Sherwood v. Archer

Gilbert, J.: The evidence given upon the trial not being before us, we must take the findings of the court below upon questions of fact as conclusive. One of these findings is, that the note in suit was given [74] in' renewal of a previous usurious note made by tbe defendant Archer, payable to and held by one Treadwell. That Treadwell delivered tbe note in suit to tbe plaintiff, to whom by its terms it is payable, in payment of bis indebtedness to her, amounting to $200; that tbe plaintiff received none of tbe usurious interest paid by Archer, and did not authorize Treadwell to receive, or know that be bad received any illegal interest. Tbe taking of the note in suit by tbe plaintiff, in payment of Treadwell’s indebtedness to her, was a perfectly legitimate transaction, and constituted her a bolder for value, and if she took the note in good faith and without notice of tbe usury in tbe previous note, those facts are sufficient to establish her right to recover upon it. By making the promise directly to tbe plaintiff, tbe defendants in fact represented to her that the transaction in which tbe note originated was a lawful one, and they are estopped to deny tbe truth of that representation. Tbe release of Treadwell’s indebtedness was a sufficient consideration for the defendants’ promise, and tbe promise, having been made to one who was not privy to tbe usurious agreement between Treadwell and tbe defendants, upon a new and independent consideration, is valid, and not affected by such usurious agreement. Tbe principle that a new security is infected with tbe taint which invalidated tbe former one, does not apply to an innocent bolder of tbe new security, who took it directly from tbe debtor. (Ellis v. Warnes, Cro. Jac., 33; Cuthbert v. Haley, 8 T. R., 390; Jackson v. Henry, 10 Johns., 185; Powell v. Waters, 8 Cow., 691; Holmes v. Williams, 10 Paige, 329; Aldrich v. Reynolds, 1 Barb. Ch., 43.) Tbe legal effect of tbe transaction is tbe same as if tbe defendants bad borrowed of tbe plaintiff tbe money wherewith to pay tbe usurious note held by Treadwell, and bad given tbe note in suit therefor. An argument that a lender of money cannot recover on such a note, because tbe money loaned was used to pay a usurious debt of tbe maker of tbe note, would hardly be bstened to. Although tbe means furnished by tbe plaintiff by which tbe debt of tbe defendants to Treadwell was paid were not in tbe form of money, yet they were equally efficacious, and tbe promise of tbe defendants should be held equally valid and binding. (Hawkes v. Weaver, 46 Barb., 164.) It has been suggested that tbe transaction was a mere device to evade tbe statute of usury. Tbe court below did not find that fact. [75] Those who allege illegal acts must prove them. In the absence of such proof, the legal presumption is that the fact alleged was not proved. The intention of Mrs. Anderson to charge her separate estate for the payment of the note, sufficiently appears from the written declaration to that effect appended to the note. That declaration bears the same date as the note, and the court below, in effect, found that they were made and delivered at the same time. They, therefore, formed, together, but one instrument. It is not essential that such declaration should appear in the note itself. (Corn Exchange Ins. Co. v. Babcock, 42 N. Y., 613; Manhattan Co. v. Thompson, 58 id., 82.) The contract is a valid one, notwithstanding it was not made in the course of the separate business of Mrs. Anderson, nor for the benefit of her separate estate, and it may be enforced as a legal liability. (42 N. Y., supra; First Mat. Bank v. Garlinghouse, 53 Barb., 615 ; Ainsley v. Mead, 3 Lans., 116; Monilaws v. Andrews, 8 Hun, 65.) The judgment should be affirmed.