Farwell v. Meyer

Mr; Justice Beckwith delivered the opinion of the Court: This is a suit in equity to restrain the collection of a judgment, rendered by the Cook County Court of Common Pleas, against the plaintiff in error and Henry W. Zimmerman in favor of Max A. Meyer, one of the defendants in error, upon a promissory note executed by Zimmerman as principal and the plaintiff in error as surety. Attached to the note was a letter of attorney in the usual form, pursuant tó which the judgment was entered by confession. The bill alleges that Rosenfeld & Rosenberg were the holders and owners of the note when it became due, and for a long time thereafter; and that in consideration of large sums of money paid' to them as usurious interest they agreed with Zimmerman to extend, and they did extend the time of payment, from time to time, without the knowledge or consent of the plaintiff in error, whereby he was discharged from liability. We are satisfied from the evidence that Rosenfeld & Rosenberg agreed with Zimmerman to extend, and did extend the time of payment, from time to time, in consideration of the sums of money paid them; and that these agreements were made without the knowledge or consent of the plaintiff in error; but the agreements, in order to operate as a discharge of the plaintiff in error, must be shown to have been binding as between Zimmerman and the owner of the note, at the times when they were made. An agreement for forbearance must be one which can be enforced by the principal against the creditor, and be available to him, either as a cause of action or as a defense, or it will not operate to discharge a surety. 3 Lead. Cas. in Eq. 563. It was therefore necessary for the plaintiff in error to establish that Rosenfeld & Rosenberg were the owners of the note as alleged, or that they had authority from the owner to make the agreements mentioned. It appears that Rosenfeld & Rosenberg had possession of the note at the time the first and some of the subsequent agreements were made, while upon other occasions they declared that the note was not in their possession. Zimmerman testifies that he was informed by them, when the first agreement was made, that they were not the owners of the note. The possession of a note indorsed in blank, unaccompanied by any declaration .in regard to its ownership, is •prima facie evidence that the holder is the owner; but when accompanied with a declaration that he is not the owner, the presumption arising from the possession is rebutted. The testimony of Zimmerman is the only evidence to sustain the allegation that Bosenfeld & Bosenberg were the owners of the note at the times when the agreements for forbearance were made; and we think it fails to establish the allegation. Bosenfeld <fe Bosenberg both testified that they were not the owners of the note at those times; and if their testimony could be relied upon, it would show that one Sondheim was then the owner; but if rejected as unworthy of belief all of it must be rejected. We cannot detach parts of sentences in their depositions and consider them as true, and reject the residue of their testimony as not entitled to credence. After a careful examination of their testimony we have arrived at the conclusion that it is too unsatisfactory for any reliance to be placed upon it. On the hearing in the court below the plaintiff in error asked leave to amend his bill by charging that Bosenfeld «fe Bosenberg pretended that one Sondheim was the owner of the note, and that if this were true they were authorized by him to make the agreements. We are of the opinion that the amendment should have been allowed. It not unfrequently happens that the evidence does not support the allegations of the bill precisely in the form in which they are made; and it subserves none of the purposes of justice to dismiss a bill on the ground of a variance between the pleadings and the proof when a slight amendment will render the testimony admissible. After an examination of Bosenfeld <fe Bosenberg as to their ownership of the note, and in regard to their authority, an allegation that if Sondheim was the owner Bosenfeld «fe Bosenberg had authority from him to make the agreements which they did make, could not have operated as a surprise to the defendants. The establishment of Bosenfeld <fe Rosenberg’s authority was an affirmative fact which it was for the plaintiff in error to- prove. The possession of the note accompanied with declarations that they were not the owners thereof did not suffice for that purpose ; and the only other evidence in regard to their authority is the testimony of Bosenfeld. He testifies that Sondheim allowed him to make the agreements by procuring the consent. of the plaintiff in error. If this statement is true he had no authority to make the agreements without the consent of the plaintiff in error, which we are satisfied he did not obtain, and if the statement is not to be relied upon, we are without sufficient evidence to establish authority to make the agreements. It was insisted in argument that Sondheim, by receiving the moneys paid to Eosenfeld & Rosenberg, had ratified the agreements made by them. A principal, who with a full knowledge of all material facts affecting his rights, receives moneys paid to one purporting to be his agent, in pursuance of an unauthorized agreement made by him, is precluded from questioning the agent’s authority in the transaction. His deliberate acceptance of its benefits, is an undertaking to discharge its burdens; but like all other contracts, an essential ingredient is the assent of the party to be bound thereby. Where the facts are known, the assent of the principal is inferred from his acts irresistibly leading to that conclusion; but no such inference can be drawn in regard to an obligation arising from facts of which he had no knowledge. A party who asserts a liability ■ arising from an implied assent must show that the facts were known to the person charged with incurring the liability arising therefrom. The testimony of Eosenfeld, if relied upon, would show that Sondheim knew of extensions of the time of payment from time to time, but there is no evidence showing that he knew that the agreements for such extensions were made without the consent of the plaintiff in error. If Sondheim was the owner of the note he was justified in believing that his agents, Eosenfeld & Rosenberg, had pursued their authority until he was informed to the contrary; and he ought not to be charged with the consequences of a departure therefrom without evidence that he knew of it. But it is evident that the owner of the note, whoever he was, received the sums of money paid by Zimmerman for forbearance, and they ought to be applied in part payment of the debt. The legal rate of interest in this State is six per cent.; and although parties are allowed to stipulate for a rate of interest not exceeding ten per cent., the privilege thus given must be exercised in conformity with the statute. An agreement which cannot he enforced as it was made will not be enforced at all. Where parties stipulate for a higher rate of interest than ten per cent., the agreement cannot be enforced as it was made, and we cannot substitute for it an agreement which the parties did not make. In such cases that part of the agreement stipulating for a higher rate ¿>f interest than six per cent, will not he enforced.; and the lender or other person contracting for an illegal rate of interest will be allowed (where no forfeitures or penalties are insisted upon) only to recover six per cent., as the measure of value which our law has established for the use of money, where no agreement has been made for a higher rate, in conformity with its provisions. Although usurious interest voluntarily paid, since the passage of the act of 1857, cannot be recovered back; still, so long as any part of the debt remains unpaid, fche debtor may insist upon a deduction of the usury therefrom. The usury received is considered as having been extorted by means of the debt, and is to be applied in part payment of the same. So much of the note as the debtor was entitled to have satisfied by payments of usurious interest as was included in the judgment entered without notice, and in a manner affording him no opportunity of asserting his rights, he was entitled to have deducted, and to that extent the judgment should have been enjoined. The decree of the court below will be reversed and the cause remanded. Decree reversed.