it was, it extinguished the earlier obligation. Winsted Bank v. Webb, 39 N.Y. 325, 330-331, 100 Am.Dec. 435, contains some language which suggests that, perhaps, where parties intend a new note to replace absolutely an old one, the old note may be extinguished beyond the possibility of revival even if it be proved that the new note is usurious and thus void. But the view more strongly and more recently taken by the New York courts is that proof of usury in the -new obligation revives the old. Patterson v. Birdsall, 64 N.Y. 294, 297-298, 21 Am.Rep. 609; Matter of Accounting of Consalus, 95 N.Y. 340. Accordingly, the usurious character of the 1931 note did not preclude enforcement of the earlier, valid notes. Nor can wé agree with. appellant’s contention that, if we hold .that, the new notes were void for usury, then we must hold that the six-year statute ■ of limitations had run on the original debt. For appellant made substantial payments up to April 28, 1941. These payments, although literally made on the new notes, were paid on account of the interest or principal- of the debt evidenced by the notes. In re Gordon, 2 Cir., 90 F.2d 583, 585; Matter of Accounting of Consalus, 95 N.Y. 340, 344—345. The statute of limitations, which would, -then, have run from April 28, 1941, was tolled while appellant served in the armed forces, from 1942 to 1946. 50 U.S.C.A.Appendix, § 525; N.Y. Military Law, Consol.Law, c. 36, § 308. Accordingly, the debt was still actionable when the claim was filed in the bankruptcy proceedings. Affirmed. Footnotes [2] The district judge referred in his opinion to “the findings of the referee- that the note of January 1, 1931, and that of February 1, 1937, were usurious.” Alth-ugh the referee made no such finding, his findings of fact did compel that legal conclusion. For, all else aside, the 1931 note included a sum of $471, for interest from the date of the earlier notes, whereas legally there was then -owing only the interest from the date of the maturity of those earlier notes.