Utica Insurance v. Cadwell

By the Court, Savage, Ch. J. I think the judge decided correctly in rejecting the parol proof. Where papers are at a distance, the party or his attorney is not bound, upon notice, to leave court and his business, and go or send for books or papers, unless he has reasonable time before the cause may be tried. It happened that between the time o'f serving the notice and the trial there was time to have sent to New-York; but the attorney could not know that the cause would not be reached, or that the circuit would last till he could obtain the books. The judge at the circuit must exercise a reasonable discretion as to admitting secondary evidence, where the primary is withheld after notice to produce it. The party should have reasonable notice; and what is reasonable must depend upon circumstances. Where the paper or book wanted is in court, or near by, a notice after the trial has commenced may be sufficient *, but where they are at a distance, a suitable time should be allowed. The objection to the competency of the witness was properly overruled. He had no interest; he had sold bona fide his stock, and was competent. This very point was decided in The Bank of Utica v. Smalley, (2 Cowen, 777,) where the witness Colling assigned his stock after he was sworn in the cause, and was then held to be a competent witness. The witness could not be a director without being a stockholder. The principle grounds of objection, however, are, 1. That this loaning was a cover for usury; 2. That it was a banking transaction, in violation of the restraining act. The judge at the circuit decided, and-so charged the jury, that the plaintiffs had sufficiently proved themselves a corporation; that the loan was made from their surplus funds; that the plaintiff’s checks paid to the borrower were the same as money, as they were always paid when presented; that [301] there was nothing improper in the insurance of the defendant’s buildings at the usual rate, that being part of the husiness of the company, and that the note was not therefore usurious; and that the plaintiffs were entitled to recover. To the whole of this charge the defendants excepted. The judge was undoubtedly correct, according to the decisions of this court, in deciding that the plaintiffs had proved themselves a corporation; and that they had a right to loan money by way of investing their surplus funds. I am of opinion, also, that he was right in saying that there was no usury in the transaction. The insurance was a lawful act, and the principal business of the plaintiffs; and as it was made at the usual rates ot premium, there could be no shift or contrivance in this transaction whereby the defendants were made to pay more than seven per cent interest on the loan made. The defendant Cadwell paid the plaintiffs $21, 60, not for the loan of the money which he borrowed, but for the risk which the plaintiffs incurred in insuring his buildings against fire. The defendant received an equivalent for his premium independent of the loan. I am not equally cléar that the transaction in question was justifiable within the restraining act,' and the rights of the plaintiffs under their charter, as expounded by this court. By the restraining act, no person unauthorized shall become a proprietor of a fund for the purpose of issuing notes, receiving deposits, making discounts, or transacting any other business which incorporated banks may or do transact by virtue of the acts of incorporation. Now it appears in this case, that a part of the capital not wanted for the purpose of insurance, arid not a part of their profits, was called in for the express purpose of being loaned in a particular way; the principal to be deposited, and checks to be drawn for the purpose of circulation. Thus a fund was virtually set apart by the plaintiffs for the purpose of issuing notes; not technically notes, but bills of exchange, which are substantially notes, for circulation, as bank notes. These checks were not intended to be presented for the purpose of withdrawing the deposit, because they received interest on the deposit; and if they can also receive interest on their checks, they have all [302] the profits of that part of banking business which consists ill iss™no notes> and more also ; for banks receive no interest on the capital which lies in their vaults, but only on their credits and notes in circulation. It seems to me, therefore, that the issuing checks prepared and intended for circulation like bank notes, not being authorized by their charter, was a violation of the restraining act. The consequence is, that the note is void, and the plaintiffs cannot recover upon it. But it has been decided in the case of these plaintiffs against Kipp, (8 Cowen, 20,) that though the security is void, the coritract of loan is not void. If therefore the plaintiffs have lent the defendants money, they may recover upon the count for money lent. It appears in this case that a negotiation took place between the defendant Cadwell and the plaintiffs for a loan. It was effected, and the other parties (defendants) are considered as surities. The plaintiffs had money in deposit in New-York, and drew their checks upon that fund. These checks authorized the holder to draw the money at pleasure, and it appears that all the checks presented to have been paid. Suppose an individual lends his check when he has funds, and it should appear that all his checks have been paid, the conclusion without evidence to the contrary, is, that the check has been paid. It is therefore money. Had there been but one check given to Cad-well, under the other circumstances appearing in this case, there could be no doubt that, as between him and the plaintiffs, the transaction was a loan of money ; and as between them, it can make no difference whether there was one check or one hundred. It seems to me, therefore, that there was a loan of money to Cadwell, but not to the other defendants. There is no liability upon them, but upon the note. They have had no other transactions with the plaintiffs. This is a joint action against three defendants, against two of whom no cause of action is shewn. The; plaintiffs have therefore failed. " A new trial must be granted; costs to abide the event.