[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 199 E.F. Bullard assigned to the plaintiff all claims and demands which he had against the defendants. This assignment unquestionably carried all moneys due said E.F. Bullard from the defendants, whether for loans or advances made to the defendants, or for debts paid by him for them. The plaintiff took subject to all defenses existing against his assignor in favor of the defendants. The amount which the plaintiff was entitled to recover, was the balance due to E.F.B. after allowing all payments made by the defendants. Amongst other deductions which the defendants claimed should be made from the amount of moneys apparently due to E.F.B., was the note of $75 loaned by him to Harrington. This note, if valid, was a legal set-off against E.F.B. and against the plaintiff, unless the latter can assail it for usury.
Two reasons are assigned why the plaintiff can not assail a claim against his assignor for usury. 1st. Because he is not a borrower; and 2d. Because the assignor had stated the account between himself and the defendants, in which *Page 200 he was charged with the money paid for the note in question, thereby admitting the correctness of the charge. The plaintiff can not thereafter set up usury to defeat the claim.
I can not agree to the first proposition. I think the assignee of the demand in suit can resist it for usury, unless his assignor has by his acts in reference thereto, precluded him. No rule of law is better settled than that the purchaser of property charged with a usurious lien or claim, can allege the usury and defeat the claim, when the purchaser sold discharged of such usurious lien. (Post v. Dart, 8 Paige, 639; Shufelt v.Shufelt, 9 id. 137; Ord on Usury, 131; Brooks v. Avery, 4 Coms. 225.)
In Shufelt v. Shufelt, the chancellor gives the reason of the rule. He says (page 145): "In the ordinary case of the giving of an usurious mortgage by the owner of the mortgaged premises, the statute having declared the usurious security void, the owner of the premises, of course has the right to sell his property or to mortgage the same, as though such void mortgage had never existed. And the purchaser in such a case necessarily acquires all the rights of his vendor to question the validity of the usurious security. For if the original mortgagor had not that right, the premises would to a certain extent, be rendered inalienable in his hands, notwithstanding the security was absolutely void as to him."
The principle must embrace personal property as well as real, and the right of the vendee to avail himself of the usury in the dealings between his vendor and a third person touching the property, must reach every case where such third person attempts to appropriate the property purchased, by virtue of any usurious contract with the vendor.
The case before us affords a very apt illustration of the necessity of extending the principle to this class of cases. Assuming that the defendants were indebted to E.F.B. $100 or any other sum, and that the defendants held the note in controversy void for usury, if the $100 were not *Page 201 the subject of sale and assignment, discharged from any usurious lien or agreement in reference thereto, the debt would be practically inalienable. The law gives to a debtor the right to retain in his hands money due from him to another, sufficient to satisfy any demand he may have against his creditor, which is available as a set-off. This is to all intents and purposes a lien on the fund, and if the set-off is usurious, the person entitled to the fund must be entitled to avail himself of the usury.
In such a case it is competent for the vendor or assignor to waive the usury and sell the claim, subject to any lien which may exist against it, or he may elect to consider the usurious lien void, and sell the claim discharged of it, and in such case the vendee or assignee will have the right to protect the whole interest he has purchased against the usurious lien.
Although the learned judge, who delivered the opinion of the court below, declares it to be his opinion that the plaintiff could not resist the note in question on the ground of usury, the decision of the court is not put on that ground, but upon the second ground above stated, viz: that if E.F.B. had stated the account including the usurious note, and thereby admitted the correctness of the charge, the plaintiff could not resist it on the ground of usury.
We must assume that the jury found the note to be usurious; that the account was stated including the note, and that the plaintiff thereby admitted its correctness.
The charge leaves it uncertain whether the plaintiff was prevented from asserting the usury by reason of an estoppel resulting from the acts of his assignor, or whether the note must be held to have been paid before the assignment to the plaintiff. As the same judge delivered the opinion in the general term who tried the cause at the circuit, we must assume that his charge at the circuit was put on the latter ground, as that is the one put forth in the opinion at the general term. So understanding the charge, I think *Page 202 it was right. The defendants kept the account on their books of the moneys received from and paid to E.F. Bullard. It was their right to charge him with the note given by him to Harrington, subject to its being repudiated when the entry came to his knowledge. A copy of the account embracing this item was presented to him, and this charge was never disputed by him. After the expiration of a reasonable time from the rendition of this account without objection, it became stated. The effect of stating an account is to bind the party by it as correct in its items and in the balance struck, and thereafter the burthen is on him to show it to be increased by reason of fraud or mistake. (Lockwood v. Thorne, 1 Kern. 170.)
If E.F. Bullard was concluded by the rendition of the account, the result would be that he having assented to the appropriation of the moneys in the defendants' hands to the payment of the note, he is not permitted to recall it; and the demand passed to the plaintiff with this item adjusted and satisfied between the assignor and the defendants.
In Barrow v. Rhinelander (1 Johns. Ch. R. 550; Same case in error, 17 Johns. R. 538), Chancellor KENT held that stating an account did not preclude a party who had been the victim of a usurer from obtaining relief in chancery against the usury. The same doctrine has been asserted in other cases. (2 Johns. Ch. R. 191; 1 Ves. Sr. 317; Bullock v. Boyd, Hoff. 294; Philips v.Belden, 2 Edw. 1.) I do not intend to disturb these cases. If the usury laws are to be enforced so as to prevent usury, they must not leave a door open through which the usurer can insert his finger; if an opening is left he will soon have his whole body through. If stating an account will prevent investigation into a usurious transaction, all dealings into which usury enters will soon take the form of stated accounts, and the law be made a shield, instead of a sword, against violators of this wholesome and necessary law. *Page 203
If E.F.B. were the party plaintiff, I should hold him entitled to repudiate this settled account, and to resist the set-off of the note. But, so far from manifesting any desire to take advantage of the usury, he has permitted the account into which this usurious item enters to become stated, and then assigns to the plaintiff. The latter must take the claim, subject to the rights of the defendants, to rest upon the account as stated.
Usury is a defense personal to the party known as the borrower. He cannot transfer to another the right he has to allege and prove a demand to be usurious.
The only way a third person can avail himself of usury is by purchasing property charged with a lien or incumbrance which is usurious, and then only in protection of his title. On the facts in this case E.F.B. might, by bill in equity, have asserted the usury in this note, and defeated it as a set-off, notwithstanding the account between him and the defendants had become a stated account; but while it stood as a stated account as between him and the defendants, the assignee was concluded by it, and could not assail it successfully so as to let in the defense of usury.
The appellant has not alluded, in his points, to the charge of the court in regard to the mistake of $100 in the defendants' account, which they were permitted on the trial to rectify as against the plaintiff; and hence I presume he has become satisfied that the ruling was right. If the point was raised, it would be unavailing, as there can be no doubt but that such mistake could be corrected between the original parties, and the plaintiff could recover no more than his assignor was legally entitled to recover from the defendants.
The judgment should be affirmed, with costs.
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