Case ID: ohio-st_24/html/0486-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Alexander McCoy v. William Stranathan.
    A debtor of an estate, in settling with the executors, allowed usurious interest on his indebtedness. In payment of the amount found due, he gave-his notes to a legatee, who accepted them in part payment of his legacy. In an action on the notes thus given, the debtor can not, by way of defense, set up the usurious interest allowed the estate, although the-legatee was one of the executors with whom the settlement was made.
    Motion for leave to file petition in error to the District-Court of Guernsey county,
    William Stranathan, defendant in error, and his brother James, were executors and legatees of the estate of their father, Samuel Stranathan, who died testate in 1868, and as such executors held three notes of Alexander McCoy,, plaintiff in error. Two of- the notes bore six per cent, interest, and the other ten.
    By an arrangement and settlement made July 17, 1869,. between the executors and McCoy, the amount found due the estate from McCoy on his notes, including eight per cent, interest on the notes bearing only six per cent.,. was $11,638; and the notes were then surrendered to McCoy, and in consideration thereof, .he gave William Stranathan his new notes for the amount so found due, who received them as a payment of a part of his legacy.
    In an action by William Stranathan against McCoy on the notes and mortgage, McCoy set up, by way of defense, that usurious interest was included in the notes sued on.
    
      J. W. White, for the motion.
    
      JET. Skinner, contra:
    By the transaction, new obligations were entered into, and new rights were acquired, by each of the parties. As between William Stranathan and the estate, he assumed an obligation to account for, and did take, $10,500 of the assets. McCoy not only assented to this as the true sum, but was a party in inducing William Stranathan to engage thus with the estate. McCoy is therefore estopped now from going back of his agreement, because to permit him to do so would prejudice both Stranathan and the estate. Herman on Estoppel, secs. 325, 327-330, and cases cited.
    By the settlement of July 17,1869, the $11,633 due the estate, as the parties then computed it, was paid. The usurious interest, if any existed, passed to the use of the estate. McCoy was released from all liability to the estate.. His debt was satisfied. It was a payment of so much to the executors, and they, as such, must account for the same. And Stranathan, as legatee, received from the estate $10,500, and as between him and McCoy, no usurious interest is incorporated into that sum.
    The transaction between Stranathan and McCoy was a borrowing by the latter from the former of $10,500. It had all the elements of a loan. The contract was consummated, and by it Stranathan was creditor, and McCoy debtor, for $10,500. Busby v. Finn, 1 Ohio St. 420; Cornwall v. Gould, 4 Pick. 444; Story on Bills, sec. 441; Shinkle et al. v. Bank of Ripley, 22 Ohio St. 516, 525.
    
      The transaction was a novation under the civil law, the original debt being satisfied and extinguished. 1 Parsons’ Cont. 187,191.
   By the Court.

By the arrangement between the parties, the indebtedness of McCoy to the estate was discharged by his assuming to pay the amount of such indebtedness on the legacy coming to 'William from the estate. McCoy having given his notes to William in pursuance of this' arrangement, which the latter accepted in part payment of his legacy, thereby discharging the estate from liability to him for that amount, McCoy is estopped from setting up the usurious interest allowed the estate on settlement, against the notes given to William. These notes were given upon a new consideration, and to a new party, and are not affected by the usury exacted on the indebtedness of McCoy to the estate, notwithstanding the fact that William was one of the executors.

Leave refused.