Union Bank of Rochester v. Gilbert

LEWIS, J. The action was brought against George A. Curran, as the maker, and the appellant, as the indorser, of a promissory note dated July 24, 1893, for the sum of $300, payable three months from date. It was alleged in the complaint that the defendant Curran made the note in suit payable to the order of W. W. Gilbert, and then and there delivered the same to Gilbert, and the said Gilbert, for value received, afterwards indorsed the said note, and then and there delivered the same to William Johnson; and that the said William Johnson, for value received, afterwards indorsed the said note, and the same was thereupon, and before it became due, for value received, duly transferred to the plaintiff, who then became, and still is, the owner and holder thereof; and judgment was demanded against the maker and Gilbert, the first indorser. Gilbert alone defended, and interposed the plea of usury. The plaintiff called, as its only witness, Gilman N. Perkins, who testified that he was the plaintiff’s cashier; that the note in suit was given in renewal of another note of the same amount; that he supposed it was discounted the same day it was dated; that it so appeared upon the books of the bank; he did not know who brought the note to the bank; that it was not placed to any one’s credit; that he simply surrendered the previous note upon the presentation of the one in suit, but to whom he could not say. When the note was taken by the bank, it was indorsed by Mr. Johnson. Johnson was what is called a “loan broker.” The plaintiff thereupon rested, and the defendant Gilbert was called as a witness in his own behalf, and testified that the note was made by Curran,. and indorsed by the witness; that he received no consideration for [946] his indorsement; he knew that the maker could not take care of the prior note when it should fall due; and that he went to see Mr. Johnson, who he knew had the former note, with the view of having it renewed. Mr. Johnson required him, as a condition for the renewal of the note, to pay the sum of $22.65,—$18 bonus in addition to the lawful interest. He paid Johnson the $22.65. He did not know from any personal knowledge what became of the note for which the note in question was given in renewal. It was not delivered to him at the time of the giving of the note in suit. He paid Johnson what he asked him to pay for its extension or renewal. He took it to Mr. Johnson because he had taken notes there, before. He knew Mr. Johnson indorsed the notes and furnished the money, and therefore took them to Mm. He understood that Mr. Johnson advanced to Mr. Curran, the maker, the proceeds of a prior note for which this note was given in renewal. He remonstrated with Mr. Johnson on one or two occasions, and asked him to renew the note for less, but Johnson declined. The evidence being closed, the plaintiff’s counsel asked the court to direct a verdict for the plaintiff for the amount of the note and interest. Defendants’ counsel asked to go to the jury on the whole case, and. particularly on the question of the delivery of the note to Mr. Johnson, and upon the question of the inception of the note. His request was denied, and he dMy excepted. He thereupon requested the court to direct a verdict for the defendants. The motion was denied, and he excepted, and the court thereupon directed a verdict for the plaintiff, for the amount of the note, with interest. It was incumbent upon the plaintiff, before it was entitled to recover, to establish that the note had its inception in the hands of the plaintiff. To establish that, the plaintiff relied solely upon the testimony of its cashier. If the note had an inception in the hands of Johnson, and he exacted, as the testimony of Gilbert tended to show, a greater rate of interest than 6 per cent., and he thereafter transferred it to the plaintiff, it was void for usury. "The plaintiff claims that the note had its inception when' it was transferred to the plaintiff, and that Johnson acted simply as a note broker, and that the amount of money in addition to the legal rate of interest paid to him by Gilbert was for his indorsement. The witness upon whom the plaintiff relied to make its case was its cashier, Mr. Perkins; and he testified that he was himself the owner of the note at the time of the trial. The truthfulness, therefore, of Ms testimony, was for the consideration and determination of the jury, and not for the court. Bank v. Diefendorf, 123 N. Y. 191, 25 N. E. 402. The testimony of the appellant tended to show that the note had an inception in the hands of Johnson. His dealings were entirely with Johnson. It was a ques- ’ tion for the jury whether the transaction was simply a cover for a usurious loan. If it was the exaction of usurious interest upon the renewal of a note, the renewal note was tainted with usury. Swartwout v. Payne, 19 Johns. 294. Gilbert, being liable to pay the note as indorser, was in a situation to make a usurious contract," and was entitled to ihterpose the defense of usury. Bank v. Lewis, [947] 75 N. Y. 523. If the note was invalid in the hands of Johnson, it could not be rendered valid by sale thereof to the plaintiff. Sweet v. Chapman, 7 Hun, 579. These were questions of fact which, we think, should have been submitted to the jury for their determination. The judgment and order appealed from should be reversed, and a new trial granted, with costs to abide the event. All concur.