King v. Perry Insurance & Trust Co.

BRICKELL, C. J. The only consideration of the bill of exchange on which the suit is founded, is the debt originally contracted by Tarry with the Perry Insurance and Trust Company. It is not disputed that the debt in its inception, and in the several renewals of the evidence of it, to which Tarry and the appellant were parties, was infected with usury. The law is firmly settled that a mere change of securities for the same usurious loan, to the same person who has reserved the usury, does not purge the original, so that an action can be maintained on the new security.—Pearson v. Bailey, 23 Ala. 537; Walker v. Bank of Washington, 3 How. (U. S.) 62; Campbell v. Sloan, 62 Penn. 481; Tyler on Usury, 396. It is not material whether the new security is merely in renewal or substitution of former evidences of ■debt, or in payment of the debt tainted with usury. The original taint attaches until á new consideration intervenes. As is said in Dunning v. Merrill, 1 Clark’s Ch. 252, “ the original taint attaches to all consecutive obligations or securities growing out of the original vicious transaction, and none of the descendant obligations, however remote, can be free from it, if the descent can be traced.” A bona fide payment of the debt extinguishes it, whether the payment is made in money or other things, and a subsequent loan between the parties would be valid, if the transaction was not a device to evade the statute against usury. The payment must not be merely the substitution of another -debt by the same parties, or some of them, the sole consideration of which' is the antecedent usurious debt.—Vickery v. Dickson, 35 Barb. 96. In Botsford v. Sanford, 2 Conn. 276, the surety applied to the creditor, and for the purpose of pursuing the principal and indemnifying himself against loss, gave his own note in payment of the usurious debt, and obtained satisfaction from the principal. The note was held usurious, but it was held that if the surety, after obtaining satisfaction from the principal, had in consideration thereof made a new promise, such promise would be valid, because supported by a new consideration. It may be conceded that the bill given by the appellant was a payment of Tarry’s debt to the appellee, converting the appellant into the relation of creditor of Tarry, discharging him from all liability to the appellee. The consideration was not changed, nor was the relation subsisting [122] between tbe appellant and tbe appellee, so far as the right to - defend because of usury, is involved. If by subsequent transactions between Tarry and the appellant, a new consideration was created, and this consideration had been the foundation of a new promise by the appellant to the appellee, a different question would be presented. The only considera- - tion of the bill now in suit was the original usurious debt.. The appellant has become the primary debtor to the appellee, and the creditor of Tarry. The subsequent transactions ■ between him and Tarry formed no part of the consideration of the bill, and as between appellant and the appellee, there • has been merely a substitution of the present bill on which the appellant is acceptor for that on which he was indorser.' In this relation of the parties, the only question is of con- ■ sideration.—Tate v. Wettings, 3 T. R. 537; Campbell v. Sloan, supra. That being a usurious debt, no greater recovery can be had than could have been obtained in the original debt. The rulings of the Circuit Court were not in accordance - with these views. It is not necessary to pass on them separately, as what has been said will be a sufficient guidance for ■ the court on another trial. The judgment is reversed, and the cause remanded.