Duel v. Spence

Ruggles, J. On the trial of this cause the defendants’ counsel requested the judge to charge that if Spence was an accommodation indorser, and the notes were made for the purpose of having one or both of them discounted at one or both of the Newburgh banks, then the notes were diverted from [560] their original purpose, and that the plaintiff was not entitled to recover. The judge was right in refusing to charge according to this request. According to the testimony of Sweet, the notes were drawn to enable Sweet & Tibbs to raise money, and there is ■ nothing in the case to show that the money, when raised, was to be applied to any particular purpose. They had the right to apply it to such purpose as they chose. It was entirely immaterial to Spence whether the notes were discounted at a bank at Newburgh, or by an individual at any other place. Powell v. Waters, 17 Johns. 176. In Brown v. Taber, 5 Wend. 566, the note was indorsed for the accommodation of the maker, for the purpose of enabling him to redeem the property of one of his neignbors taken in execution. It was payable at a bank in Albany, offered there by the maker for discount, refused and returned to the maker with the hank marks upon in, and after-wards applied by him to the purchase of lottery tickets at an exorbitant price, a few days before its maturity. This was an application of the note to an entirely different purpose from that for which it was made; and under circumstances, which in the. opinion of the court, were sufficient to charge the holder with notice of its misapplication. In the present case, if the note was fairly discounted by Buckley & Duel, whether for money paid at the time, or for a precedent debt, there was neither fraud nor misapplication of the note. If the note had been discounted at Newburgh, Sweet & Tibbs might rightfully have applied the money to the payment of their check held by Buckley & Duel, and they did no wrong to the indorser in paying the note to that firm for that purpose. Nor can I perceive how Buckiey & Duel’s knowledge of the original intention to have the notes discounted at one of the banks of Newburgh could make any difference in the case so long as Sweet & Tibbs were at liberty, consistently with their duty to their indorsers, to apply the proceeds of the notes to the payment of their debt to Buckley & Duel. In Seneca County Bank v. Neass, 3 N. Y. (3 Comst.) 442, it was decided that when a note was indorsed for the accommodation of the [561] maker, without any restriction as to the particular purpose to which it should be applied, the maker had a right to appropriate it to any purpose which he might deem for his own interest, and he having appropriated it to the payment of a note, held by the plaintiffs against him, the consideration was declared to be sufficient to render it valid in their hands. The holder in that case, and under those circumstances, recovered against the accommodation indorser. We think there was no error in any part of the charge of the judge for which the judgment can be reversed, except in what he said in regard to the question of usury. In the course of the trial, for the purpose of showing the transaction usurious, the defendant’s counsel offered to show a general agreement between the firm of Buckley & Duel, and the firm of Sweet & Tibbs, as to the amount of interest to be paid by the latter firm for moneys borrowed of the former. This evidence was objected to and excluded, and an exception taken to the decision. And the judge charged the jury that the usury must be proved to have been taken at the rate of one per cent a month, as set up in the answer, and that if not so proved, the defendant was liable on the seven hundred dollar note. The evidence of the agreement as to the rate of interest was probably rejected on the ground that the offer did non specify that the rate of interest agreed on, was the same as that stated in the answer. We think the proof offered was erroneously excluded, and that there was error in the part of the charge last referred to. In Catlin v. Gunter, 11 N. Y. (1 Kern.) 368, decided at the last September term, it was held that the provisions of the Code of Procedure on the subject of a variance between the pleading and proofs, are applicable to cases in which usury is set up as a defense; and that a variance between the answer and the proof in such a case should be deemed immaterial, unless the proof differed from the answer in its entire scope and meaning,, if the plaintiff gave no proof that he was misled to his prejudice. According to this case a variance as to the rate of interest merely, should, we think, have been disregarded at the trial. The evidence offered should have been admitted, and the jury [562] instructed in conformity with the rule adopted in that decision. The judgment below must be reversed, and a new trial directed, with costs to abide the event of the suit. -