Hackley v. Sprague

By the Court, Savage, Ch, J. When the note declared on was made, and when it became due, it was void for usury; and the defendant had a right to set up that defence against any person holding the note, though he received it in the usual course of business, bona fide, and for valuable consideration. At common law the maker is entitled to the same defence against a bona fide holder for valuable consideration as against the payee, where the note has been transferred after due. The note being void by statute, that constituted a good defence against the payee, independent of the statute provision which avoids usurious paper in the hands of an innocent holder. But the revised statutes are supposed by the plaintiff’s counsel to defeat this defence altogether in favor of the endorsee, since the 1st January, 1830. The revised statutes, (1 R. S. 773, § 5,) after declaring all usurious bonds, bills, &c. void, add, 65 But this section shall not extend to any bills of exchange or promissory notes payable to order or bearer, in the hands of an endorsee or holder, who shall have received the same in good faith and for valuable consideration, and who had not at the time of discounting such bill or note, or paying such consideration for the same, actual notice that such bill or note had been originally given for an usurious consideration, or upon an usurious contract. It is presumed that the intention of the legislature was to protect the innocent holder for valuable consideration, who had received the note in the usual course of trade, before it was due. The law merchant goes no farther in any case when the maker has a legal or equitable defence, as against [116] the payee; and when the legislature declare a note void, they surely intend to extend the same defence to the maker which he would have if he had paid the note to the payee. The true construction of this section is, that usurious paper shall not be avoided in the hands of an innocent holder for value paid, when received in the usual course of business, that is, before it arrives at maturity. If it is transferred afterwards, the holder takes it as he does all other negotiable paper, subject to any defence which the maker has as against the payee. But even if the statute were to be construed as the plaintiff contends, it could not apply to this case; all statutes are to be construed prospectively, and not retrospectively, unless they are otherwise incapable of a reasonable construction. Such is not the case here. To give this statute a retrospective construction, would be creating a valid, contract out of one which was void when the statute was passed. ' This I apprehend is beyond the power of the legislature, had they intended such a consequence. On both these grounds the plaintiff must fail. New trial granted; costs to abide event, •