Case ID: ny-sup-ct_22/html/0564-01.html
Source: Caselaw Access Project
Author: {"author": "Bocices, J,:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

THE NATIONAL BANK OF GLOVERSVILLE, Appellant, v. JOHN W. PLACE and CALVIN W. THOMAS, Impleaded with others, Respondents.
    
      A usurer cannot set up his own, uswry to avoid, his agreement.
    
    In an action against the indorsers of a promissory note, they alleged that they had been discharged by an extension of time given -without their consent to the maker. Plaintiff claimed that the extension was invalid, because its consideration was an usurious bonus exacted from the maker.
    
      Held, That it could not set up its own usury to invalidate its agreement.
    
      Billington v. Wagoner (33 N. Y., 31) followed.
    
      Appeal from a judgment in favor of the defendants, entered ■ upon the verdict of a jury, and from an order denying a motion for a new trial, made upon a case ond exceptions.
    
      Parkhurst <& Baker, for the appellant.
    Dudley, Dennison <& Dudley, for the respondents.
    The plaintiff cannot raise the question of usury to avoid the agreement to "extend. Because only the party paying usury can raise that question. (Billington v. Wagoner, 33 N. Y., 31; Draper v. Prescott, 29 Barb., 401, 404, 405.) The plaintiff received and held :the consideration for the extension, and cannot now be heard to allege the contract void for any reason, while holding the consideration received by it, (Place v. McIlvain, 38 N. Y., 96.) The plaintiff is a national bank, organized under the laws of the United States, and the laws of this State relating to usury are not ■applicable to it. (Farmers and Mechanics' Nat. Bank v. Dearing, Thompson’s Nat. Bk. Cases, 117; 91 U. S. Rep., 29.)
   Bocices, J,:

It is, of course, admitted that the giving of time to the principal, by a valid agreement with him having that effect, without the consent of the surety, operates as a discharge of the 'latter ; and this lade of law applies as well to indorsers on commercial paper as to sureties in the strict sense of that term.

In this case the defendants, Place and Thomas, indorsers of the note in suit, set up the defense, that time of payment had been given the makers of the note without their consent. The jury found the issue in favor of the defendants.

The consideration of the agreement of extension as alleged and found was the payment, by the makers of the note, to the bank, of twenty-five dollars bonus. The court instructed the jury, in effect, that if they should find in favor of the defendants as to the alleged agreement of extension, the latter would be entitled to their verdict; and refused to instruct them that if the consideration of the agreement was a bonus over and above the legal interest on the note, then that the agreement would be void for usury, and therefore would not bar a recovery against the indorsers.

If this ruling be right, it must be justified on the ground that the plaintiff, holding the position of a usurer, cannot insist upon the invalidity of the usurious agreement. This precise question Avas determined in favor of tho defendant’s in Billington v. Wagoner (33 N. Y., 31). There the agreement, as here, >vas one of extension of the time of payment of a note ; and it was also, as here claimed by the plaintiff, that the agreement Avas void for usury. So the question there, as it is here, Avas .this: .“assuming that the agreement made by the plaintiff Avith the principal debtor Ayas usurious, and therefore, in the language of the law, void, ,c,an the plaintiff interpose that objection?” The question Avas answered in the negative; and the remark of Judge Gbidlev in La Barge v. Herter (4 Barb., 346), was quoted and approved; tq wit, that “it is the victim of the usury, and not tho .usurer himself, that can set up against a contract that it is usurious and void.’,’ This case Avas affirmed in the Court of Appeals. (9 N. Y., 241.) It Avas definitely hold in Billington v. Wagoner, that tho objection to a contract that it was void for usury, can only be set up by the party bound by the original agreement to pay the sum borrowed, or his sureties, heirs, devisees, or personal representiitives; that tho usurer himself cannot interpose the objection. It should be also here remarked, that in each of the cases above .referred to the point was taken, as it is here, that although a party to a fraud is estopped from setting it up for his oavii advantage, yet if his opponent alleges and proves it as a part of his own case, the guilty party Avill then be entitled to the benefit, Avhilq he incurs the disadvantages resulting from such a state of things.But this principle Avas held, in the case cited, to be irrelevant to a case like this for tho reasons there given. I have quoted freely from the cases cited, .as the subject here tinder consideration was there carefully examined on principle and authority, and was definitely determined. A reference to the cases theretofore decided, bearing on the question under examination, can answer no useful end here, as they are there collated and commented on. I am not aware, that the decision in Billington v. Wagoner has ever been questioned; but I do find that it has been in several cases cited with approAgil. (Williams v. Tilt, 36 N. Y., 326; Mer. Ex. Bk. v. Com. Warehouse Co., 49 id., 643, note op bottom qf page.) Also see remarks of Wpop-: ruff, J., in Winsted Bk. v. Webb (39 N. Y., 331); Fernan v. Doubleday (3 Lans., 216). The case of Fernan v. Doubleday is not in point in this case, except as it recognizes the binding authority of Billington v. Wagoner, inasmuch as in Fernan v. Doubleday the usurious agreement remained unexecuted. The court took the distinction between a case where usury is paid down, and one where it is only agreed to be paid; between a contract executed and one executory. In the case in hand, like that of Billington v. Wagoner, and of Draper v. Trescott (29 Barb., 401), the usurious contract was fully executed. The case of Church v. Maloy (70 N. Y., 65), does not conflict with Billington v. Wagoner, as will bo seen on referring to the facts and question there under discussion; although the syllabus of the case seems to roach the question here under examination. Billington v. Wagoner is not overruled by Church v. Maloy; indeed, is not referred to in the latter case, and for the reason that the question discussed and. settled in the Billington Case is not in the Church Case at all. It is suggested that the proof does not show an actual payment of the twenty-five dollars bonus in this case. We think otherwise. But certainly there was a case made for the jury on the evidence, and the verdict must be acccepted as conclusive of this question of fact. On the authority of Billington v. Wagoner the case seems to have been properly disposed of at Circuit, and the judgment and order appealed from must be affirmed, with costs.

Learned, P. J., and Boardman, J., concurred.

Judgment and order appealed from affirmed, with costs.