Wies v. Sultzer

McAdam, J. Judgement was entered against Sultzer, the indorser, who alone appeals, and the first question presented for consideration is whether the agreement alleged by him, if made, operated to discharge him from his obligations as indorser of the note in suit. That $50 was paid to Bernard, as the plaintiffs’ agent, to induce an extension of the time to pay the note is undisputed, and the extension bargained for seems to have been granted. That, if legal, this extension, without the indorser’s consent, operated to discharge him, there can be no doubt, and we will assume that the acts of Bernard were authorized by the plaintiffs, or we are met with the unanswerable objection, that the case presented evidence tending to establish such authority (folios 34, 60, 64, 71); which, taken in connection with the $50 check, with plaintiffs’ indorsement at fol. 95, and with the other evidence in the case, required the submission to the jury of the ques [3] tian, whether the $50 was paid by Bernard for his services, as suggested by the plaintiff’s counsel, or to the plaintiffs through Bernard, as their agent, for the forbearance of the money (Thurston v. Cornell, 38 N. Y. 281). The justice refused to submit the case to the j ury, and directed a verdict for the plaintiffs, on the authority of Vilas v. Jones, 1 N. Y. 274; Bank of Utica v. Ives, 17 Wend. 501, upon the theory that the agreement for extending the time was made in fact, but was usurious, and therefore void in law. This leads ns directly to the question whether this conclusion was right or wrong. If the money was paid to the plaintiffs, it was so paid for the forbearance of $600 for fifteen days, and this part of the transaction was therefore usurious. Did this usurious agreement between the maker and holders of the note operate as a valid extension of time, so as to discharge the indorser ? I think it did, upon the ground that the plaintiffs cannot by an allegation of their own turpitude, avoid a contract once executed; it is a matter of defense to the borrower, or his sureties, or representatives, which they may waive if they see fit. The surety waived it, in the present case, by insisting on the extension as a legal obligation, yet the plaintiffs, though retaining the usury, succeeded, by alleging their own turpitude, in obtaining a verdict by which they recover the whole amount due on the note in addition to the usury retained. If the cases in 1 N. Y. 274, and 17 Wend. 501, relied on by the plaintiffs, assert or sustain such a doctrine, they have been overruled, in La Farge v. Herter, 9 N. Y. 241, and in Billington. v. Wagoner, 33 Id. 31, wherein rulings were made which seem more consistent with the object of the statutes against usury, which were designed to prevent usury by punishing the party exacting it and making it a legal defense in favor of the party paying it; for, as was said in La Farge v. Herter, 9 N. Y. (at page 243): 1 ‘ The parties do not stand in [4] pari delicto. It is oppression on one side and submission on the other. The borrower, therefore, may set up usury for the purpose of avoiding a contract tainted with it, but the lender cannot.” Under this view of the case, it is unnecessary to consider any of the other objections urged against the verdict. The direction to find for the plaintiffs was error for which a new trial mast be awarded, with costs to abide the event. Judgment reversed as to defendant Snltzer, and new .trial ordered, costs to abide event. Spaulding and Alicer, JJ., concurred. .An obligation valid in its inception is not invalidated by an-usuripus agreement for the extension of the time of payment; but the sum paid on the agreement for forbearance will in equity be applied as payment (Real Estate Trust Co. v. Keech, 69 N. Y. 248. See also Bush. O. Livingston, 2 Cai. Cas. 66; Pearsall v. Kingsland, 3 Elw. 195. S. P., Lovett v. Dimond, 4 Id. 22; Carson v. Ingalls, 33 Barb. 657; Lesley v. Johnson, 41 Id. 359; Williams v. Fitzhugh, 44 Id. 321; partly affirmed on other grounds in 37 N. Y. 444).