Case ID: misc_7/html/0429-01.html
Source: Caselaw Access Project
Author: {"author": "McCarthy, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Frederick C. Leubusher, Respondent, v. William M. Ruffhead, Appellant.
    (City Court of New York—General Term,
    March, 1894.)
    An answer in an action against the last indorser oí á promissory note alleged that the note was made without consideration; that no consideration existed for the prior indorsements-; that it came into defendant’s hands solely for the purpose of procuring its discount and had no vitality or legal inception prior to the transfer to plaintiff, and that such transfer was made in pursuance of a usurious agreement. Held, sufficient on demurrer.
    
      Appeal from judgment entered upon order sustaining demurrer to answer and awarding judgment in favor' of plaintiff.
    
      If. O. Milnor, for appellant.
    
      Lorenz Zeller, for respondent.
   McCarthy, J.

Plaintiff demurs to the answer of the defendant on the ground that it is insufficient in law on the face thereof.

The action is upon a promissory note and is against an indorser, the last of several indorsers. The answer shows that the note was made without consideration by the maker, and that no consideration existed for the various indorsements, and that it came to the hands of the defendant solely for the purpose of procuring the discounting of the note, and that prior to the transfer of the note to the plaintiff the note had no pre-existing vitality and no legal inception. It then sufficiently-alleges that the transfer of the note' by defendant to plaintiff was made in pursuance of an usurious agreement and was in violation of the statutes of this state. The issue of law thus raised was brought on for argument, and the judge at Special Term rendered the following decision: “ Demurrer sustained. The plaintiff had a right to purchase note in suit at the lowest possible price that defendant was willing to take for it. The transaction was not usury, but merely a sale of the note.”

The justice at Special Term by the demurrer was called upon to determine whether or not the defense of usury was properly pleaded in the answer, and not to determine the merits. ' ■

By the demurrer the facts pleaded were conceded to be true. We .think that "this plea of usury is sufficiently set forth. See National Bank v. Lewis, 15 N. Y. 516, 519.

The question whether the note was void for usury depends upon the point whether it had its inception before it was transferred to defendant or plaintiff. In Eastman v. Shaw, 65 N. Y. 527, Dwight, J., says: “ The inquiry is not * * * whether the note is accommodation paper, but it is the more broad proposition whether an action could have been maintained upon it before transfer.” Again he says, “ If no party to the note who is prior to the holder could himself bring an action upon it against the maker, then no prior party ever owned the note, and the holder, being the first owner, must be held to have loaned the money to the maker, through the prior parties, who were only agents of the maker; on the other hand, if any prior party could have maintained the action, he owned the note and sold it to the holder.”

The answer, alleging that nothing was given or received by either the maker or indorser, and that prior to the transfer to plaintiff this note had no vitality or legal inception, and thereupon alleging a corrupt and usurious agreement between the plaintiff and defendant, was sufficient.

The justice erred in sustaining plaintiff’s demurrer and awarding him judgment.

The judgment and order sustaining demurrer should, therefore, be reversed, with costs to the appellant.

Van Wyck and Mewburger, JJ., concur.

Judgment and order reversed, with costs to appellant.