Case ID: ny_23/html/0491-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court—Lott, J. Davies, J. (Dissenting).", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Dagal v. Simmons et al.
    
    An. answer is sufficient to set up the defence of usury to an action on a promissory note where it states an agreement, upon the application for a loan, to give more than legal interest, and that the lender deducted from the amount for which, with interest, the note was made “ about enough, as he said, to buy a barrel of flour, which amount, as the defendants believe, was seven or eight dollars.”
    The case oí Manning v. Tyler (21 N. Y., 567), considered and distinguished.
    Appeal from the Supreme Court. The judgment at special term was against the defendants on account of the frivolousness of their answer, and this was affirmed at general term in the third district. The defendants appealed to this court The complaint counted on a joint and several promissory note made by the defendants for the payment of $176, with interest, six months from its date, December 5th, 1855. The defendants put in' a joint answer, in which they averred that Simmons, being desirous of obtaining a loan of money, authorized the defendant Wooster to procure the same for him. “ And the defendant Simmons, upon information and belief, further says, that Wooster accordingly applied to the plaintiff for a loan.” It then states in substance as follows:
    
      That the plaintiff said he must have more than legal interest; that Wooster then agreed to give him more than legal interest; that the defendants then procured of the plaintiff $70, and gave him their note therefor, the plaintiff then saying that, in a short time, he would let them have more money. That in pursuance óf this agreement, on the 5th of December, 1855, the defendant Simmons received of the plaintiff, the former note of about $70, and bank bills and silver, sufficient to make together $175, the plaintiff taking therefrom about enough, as he said, to get him a barrel of flour, which amount the defendants believe was about seven or eight dollars. And the defendants then gave to plaintiff their note for $175 with interest.
    
      “ And the defendants further say, that said money was let as above-mentioned, and for more than the legal interest of seven per cent per annum, contrary to the statute, and the defendants charge and claim that said note in the complaint mentioned is usurious and void.’’ The answer was verified by both defendants as true of their own knowledge, except as to such matters as were therein stated on information and belief, and as to such matters they affirmed their belief of its truth.
    The cause was submitted on printed arguments
    
      Clarence Buel, for the appellants.
    
      R. A. Parmenter, for the respondent.
   By the Court—Lott, J.

The answer does not allege the facts and circumstances set up as a defence with such precision and certainty as ought to characterize a proper pleading; but the defects relate to the form, and not to the substance, of the allegations contained therein.

It avers that the note in question was given on a loan of $175 by the plaintiff to Simmons, one of the defendants, upon an agreement that more than legal interest should be allowed therefor, contrary to the statute, and that, in pursuance of such • agreement, the excess was deducted from the amount borrowed, The precise amount of such excess is not stated, it being alleged that the plaintiff took “ about enough, as he said, to get him a barrel of flour, which amount defendant believes was about seven or eight dollarsand then it is stated that the note was given for the entire amount of the loan, and it is payable, with interest, in six months from its date. These allegations, as I understand' the answer, are made by both of the defendants, although the defendant Simmons makes the statement as to the particulars of the negotiation for the loan on information and belief merely. This was carried on by his co-defendant Wooster for him, and not by himself personally. He consequently could not answer in respect to it as of his personal knowledge. The answer commences with an averment by both of the defendants “ that the note was given under the following circumstances,” which are then detailed (the defendant Simmons, as before stated, answering on information and belief as to these), and concludes with the further averment by both of them, “that the cause of action mentioned in the complaint in this action arose out of the above-mentioned loan*” and with the charge and claim that said note is usurious and void.

The facts and circumstances stated appear to me clearly sufficient to constitute usury.

The substance of the answer is, that the plaintiff received, in pursuance of an agreement to take more than lawful interest,, contrary to the statute, seven or eight dollars of such excess for the loan of the sum of $175 for the term of six months by the plaintiff to the defendant Simmons, and that the note in question was given to secure the sum loaned, with legal interest thereon. If more particularity was required as to the amount of such excess, application should have been made, under section 160 of the Code, to have the answer made more definite and certain by amendment. (Prindle v. Caruthers, 15 N. Y., 425.) It, however, contained a substantial defence as stated, and, on the trial, a variance as to the amount of interest would not have been material in the absence of proof that the plaintiff was misled. (Catlin v. Gunter, 1 Kern., 368.) It was settled by this case that the same rule is to be applied to the defence of usury which is applicable to other cases; and the case first cited shows that the allegations in the answer before us are sufficient.

The case of Manning v. Tyler (21 N. Y., 567), was materially different from the one under consideration, and does not aid the plaintiff. There the only allegation was, that the loan was at a greater rate of interest than at the rate of seven per cent per annum, without giving any particulars of the transaction ; and Bacon, J., in the prevailing opinion of the court, said of the answer, “It consists, in effect, of nothing more than a general averment that the note on which the suit is brought is void for usury.- It does not aver what the usurious agreement was, between -whom it was made, the quantum of usurious interest that was agreed upon and received, nor that the agreement was intentionally usurious and corrupt:”, and he adds, that “ everything stated in that answer may be true, and yet no usury whatever may have existed in the transaction; since there may be many cases where more than seven per cent is actually received on a loan, and yet the transaction be entirely uninfected with usury, and the law will never presume a corrupt and usurious, or, indeed, any other unlawful agreement, from a state of facts that is equally consistent with a lawful purpose.” It is manifest, therefore, that the decision in that case was based on the ground that there were no facts or circumstances alleged on which to found the charge of usury, and has no application to a case like that under review, where all the details are set forth. These, as stated, show the transaction to be usurious, and constitute a good defence.

The judgment rendered against the defendant was therefore erroneous, and must be reversed, and the case must be sent back for trial.

Comstock, Ch. J., Selden, Denio, Mason and Hoyt, Js., concurred.

Davies, J. (Dissenting).

This case falls directly within the principle settled by this court in the case of Manning v. Tyler (21 N. Y., 567). We then affirmed a judgment holding an answer, not unlike that in the present case, frivolous. This answer does not at all come up to the rule laid down in the dissenting opinion in that case. It was there said “the cases are numerous and decisive, which hold that the terms of the usurious contract should be stated, so that it shall appear what rate or amount of interest was taken or accrued, and on what sum and for what time.” The answer in this case is singularly defective and obscure, and its uncertainty and ambiguity, create a strong suspicion that the defence suggested is sham, and has no foundation. If a usurious agreement had been made, and consummated by the taking of unlawful interest, it could- have been clearly stated, and as the answer was to be upon oath, it must necessarily have been truly stated. I think if these defendants had in truth any such defence, they would have spread it upon the record, and verified it by their oath. Their omission to do so, and the bungling attempt to indicate one in the most ambiguous and indefinite way, lead my mind to the conclusion, that none such in fact existed. The judgment of the special term upon this answer was right, and the judgment appealed from should be affirmed.

James J., also dissented.

Judgment reversed, and a trial ordered.