Mechanics' Bank v. Townsend

By the Court, Roosevelt, J. The defendant Townsend is sued as maker, on two promissory notes. His defense is, that the notes were issued by him on a usurious consideration, and [575] are therefore void even in the hands of a bona fide holder who may have discounted them at the lawful rate of seven per cent. To meet this objection, the plaintiffs, on the trial, introduced, in evidence two certificates signed by the defendant, and which, the jury in effect have found to have been given by him to accompany the notes, and to have been designed to represent that the notes were valid, (when in fact and to his knowledge they were invalid,) so that subsequent parties should take the notes on the faith of the certificates. It should he added, too, that the verdict in effect establishes the further fact that, the plaintiffs discounted the notes on the faith of the certificates, giving full value, under circumstance free from suspicion, and without any design on their part to evade the statute, andUwithout reason for suspecting such design in others. Such a certificate, acted on in good faith, it has been repeatedly held, operates to estop the party giving it from falsifying his own statements. No man, as against an innocent person, can take advantage of his own fraud. So far from being, in such case, a defense, the fraud would itself, if any loss were sustained, be a positive cause of action entitling the injured party to equivalent damages. (See the cases of Holmes v. Williams, 10 Paige, 326; Watson’s Ex’rs v. McLaren, 19 Wend. 557; Dowe v. Schutt, 2 Denio, 621; Clark v. Sisson, 4 Huer, 408 ; Truscott v. Davis, 4 Barb. 495.) All these cases are cited by Mr. Jus tice Ingraham at special term, in a decision against the same defendant, reported recently in 26 Barb. 611. Much stress is laid, by counsel, on the peculiar form of these certificates. They merely declare that the notes—and such, it is said, is the purport of the notes themselves—“ were given for value received, and will be paid when due.” If nothing further was meant by the certificates, why attach them to the notes ? The act would have been a childish ceremony. We must infer that it meant something. The jury have found, in effect, and we think correctly found, that the defendant meant to convey the idea not only that some value, but that full le [576] gal value, had been received, and that the promise to pay was not merely an optional promise, but one which could be legally enforced. In other words, the object of the certificate, as is said b.y Judge Ingraham, was “ to induce a purchaser to take the notes without fear of the defense of usury.” And it is not competent to the defendant now to argue that the terms selected were ingeniously contrived as a trap to catch the unwary. [New York General Term, May 2, 1859. Roosevelt, Ingraham and Pratt, Justices.] Judgment appealed from affirmed with costs.