Utica Insurance v. Kip

[373] By the Court, Savage, Ch. J. I am inclined to think the note void, but' not for usury, for by the defendant’s own account of the operations of the company, the excess was taken by mistake. In this particular this case is distinguishable from the cases referred to by the defendant’s counsel. The taking more than lawful interest, and casting it upon an erroneous principal unexplained, would be evidence of a corrupt agreement ; but here both parties have sworn to a mistakethe inference of law, therefore, is rebutted by the oath both of the defendant and of the officer who recommended the erroneous mode of casting interest. The note is void because taken in violation of the restraining act, forbidding incorporated companies from carrying on banldng operations, unless expressly authorized by their charter. But it has been decided in this cause, (8 Cowen, 20,) that though the security be void, the contract of loan is not. In answer to this view of the case, the defendant relies upon the statute of limitations, and it therefore becomes necessary for the plaintiffs to shew a recognition of the demand within six years or the remedy is gone. The evidence on this point is the indorsement on the back of the note. This is certainly an admission that the .debt is unpaid, and though the note is inoperative as a security for the money, is it not an acknowledgment sufficient to take the case out of the statute 1 lam inclined to think it is. The'claim of the plaintiffs for the $5,500 was properly rejected. Independent of the suspicious purpose for which it was paid to the defendant, there is nothing in the facts from which a promise to pay may be implied; the defendant was to use the money at his discretion, and it was understood that he was never to be called upon to explain how he expended it. The act of the secretary was confirmed by the acquiescence of the board, who, though informed in 1817 of the transaction, have not until now called upon the defendant to account. The referees also did right in rejecting the claims of the defendant. For the first year of the operations of the company a salary was voted to him as president. It was con [374] fined, however, in its terms to that year. His services after-wards must be considered gratuitous. Unless an express agreement is made, it is understood that the services of the President and directors of monied institutions are gratuitous. The defendant’s claim for the shares of stock was shewn to-be unfounded,, they having been forfeited according to the charter of the company. I am of opinion that the motion to set aside the report of the referees should be denied. Motion denied.