Williams v. Wilder

Poland, Ch. J. The first inquiry suggested by this case is whether the plaintiff has paid any usurious interest to the defendant, in such manner as to be entitled to maintain an action against him to recover it back. The report shows that in the note the plaintiff gave to Hubbard, there was included one hundred and forty dollars usury; that Hubbard sold and transferred the note to the defendant, and that the ultimate payment of the whole note, both the legal and illegal part, was made by the plaintiff to the defendant. This was the sole payment ever made by the plaintiff, and he had no right of action to recover for any usury paid by him, until he made this payment to the defendant. That the plaintiff might have successfully resisted the' payment of the usurious part of the note as against the defendant, admits of no doubt, because the case shows the fullest knowledge by the defendant of the illegality of this portion of the note when he purchased it. The plaintiff’s counsel say that he could have done so, if the defendant had been an innocent purchaser of the [617] note while current. But this we think admits of great doubt. Under the English statutes against usury, which expressly made the security infected with usury void, this was so, and so of all notes or other securities founded on considerations made illegal by statute, when the statute so declares. But where the consideration is merely declared illegal by statute, without saying the security shall he void, we understand the settled law to be otherwise, and that such security is good in the hands of an innocent holder for value, if taken in the due course of business in the mercantile sense. This was so held in this state in Converse v. Foster, 82 Vt. 828, in the ease of a note given for liquors sold in violation of the statute. And the same has been decided in Massachusetts, under their statute restraining the sale of spirituous liquors, which is much like ours. But it does not necessarily follow, that because the plaintiff might have avoided the payment of the usurious part of the note to the defendant, if he voluntarily paid it, he could recover it hack as usury paid. For my own part, I do not see any great objection to allowing the action to he sustained against a party with whom the usurious contract was not made originally, but who has purchased the note and received payment of it with full knowledge that a portion of it was usurious. But we are not prepared to decide this without more consideration, and neither do we find it necessary to the determination of this case. The defendant we think was a party to the usurious contract in this case, so as to make him liable to repay so much of the usury paid, as he received, though not named as a party in the security given. He was the party who actually made the contract for the loan with the plaintiff, and procured Hubbard to furnish the money. We do not mean to decide that one who as the mere agent of another effects an usurious loan, becomes liable, hut the defendant was more than this ; he was a party really interested and intended to he benefitted by the usurious part of the agreement. Notwithstanding the various shifts and falsehoods told to cover it up, the real contract is apparent. Hubbard furnished the seven hundred dollars that was really loaned to the plaintiff, and the one hundred and forty dollars usury included, was for the mutual benefit of Hubbard and the defendant, and they were to divide the plunder [618] equally. If under this agreement the defendant received his share of the usury, we see no reason, upon the strictest construction of the statute, why he should not he compelled to repay it. It would not be claimed that one could avoid liability for usury taken by him because he made his note payable to another man. And we do not see why the defendant should not be equally liable as if a note for one-half the usury had been made payable to, and actually paid, directly by the plaintiff to him. That the defendant actually did receive his half of the usury is found by the referee, and that it was all paid by the plaintiff. But the defendant claims that if he was ever liable to the plaintiff for any usury received by him, it was paid and received more than six years before this suit was brought, and is therefore barred by the statute of limitations. It was decided by this court in the recent case of Davis v. Converse et al., 35 Vt. 503, that the statute applies to such payments. Did the plaintiff’s claim for usury paid, as against the defendant, accrue more than six years before the commencement of the action ? Soon after the usurious note was executed by the plaintiff to Hubbard, (as the security for it w'as ample), Hubbard paid over to the defendant his half of the usury, and this was more than six years before suit; and the defendant alleges that if he ever received any usury it was then. But this was a matter the plaintiff had nothing to do with. He had paid nothing, and notwithstanding he had given his obligation to pay, he could recover nothing until he had actually paid more than the legal part of the note and the lawful interest thereon. The referee reports that when the defendant took the note from Hubbard he paid him the full face of the note. The defendant claims therefore that when the full amount of the note was paid him by the plaintiff, he only paid him what he had paid to Hubbard, and that therefore he received no usury. But this fact is to be taken in connection with what had already transpired, that the defendant had then in his hands one-half the amount of the usury which he had received from Hubbard, so that really he paid Hubbard for the note, deducting one-half the usury. The case stands, so far as this ques{úpp. ig cpncerned, just as if the plaintiff had paid the lawful part, [619] and one-half the usurious part, to Hubbard, and then Hubbard had handed the note to the defendant, and the plaintiff had paid the other half of the usury to him. The plaintiff was not affected by the payment Hubbard made to the defendant; no right then accrued to him, which he could enforce, and therefore no time began to run against his right. The plaintiff' found the note wholly unpaid in the defendant’s hands, and paid the full amount to him, and he had the right to understand that the defendant took the usury under and according to his original contract to have it. We think therefore the cause of action arose when the plaintiff made the payment to the defendant. The defendant was the actual party making the oppressive and usurious contract with the plaintiff; he was to share in the usurious part of the agreement, and did so ; the plaintiff has paid the usury and the defendant has received it; and it would be a reproach to the law, if it is so impotent that it can give no redress against the real wrongdoer. On this subject of usury the law disregards all pretence and sham, and deals with the reality, and wherever one has usury in his pocket, it will reach it, by whatsoever name it may be called. Judgment affirmed.