Sheppard v. Hamilton

By the Court, Welles, J. It is not, and cannot be, denied that except for the alleged cancellation of the first note by means of the giving up of the second one, the plaintiff would be entitled to recover of the defendant the amount due upon [158] the former. The defendant was legally bound to pay it to Whittlesey, and the plaintiff has acquired by assignment all the rights of Whittlesey and Emery Thayer, with the latter of whom the defendant had contracted to pay it. I think Whittlesey, if he had not assigned to the plaintiff, could have maintained an action against the defendant upon his promise to Thayer. That promise was to pay to Whittlesey. But whatever interest Thayer had in the defendant’s obligation to pay the note to Whittlesey is also assigned to the plaintiff, who stands in the place of Whittlesey, clothed with all his rights, with the addition of the rights of Thayer, and subject to all the objections which might be taken to his right to recover if he had brought the action after the discontinuance of the first action, and before he assigned to the plaintiff, except such as might have been made for want of the assignment of Thayer’s interest. If the arrangement of October 1st, 1855, between the defendant and Whittlesey, by which the Thayer note was given up to the defendant, and the note of the defendant and J. A. Hamilton delivered to Whittlesey, was valid, so as to be legally enforced, the obligation of the defendant upon which this action rests was satisfied and discharged by the new security taken for it by Whittlesey, and no action can now be maintained upon it. But if, for any reason, such new security is void, and cannot he legally enforced, the party holding if is remitted back to his original rights, as they existed at the time the new security was taken ; for the reason that the new security being abortive the consideration of the cancellation or satisfaction of the original security or indebtedness fails, and the indebtedness remains unaffected. In this case the ground upon which the plaintiff seeks to avoid the effect of the new security is, that it is inoperative and void for usury. The defendant insists that the plaintiff is not at liberty to allege the unlawfulness of the new security, as he would thereby be asserting his own corrupt and unlawful conduct in exacting the usury. The plaintiff insists, in reply, that he has not set up the usury, but was content with the [159] new security, and that when he attempted to enforce it hy action he was met hy the defendant’s allegation of the usury. This, I think, is a sufficient reply to the defendant’s position. When the plaintiff brought his action upon the last note, the defendant interposed his sworn answer, alleging that the note was usurious and void, and he should not now be permitted to deny that what he then alleged under his oath was true; and if it was true, then there was no valid satisfaction of the debt. In this I think I am sustained by authority. (La Farge v. Herter, 11 Barb. 159; S. C. on appeal, 5 Seld. 241.) Judge Euggles remarks, in his opinion in the court of appeals, in the case referred to, that “ a party to an illegal transaction is not allowed, by an allegation of his own turpitude, to recover back what in a forbidden bargain he has delivered to the other party, or to avoid the bargain when once executed.” And in another place in the same opinion the learned judge says, “ A party to .a fraud is estopped from setting it up for his own advantage; but if his opponent alleges and proves it as a part of his own case, the guilty party will then be entitled to the benefit, while he incurs the disadvantage resulting from such a state of things.” And to the same effect is the reasoning of Judge Allen in the same case, as reported in 11 Barb. See also Vilas v. Jones, (1 Comst. 274.) [Monroe General Term, March 7, 1859. Welles, Smith and Johnson, Justices.] The plaintiff is therefore entitled to judgment on the verdict. Ordered accordingly.