Rice v. Mather

By the Court, Savage, Ch. J. The only question is whether this was a usurious transaction. According to the uniform decisions of this court, it clearly was not. The note was given for a valuable consideration ; it was an available instrument in the hands of the original payees ; there was no usury in its original concoction, and therefore a purchase of it, or a discounting of it, at a sum less than the face, does [65] not taint the note itself with usury. Usury to invalidate the note, must exist between the original parties to it; but when as between maker and payee, the maker has received value for the note he gives, it is of no consequence to him what price the holder gave for it. He had value himself, and therefore must pay it. When a note is made, not upon valuable consideration, but for the purpose of having it discounted at a rate exceeding lawful interest, then the usury entering into its concoction, it is void. So, had it been agreed in this case, after James G. Mather called on the plaintiff and ascertained his terms that such a note as the one in question should be produced for the purpose of being so discounted, and the defendant had lent his name to accommodate James G. Mather or Keeler and Mather, there can be no doubt that the note would have been usurious and void. This distinction runs through all the cases. Dunham v. Dey, (13 Johns. R. 40,) was a case where a number of notes were given upon a previous usurious contract; there the notes were held void. Munn v. Commission Co. (15 Johns. R. 44,) was a case of a different description; the bill in the hands of the payee was an available instrument, and had he retained it till due, he might have maintained a suit upon it; it was sold to the plaintiff for near SI50 less than its face, though it had but sixty days to run, yet that was held to be a purchase of the bill, not a loan to the acceptor. In that case Mr. Justice Spencer said, “ The principal is too well settled to be questioned, that a bill free from usury in its concoction, may be sold at a discount, by allowing the purchaser to pay less for it than it would amount to at the legal rate of interest for the time the bill has to run.” I know of nó case containing a contrary doctrine; and this seems to me entirely decisive of this case. The plaintiff is entitled to judgment.