Cook v. Dyer

ORMOND, J. The statutes of this State prohibit usury, and declare that the security by which it is reserved, shall be void for the entire interest, and that the principal only shall be recoverable. Aik. Dig. 655. A previous act authorised a qui tarn action to recover both principal and interest, where usury had been taken, unless the borrower was the informer, when the whole amount went into the treasury. The same statute authorized and required the grand jury to present all persons guilty of usury,, and if found guilty, they were to be fined in the amount lent or taken, contrary to the provisions of the act. Aik. Dig. 437. It will be perceived from this statement of the statutes, that although the law against usury, has been greatly modified by the act first cited, making void the security by which illegal interest is reserved for the interest only, it is still a highly penal •offence. In this case, however, we are to consider whether this contract evidenced by the bill sued on, and which is said to be composed entirely of illegal interest, is void, as between [646] these parties. The statute making void, not only the contract, but the security itself, by which illegal interest was reserved? was doubtless intended for the benefit of the borrower, he may, if he thinks proper, refuse to take the benefit it proffers to him, and pay the debt, and if he does, no one else can take advantage of it. If the bill in this case had no connection whatever with the usurious transactions between Cabiness and the defendant, and the former had transferred it to the latter, in payment of a debt, .consisting wholly of usury, no proposition can be clearer than that the acceptors could not avoid the payment on the ground that it was indorsed on a usurious consideration. Suppose further, that Cabiness had given the plaintiffs in error the money to pay this usurious debt, and that they had discharged it by accepting this bill, there would be no pretence for resisting the payment on the ground of usury, and yet that is in effect this case, unless a distinction can be shown between receiving pro* perty, Which is afterwards converted into money, and receiving money in the first instance. The cases cited by the counsel for the defendant in error, indeed, go much further than this, and establish the proposition, that where the suit is not brought on the instrument itself, by which the usury was reserved, but on one substituted for it to an innocent holder, that the defence cannot be made — that is the effect of the case cited from 8 Term Rep. 390. The case cited from 4 Dana, 181, is in principle, like this. There, a note secured by a deed of trust, was assigned on a usurious consideration, and a third person to gain a precedence for his own debt, secured by the same deed, endeavored to avoid the note for the usury in the transfer; but the Court- refused to permit this to be done, on the ground that the statutes against usury were designed for the protection of the borrower, and that if he refused to avail himself of them, no one else could. See, also, the case of Nichols v. Fearson, 7 Peters, 111. The case of Bearce v. Barstow, 9 Mass. Rep. 45, was a case in all respects like this, except that the defendant, instead of' receiving property when he executed the note to pay the usurious debt of another, was indebted to the person whose usurious debt he thus became bound for. The Court held that the defence could not’be made. The Court say it is nothing to the [647] defendant, to what use or purpose his creditor has disposed of the demand against him, which is liable to no objection of usury, and which being due from him, has been legally transferred, and made the consideration of the note in suit. The case is as fully in point as the reasoning is conclusive of this case. It is, however, supposed, that as the statute makes the of-fence of taking usury indictable, and as therefore the defendant in error upon the receipt of this money, Would be liable to a criminal proceeding, that no Court will aid in its recovery. If the question of usury could be tried in this case, there can be no doubt that the reasons stated would be conclusive against a recovery — but as there was no usurious contract between these parties, nor illegal interest reserved on the bill of exchange, and as it is not pretended that the transaction is a shift or device to evade the statute, the question cannot be presented to the Court. It is a matter inter alios acta, with which the present defendants have no concern, and cannot be permitted to volunteer a defence to the action which, the party interested declines making. The money in their hands for the payment of this bill, is the money ofCabiness, paid to them for this particular purpose; it is in effect therefore, the same as if it had been paid to the defendant in error. If, therefore, this defence were allowed, it would be permitting the plaintiffs in error to do indirectly what they could not do directly, as it is certain they have no right to the money, and it appears that Cabiness does not wish to avail himself of the protection afforded him by the statute. A still more conclusive reason, if possible, will be found in the fact that the plaintiffs in error obtained possession of this fund, upon their promise to pay this debt, and to allow them now to withhold the payment, and retain the fund, would be to sanction the commission of a fraud. Upon every view which we can take of this case, the judgment of the Court below is correct, and is therefore affirmed,