Ingalls v. Lee

By the Court, Parker, J. The notes in question, dated May 12,1842, were made in renewal of the note dated Aug. 9, 1841; and whether they are usurious, depends upon the previous transaction, by which the first note was transferred by Hunt to Cornell, after being indorsed by the defendants. Was that transaction a sale, or a loan? Unless it was a loan, there could be no usury. The facts are brought before the court by a case agreed upon by the parties, under section 372 of the code. The facts, and not the evidence, are thus presented; and upon such facts the court has only to pronounce the law. I think the history of the negotiation, as thus presented, shows only a sale. The transaction certainly has the form and appearance of a sale, and nothing more; and it can not here be pretended that such form was assumed as a cover for a loan. That would be a question of -fact which we can not decide. In such cases, the fact is in dispute; and the parties, instead of agreeing upon a statement of facts, would find it necessary to submit them to the determination of a different tribunal. That the facts, as presented to us, do not constitute usury, has, I think, been repeatedly held by the highest judicial tribunals in this state. In Cram v. Hendricks, (7 Wend, 569,) the transaction was [650] as follows : Cram was payee and holder of two promissory notes, made by one Gomez, amounting together to about $3,000. The notes were given in September, 1825, at four months. About three months before the note came to maturity, Cram indorsed the notes in blank, and procured Hendricks to discount them at one per cent a month for the time they then had to run. The notes not being paid when due, were protested, and notice of non-payment given to Cram, who was thereupon sued by Hendricks as indorser. The court for the correction of errors held that the transaction was not usurious. How I can see no difference in principle between these two cases. In both, there was a sale of a valid business note and an indorsement made, to secure the purchaser, and it can certainly make no difference, whether the indorsement procured for that purpose was that of the payee, or of a third person. In neither case was there any loan or forbearance of money or other property. ' The same principle was recognized in Mazuzan v. Mead, (21 Wend. 285,) where it was held by the supreme court, that the transfer and guaranty of a note for a larger sum, in consideration of a less sum, was not per se usurious. But the case that has been regarded as going farthest on this subject, is that of Rapelye v. Anderson, (4 Hill, 472.) Robert Anderson held a bond and mortgage against John Anderson for $3000, dated December 8, 1836, due one year from date, with interest at the rate of seven per cent, payable half yearly. In June, 1837, Robert Anderson, being in want of money, applied to Rapelye to purchase the bond and mortgage, which he agreed to do, at a discount of $400 in addition to the interest then due ■thereon; provided Robert Anderson would give a bond, singed by himself and one Remsen, guarantying the payment thereof. These terms were agreed to, and a bond was accordingly given, in the penalty of $6000; conditioned, that if the mortgagor paid the sum of $300® and interest, on the day the mortgage fell due, the bond should be void; otherwise, in force. The assignment was under seal, and contained a covenant, that $3000 was then unpaid on the bond and mortgage. Only $2600 was In fact paid by Rapelye, though the assignment statgd [he consid [651] eration to be $3000. A bill was filed by Robert Anderson, against Rapelye, to set aside the assignment of the bond and mortgage, and to' have the bond given by Rapelye and Remsen delivered up and cancelled. The court for the correction of errors held that the transaction was not a loan, and was not usurious. The case of Cram v. Hendricks shows, that the owner of a chose in action, who sells it for a less sum than the amount secured by it, may become security for its payment, as an inducement to the sale ; and Rapelye v. Anderson applies the same rule to a sale of a chose in action, where the security is given by a third person. It certainly makes no difference what is the form of such security ; whether it be by indorsement of a note, or by a guaranty in a separate instrument. It can not be necessary to examine the numerous other cases decided in this and in other states, bearing upon the question under consideration. They are all very fully discussed in Cram v. Hendricks, and Rapelye v. Anderson. Nor are we at liberty to question the correctness of the decisions thus made by the highest judicial authority of this state. We have only to apply the principle thus established, to the case under examination; and by that test it seems to mo very plain, that the plaintiff is entitled to judgment. It is now settled, that an indorsee, who buys a note at less than its face, can recover against the indorser no more than the sum for which he bought the note, with interest; though he may recover the full amount of the note against the maker. (Wiffen v. Roberts, 1 Esp. Rep. 261. 7 John. 361. 13 Id. 52. 15 Id. 56.) Whether the rule thus limiting the recovery, would apply to third persons who indorse for the accommodation of the payee, and who are not parties to the transfer, has not been decided. In Rapelye v. Anderson, Franklin, senator, intimated that Rapelye could collect, on the guaranty, only the actual sum received on the assignment. But that question was not before the court, which was called on to decide only whether the securities taken, were void for usury. If they were valid, the amount the holder would have been entitled to receive, could only [652] have been ascertained in a separate action, on the bond. I think the rule referred to applies only as between the parties to the sale, and rests upon the principle of recovering back the consideration paid. Besides, in this case, new notes made by Henry Hunt, and indorsed by the defendants alone, were substituted in place of those signed by Hayes and Churchill. This transaction was a new contract, upon which, I think, the plaintiff is entitled to recover the whole amount secured by the notes, viz.: $1505 and interest, since November 12,1849.