Erickson v. Bell

Beck, J. I. The plaintiff claims that the note secured by the chattel mortgage is usurious, and that the payments made thereon, and upon the unlawful interest, are sufficient to — 628 — fully discharge the note and mortgage. But the defendant insists that the plaintiff is estopped from the setting up usury in the note, for the reason .that before the holder of the note acquired it he applied to plaintiff for information in regard to its validity, and was informed that it was all right, and the amount purporting to be due thereon' was unpaid. The evidence tends to prove the following facts: In 1875 plaintiff borrowed of D. O. Thomas $100, for which he gave his note for $120, and ten per cent per annum interest, payable one year after date. Certain payments were made upon this note. All the business was done by D. C. Thomas, and" plaintiff had no reason to believe that he was acting as the agent of another. This note was indorsed by D. C. Thomas, without recourse, to John Lewis. It was usurious. In 1878 plaintiff arranged with D. C. Thomas for an extension or renewal of the note by the execution of a new note and mortgage, the contract providing for the payment of unlawful interest. When the note and mortgage were juesented to plaintiff for execution he discovered that Thomas Thomas, the father of D. C. Thomas, was made the payee of the note and mortgage. This instrument secured the balance due upon the first note with usurious interest. The plaintiff was informed by D. C. Thomas that he was procuring the loan from Thomas Thomas. The amount due on the first note, without deducting the amount of usury paid, was $95. The second note was due in ten months and was for $115. D. O. Thomas executed and handed to plaintiff a receipt for $18 for services in procuring the loan. But nothing was paid; the $18 was included in the note. No money passed to or from either of the parties in this transaction. It does not appear that the last note was ever in the hands of Thomas Thomas. D. O. Thomas acted as agent for his father and received certain payments made on the last note. „ The payments on the first note were also made to him. The first note D. C. Thomas gave to Lewis, who immediately returned it and took a receipt which specified that it should be held for — 629 — collection. All payments were made to D. O. Thomas. The agreement between him and Thomas Thomas was to the effect that the former should pay the latter the money received for loaning and ten per cent per annum interest, and retain all interest collected above the lawful rate, and commissions. This was the arrangement with both Lewis and Thomas Thomas. The court correctly instructed the jury that if the two notes were separate transactions the last one was not subject to the usury paid on the first, but if the last one was a continuation of the original transaction, was a renewal of the first, it was usurious. II. The court gave the jury the following instruction, which is complained of by defendant: í uauitx . note^SpSnc¡pai ana agent. “ In determining whether the first note was usurious or not, you are told that if D. C. Thomas loaned $100 to ErickS0IL an¿ t°°k his note for $120, drawing ten per cent interest per annum; that he did not say or pre£eriq that the money was not his own, and Erickson believed that it was Thomas’ money, then you should find that the first note was usurious; but if Erickson knew that Thomas was acting as agent for John Lewis, or any other third person, or if Thomas told him he was so acting, and he in fact was acting as an agent, then the note would not be usurious unless the party for whom he was acting authorized him to charge more than ten per cent interest, or had knowledge that he was doing so.” The instruction contemplates the facts that the note referred to was made payable to D. O. Thomas, and that plaintiff had no knowledge that the money was not really the property of the agent, but believed that it was. A person dealing with an agent in regard to personal property entrusted to him ,by the principal, without knowledge that the property is not owned by the agent, but supposing' him to be the owner thereof and the principal in the transaction, will possess all the rights that he would have acquired — 630 — had the transaction been with the real principal. See Story’s Agency, section 444. - This rule is applicable to the case before us. It is founded upon the plainest principle of law and justice. In support of his position that the instruction is erroneous .counsel for plaintiff cites Lee v. Chadsey, 3 Abbott, Court of Appeals Decisions, page 43, and Estevez et al v. Purdy et al, 66 N. Y., page 446. These cases, as well as Bell et al., Administrators, v. Oliver, 32 N. Y., 165, and Condit v. Baldwin, 21 N. Y., page 219, to the same effect, differ from the case before us in that the notes involved in the several actions were not made payable to the persons acting as agents. The note referred to in the instruction was payable to D. O. Thomas, and he was not known by the defendant to be the agent of Lewis. The fact that the notes were payable to the principals gave the respective makers notice that the persons with whom they dealt were agents. The defendant in this case had no notice of that kind. 2, evidence: wituSsVciectaxations. III. A witness was permitted to testify, against defendant’s .objection, that D. C. Thomas had said he would be a loser if this suit should be decided against defendant; the holder of the note would have recourse np0n him. The evidence was improperly admitted. It was clearly incompetent • to impeach the credibility of the witness D. C. Thomas, who had before testified, as no foundation had been laid for the evidence by directing his attention to the time and place where the declarations were alleged to have been made. Neither was it competent to show that the witness was interested in the suit, as a guarantor of the note of otherwise, in order to affect his credibility. Under the rules of evidence prevailing at common law, the interest of a witness renders him incompetent and may be •shown to exclude his evidence. Under our statute a witness is not incompetent by reason of interest, but it may be shown for the purpose of lessening the credibility of his testimony. — 631 — Code, § § 3636, 3637. Tlie rules relating to the admissibility of evidence showing the interest of a witness are the same at common law and under the statute. A difference arises only as to the effect of the interest, and consequently as to the time when it may be shown. At common law the court passes upon the evidence, and, if the interest be established, excludes the testimony; under the statute the evidence goes to the jury and is considered upon the question of the credibility of the witness. The difference above referred to does not extend to the manner of showing the interest of the witness. Decisions of the courts made at common law must, therefore, determine the question under consideration. It has been often held that the testimony for the purpose of establishing declarations of a witness, to the effect that he is interested in the event of the suit, is not admissible; it is regarded as mere hearsay evidence. Rich v. Eldridge, 42 N. H., 153; Vining v. Wooten, Cooke, Tenn., 127; Commonwealth v. Waite, 5 Mass., 261; Pierce v. Chase, 8 Mass., 487; Pallock’s Lessees v. Gillespie, 2 Yeates, 129; Young v. Garland, 18 Me., 409; Stewart v. Lake, 33 Me., 87; Cotchett v. Dixon, 4 McCoid, 311; Dunn v. Cronise, 9 Ohio, 82; Sims v. Givan, 2 Blackf., 461; Freeman v. Suckett, 2 J. J. Marsh., 390; Davis v. Whiteside, 4 Id., 116; Jones v. Tevis, 4 Lett., 25; Simmel v. Underwood, 3 Gill & John., 282; Walker v. Coursin, 19 Tenn., 321. A different rule was recognized in Denn v. Jones, 1 Cox’s Rep., 46; Anon., 2 Haywood, 340, and Colston v. Fichols, 1 Har. & John., 105. The last case was overruled in Stimmel v. Underwood, supra. Lucas v. Flinn, 35 Iowa, 9, is not applicable to the question before us. In that case a party to the action testified to a fact claimed by him to be relevant to the issues. A witness was permitted to give testimony of a declaration of the party in conflict with his testimony. This was held to be correct upon the ground that the fact testified to by the party was to be regarded as in issue in the case. — 632 — Other questions discussed by counsel need not be considered. For the errors in admitting the evidence above pointed out, the judgment of the District Court is Reversed,