Case ID: scl_12/html/0350-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Justice Bay\n    ", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Abraham Motte vs. Robert Dorrell.
    Where a person gave a note of g 500, for valuable consideration, payable sixty days after date, and when it became due, in order to obtain the further time of sixty days, gave his due bill for fifty dollars, and took a renewed note for jg 500, payable sixty days after date, the court Held the transaction usurious, and that the note of jg 500, as well as that for $, 50, was void under the Statute; for, it seems, every renewal of a note .is a new contract. — 
    
    Charleston Court of Appeals, May Term, 1821. Motion for a new trial.
    Fin r 11 HIS was an action of assumpsit, brought by the holder of a note of hand against the. indorser, tried before Judge Bay, in January Term last. The note was drawn by George K. White, at GO days, for 500 dollars, in favor of Robert Dorrell, the defendánt, and indorsed to the plaintiff. The hand-writings of the parties were admitted, and also regular notice of non-payment to the indorser; and the plaintiff rested his case.
    The defence set up, was usury. That the note in question was a renewal of a former note for the name sura of 500 dollars ; and that the plaintiff who was the holder of this original note, at the time when he consented to take this second note, required 5.0 dollars for his forbearance for 60 days, which was accordingly consented and agreed to by the drawer, Mr. White; tvben the latter note tras drawn for the above sum, payable at GO days. A due bill was reserved and taken by the plaintiff for 50 dollars for the forbearance above mentioned. .And to prove this fact, the maker of the note, Mr. While, was offered as a witness. To his competency, the plaintiff objected :
    1st. Because he, the plaintiff, under the act of assembly, offered to swear there was no usury in the note; and,
    2dly. Because he was a party interested.
    Upon which a release was tendered by the defendant to Mr. White, to remove all doubts as to his competency.
    As this was an action against the indorser only, and the drawer was not a party to it, i't appeared to the court that White, the drawer, wh*o had in the mean time become insolvent, stood perfectly indifferent between tire two parties in this suit, and on that ground was competent; but as a release had been given him by the defendant, it removed every ground of mcompeiency out erf the way.
    And as to the offer of the plaintiff to swear, under the act, that there was no usury in the transaction, the court was of opinion he was only permitted to be a witness under the statute, in the total absence of all common laxv testimony ; but where there was legal evidence offered to be given in the case, his partial evidence of a denial ought not, according to the rules of law, to be admitted.
    Mr. White was therefore sworn to give testimony. The witness then proved that the original note was fair in its origin between Dorrell and himself. But that to procure the indulgence of 60 days longer, after the note became due, he applied to the plaintiff, to whom the first note had been indorsed, before it became due, and who "was the bone fide hold er of it, for leave to renew it; to which he consented on giving him SO dollars for forbearance 60 days longer. That accordingly another note was drawn at 60 days, and indorsed by defendant, which was the one on which this action was founded for the like sum of 500 dollars, and at the same time, he, the witness, gave the plaintiffs, due bill for the 50 dollars for this forbearance, which pre-tniam due bill was afterwards blended, with other transactions between them, and was now incorporated in a duo bill for 100 dollars ; but neither of them was the cause oi action in the. present suit. Mr. White further proved that the premium due bill still remained unpaid ; and that lie, himself, was utterly insolvent, and utterly unable to pay the same ; but the plaintiff had a judgment against him for it. Mr. Darrell was a mere friendly indorser for him, and knew nothing of these transactions.
    
      Christian 31. Logan, a witness for the plaintiff, stated that he hod been the broker who negotiated the business between the plaintiff and White, when the original note of '500 dollars was passed away to the plaintiff, who paid him dollar for dollar for the same : but he knew nothing about the renewal of the hole on which this suit was brought.— That White once offered to mortgage property for payment of it, which the plaintiff refused, on the ground as he alleged, that White had no title to the property he offered to mortgage.
    Here the testimony on both sides closed.-
    In charging the jury, Judge Bay told them that our act of 1777, changed the rate of interest from 8 to 7 per cent.; but in every other respect it was the same as the British act against usury ; consequently all the British authorities in’the books would apply in this country. That by our act of Assembly, whenever more than 7 per cent, per an-num was reserved on any contract for forbearance, or giving day for the payment of mo’ncy, it was usurious; and would not only render every such contract null and void, hut would also suhject the lender- to treble the value oí die monies, goods, wares and merchandizes, or other things of value so lent; one half to be paid into the treasury, and the other to the person .who should sue for the same. That so strict was the act in this respect, that no shift, device or pretext whatever could elu<;le or evade the beneficial effects of it. That with regard to the facts of this case, they were for the consideration of the jury ; and if they should be of opinion that .this 50 dollar-due bill was given for forbearance money for 60 days, when this renewed note was given and accepted by the plaintiff, then in his opinion, it would constitute usury, whatever might be the form or pretext made use of to elude it, as they were cotemporaneous debts j one given for the acceptance of the other, which might well be considered as different parts of the same transaction. But that if the original note, which was fair in its creation, had remained in the plaintiff’s hands, uncancelled and not destroyed, and this or any other due bill had been given for forbearance for 60 days, such due bill only would have been considered as usurious; but the original fair transaction would have remained good and valid in law ; and this was the true distinction which would be found to run through all the cases in the books upon this subject: Whereas, on the contrary, it appeared in this case that the original fair note was given up or cancelled, and a new contract made by giving and taking this new note for 500 dollars, tinctured with the. usurious transaction of this premium due bill, which, in liis opinion, made the whole usurious.
    The jury, without any hesitation, found for the defendant.
    • A motion was now made for setting aside the verdict, and for a new trial, on the ground of misdirection of the ' Judge in the court below, and that the verdict was against law and evidence.
    
      
      
         Quere? If it should not be so considered in esses of judgments confessed, and mortgages given to secure an indorser for indorsing notes to be renewed in bank ? Persons are daily in the habit of giving such judgments and mortgages, and we have always thought that they would be postponed to subsequent judgments or mortgages given for a debt actually due, and more especially after the original note, for the indorsing of which such security had been given, has been changed, and, by a renewal, a new .one substituted. (See Roberts on Fraud. Conv. 489-) — R.
    
   Mr. Justice Bay

delivered the opinion of the court.

I have again given this case the best consideration in tny power since the argument; and from a review of the law authorities upon the subject, I am of opinion thdt there are no grounds for setting aside this verdict. One uniform principle seems to fun through the whole of them, namely, that where the original contract is not usurious, it shall never be made so by matter expost facto, (Buls, p. 17. 7 Bac. Tit. Usury, 200, also, Ord On Usury, 100 and 101, 1 Wm. Black. Rep. 462,) as where a man lends money on a legal interest, and after a subsequent agreement is made for more interest, which is usury, that will not avoid the first contract; per Holt, Chief justice. (7 Bac. 20O. Ord On Usury, 100. 1 Saund. 294. Crok. Eliz. 20.) But where there be a corrupt agreement at the time of making the contract, or lending the money, then the bonds and all assurances are void. (1 Mod. 69.) So, in like manner in 2 Mod. 307, it is laid down, that to avoid a security, by reason of usury, the contract itself must be usurious to make it void. And in Hawk. P. C. chap. 82 and 21, it is laid down that it is not material whether the payment both of principal and the usurious interest be secured by the same or different conveyances, but all writings whatever for strengthening such a contract are void. (7 Bac. 200.)

Now to apply the circumstances of this case to their legal principles, there can be no doubt, as I mentioned in my charge to the jury, that if the plaintiff had retained the first' note in his hands, which was fair and good when drawn, and at the time it became due, had taken this premium due bill, or any other instrument for forbearance for sixty days longer, which was more than 7 per cent, for the use of the 500 dollars for that time, such due bill or instrument only would have been usurious, while the original note would have remained unimpeachcd in the hands of the holder. But here the original contract was rescinded, and a new one entered into, (for I take every renewal of a note to be a new contract,) and at the time when this new contract was made, this 50 dollar premium note was given for the forbearance of the payment for 60 days ; and although it is made payable by a separate instrument made so instante, it must be considered as a part of the said new contract, which makes the whole usurious.

I am therefore of opinion that the rule for a new trial should be discharged.

Justices Colcock, Nott, Huger and Gantt, concurred.