#### *John Cantey, Executor, vs. John J. Blair et al.*

It is a ground of relief in Equity, that a party has, since a trial at law, .discovered evidence, of which he had no knowledge, and which, with due diligence, he could not have discovered before the trial; and such newly discovered evidence need not be in writing.

The principal to a bond is not a competent witness for his surety, to prove that the bond was usurious, or that he had made paymer ts thereon.

Where a bond, executed by a principal and his surety, was originally usurious, *Held,*that it was not divested of the taint of usury, as against the surety, because the lender, afterwards, inadvertently advanced to the principal the whole amount oí the bond.

The assignee, for valuable consideration, without notice of a judgment, cannot be placed on a better footing than the assignor.

*Before*Harper, Ch. *at Kershaw,*June, 1843.

The Chancellor. On the 10th March, 1829, Henry T. Can-tey, the complainant’s testator, executed a bond to General James W. Cantey, conditioned for the payment of $2000, which bond the said James W. Cantey afterwards assigned and delivered to the defendant, John J. Blair. On the 16th February, 1830, the said Henry T. Cantey and James W. Cantey executed their joint and several bond, payable to the said John J. Blair, conditioned for the payment of $3,337 50, which was delivered to the said John J. Blair, some time after its execution. The defendant, John J. Blair, after the death of complainant’s testator, brought suit on these bonds against the complainant, and at March term, 1834, recovered judgment, which was signed and execution issued.

The complainant charges by his bill, that he made no defence at law, not knowing of any defence which could be made, but that very lately, and since the rendering of the judgment, he has discovered that the said bonds were given and transfered upon an usurious contract. He alleges that the bond of the 10th March, 1829, was without any consideration, bufr was given by the said Henry T. Cantey to James W. Cantey, to enable him to raise money. He also alleges, that Henry T. Cantey joined in the execution of the bond of the 16th February, 1830, solely for the accommodation of the said James W. Cantey, for the same purpose of enabling him to raise money, and without any consideration moving to himself. The bill also charges, that various payments have been made by James W. Cantey, on the said two bonds or judgments, for which the defendant has failed *42to give credit. He charges that the defendant is proceeding to enforce his execution, by levy on the estate of Henry T. Cantey, and that there is in the hands of the sheriff a considerable fund, the proceeds of the sale of that estate. He submits to pay the amount actually due, with the lawful interest. It appears that the defendant has assigned to Mrs. C. McKinon and to William McWillie, Esq. several portions of the said judgment, for valuable consideration. The defendant, by his answer, denies that when he purchased the bond he knew that it was a voluntary bond as between Henry T. and James W. Cantey ; he denies that he purchased the said bond at an usurious discount, but paid the full amount secured by the face of the condition, abating only the legal discount. I regard it as immaterial whether the defendant knew this or not. The bond was shewn to be voluntary, and it is well settled that a bond or note given for the purpose of enabling the payee to raise money, and purchased for less than the legal rate of discount, is affected with usury in the hands of the purchaser.

With respect to the bond for $3,337, he admits that it was executed to him to secure money which he was to advance to James W. Cantey, at 20 per cent, discount. He states that he did accordingly make advances to the said James W. Cantey, at various times subsequently. But he states that by a late examination of his accounts, that instead of paying 20 per cent, less than the condition of the bond, he is induced to believe, by various receipts, that he has actually paid considerably more.

The defendant positively denies that any payments made to him by James W. Cantey were to be applied to the bonds or judgments in *question;*but, on the contrary, were to be applied to another bond made by the said James W. Cantey alone, and that this was fully understood between the payer and receiver. He pleads the judgment at law, in bar to any proceedings in this court.

The principal witness offered was James W. Cantey an objection was taken to his testimony, on the ground of his interest, but it was received, subject to the exception. I am of opinion that in a legal point of view the witness was indifferent in point of interest, and therefore competent. It is hardly necessary to state the well known rule, that to disqualify a witness, the interest must be direct. He must either gain or lose by the event of the suit, or the judgment must be evidence for or against him in a future suit. Certainly the witness will gain *43or lose nothing by the event of the present suit. He is not a party to it, and if by his evidence the payments made by him should be appropriated to the two bonds in question, he would remain liable to the same extent on his individual bond. Could the decree in favor of the complainant be evidence for the witness in any other suit, take the instance of the latter bond, the joint and several one! — suppose the complainant to be relieved upon the ground of usury, and an action to be afterwards brought on the bond against the witness, certainly the decree would be no evidence for him. It is *res inter alios acta,*as I have said in the case of *Gist vs. Davis*and others, 2 Hill Ch. 348, in reference even to the case where the surety, being sued, had given notice to the principal to defend the suit. But though the principal had had notice of the suit, and had in fact defended it, and failed, the verdict would have been no evidence in a subsequent suit by the payee against the principal. Or suppose the decree to be against the complainant, and that.he should be compelled to pay the money, the decree might be evidence in a suit against the witness ; not as a judgment by which the witness was bound, but to make out the fact of the payment of the money. If he had paid without suit, the fact might be equally well made out. Similar reasoning would apply to the bond for $2000 ; if complainant should defend himself by the* witness’s testimony, and the witness should be afterwards sued on the guaranty created by his assignment, the decree in favor of the complainant would certainly be no evidence against him ; his assignment binds him to guaranty against any such defence.

But it is not necessary to consider further in relation to this bond. We come now to consider the merits of the defendant’s plea. I certainly agree with the argument on the defendant’s part, that there is nothing in the defence of usury to make it different from any other defence, and that if the party neglect to avail himself of it at law, when it was in his power to do so, he has no title to relief in this court. I agree also, that when a party comes into this court, on the ground of newly discovered evidence, he must shew some tangible and substantial fact, constituting of itself a defence, of which the evidence had come to his knowledge since the trial ; not particles of testimony, as they are called, or accumulative testimony, which might have influenced the jury more or less in finding their verdict, one way or the other. So, if it be known to the party that his true defence is confined to the knowledge of the plaintiff at law, and *44he neglect to file his bill for discovery before verdict had. So it is said, as in the case of *Woodworth vs. Van Buskerk,*1 Johns. Ch. 433, that it is a rule at law, that a party going voluntarily to trial, goes at his peril, and he cannot have a new trial merely to give him an opportunity of impeaching the testimony of a witness of whom he was apprized before hand, and of the very purpose for which he was called. It is added, he must at least shew that he has since discovered testimony of which he had no knowledge before the trial. But there was one position contended for on the part of the defendant, for which I have not found any authority, viz ; That the newly discovered evidence must be in writing. The instance put in *Ganisborough vs.*Gifford, 2 P. fm’s. 426, and in *Williams vs. Lee,*3 Atk. 224, of a receipt discovered after the verdict, or that the plaintiff’s books are crossed, if indeed the latter case be called a discovery of written evidence, seems to be given by way of example. In the latter case Lord Hardwicke supposes the case for relief to be when the plaintiff knew the fact of his own knowledge, and what the jury find by their verdict. and the defendant was ignorant of it, and puts the case of a receipt. I suspect some misreporting, for the plaintiff would be at least as likely to forget the existence of the receipt, as the defendant, in whose possession it was. All the cases concur ‘hat the newly discovered evidence must be such as the defendant at law could not have discovered with due diligence before the trial. And there might well seem a want of due diligence in not discovering a paper which was in his own possession. I have examined the various cases referred to in argument, and in all of them, as in *Bateman vs.*Willoe, 1 Sch. <fe Lef. 201; *Winthrop, Todd and Winthrop vs. survivors of Lane, son and*Fraser, 3 Eq. Rep. 310 ; *Lansing vs, Eddy,*1 Johns. Ch. 51; *Simpson vs. Hart,*lb. 96 ; *Barker vs. Elkins,*lb. 465; and *Floyd vs. Jayne,*6 Johns. 479 ; and in all of them I find it to be laid down as the general rule, that this court will not relieve against a judgment at law, on the ground of its being contrary to equity, unless the defendant below was ignorant of the fact in question pending the suit, without any distinction as to the fact’s being evidenced by writing or otherwise. To this must be added, that the party had no means of discovering the fact, by exercise of due diligence, or if the evidence rested in the knowledge of the plaintiff at law, had no means of knowing that fact, so as to put him upon filing a bill of discovery. In the case of *Floyd*
      *45
      *vs. Jayne,*a payment had been made, as it was alleged, without the presence of any witness, without taking up the note on which the money was due. After recovering on the note at law, the newly discovered evidence offered, was that of several witnesses who had heard the defendant confess the receipt of the money. The bill was dismissed, on the ground that two of the witnesses had intimated what they knew to the defendant before the trial, and that another witness had been present at the payment, so that there was negligence on the part of the defendant at law. But there was no intimation that if such negligence had not existed, the newly discovered evidence was not of such a character as to authorize relief in equity. Then, if usury existed, has it been discovered since the verdict at law ? That one was ignorant of the fact, is not strictly susceptible of proof, but the allegation is made as that of a fraud having been discovered within four years, to put the opposite party upon proof of knowledge. But the complainant in the present case has come as near the proof of a negative as is perhaps possible in any case. In the first place, he had no means of knowing ; he was not privy to the original transaction between the parties. Mr. Sal-mond, who, as President of the Bank with which General J. W. Gantey had dealings, was interested to know the state of his affairs, testified that he did not come to the knowledge of Gen. Gantey having borrowed money on usury, until after execution of the second bond, and that he gave notice of it to the complainant,-on the 8th or 9th February, 1842, who appeared sur-prized at the communication, and immediately directed the present bill to be filed. It was explained that Henry T. Gantey was in the habit of lending his name as drawer or, endorser to J. W. Gantey, and the latter would be naturally anxious to conceal the circumstance of his borrowing money on usury, in order to preserve his credit. James W. Cantey, himself, testifies that no one knew of the usury except Salmond and ‘himself, and that he never communicated it to the complainant. He states that when complainant enquired of him the consideration of thése bonds, he told him generally that they were for money borrowed, thus leading him naturally to the conclusion that there was no defence against them. Then we come to the proof of usury ; this is positively denied,, with respect to the first bond of $2000, by the defendant’s answer. There is no proof except the testimony of James W. Gantey ; *46here, I think, the rule applies, which requires more than one witness to discredit the defendant’s answer.

I do not perceive that there are circumstances in favor of either one side or the other. If it be said that the defendant has been guilty of usury with respect to the second bond, it may also be said, that he has admitted it. The defendant admits in his answer, that the agreement was that he should retain a discount of twenty per cent., but to avoid the imputation of usury, he states that he made advances to James W. Cantey, from time to time, as his necessities required, by checks and otherwise, and that inadvertently, by mistake as I understand it, he actually advanced to him more than the amount on the face of the bond; but this can have no effect. The agreement was either usurious or otherwise, at the time it was completed and the bond delivered. It could not effect the usurious character of the transaction, as to one of the obligors, *that the*obligee has paid more by mistake to the other. Both bonds, however, are now merged in the judgment, and the entire judgment will be opened to investigation in the reference which I shall direct. Perhaps more satisfactory evidence may be produced than has appeared before me, so I shall say with regard to the payments alleged to have been made by J. W. Cantey, it is not proved that these payments were directed to be applied to the two bonds in question. It is positively denied by the answer, which is contradicted only by the evidence of a single witness. The only testimony which was produced, the letter of J. W. Cantey to the defendant, tends to support the answer. But this is properly matter of reference, and the evidence in relation to it was not regularly introduced before me. The claim of McWillie to a portion of the judgment is not contested, and that of Mrs. McKinon must be supported, as that of a purchaser for valuable consideration without notice. This is immaterial, however, to them or the complainant; all the parties are before the court, and the defendant must make good to any of them, any injury they may have sustained in consequence of his illegal act. If he had assigned the whole judgment, complainant, having paid it, would be entitled to be reimbursed whatever he had paid beyond the amount actually advanced, and lawful interest; in that case, in making up the account, the defendant would be charged with the entire amount of the jugment, and credited with what he appeared to have actually advanced on the bond. As it is, he must be charged with the amount of such portions of the judg*47ment as he has assigned, and credited in like manner, and must be restrained in proceeding to enforce his judgment beyond the amount that shall be found due to him on such accounting.

It is, therefore, ordered and decreed, that it be referred to the commissioner to take an account of the sums actually advanced by the defendant on the bonds in question, and of the moneys paid to him on account of said bonds or judgments, charging him with portions of the judgment assigned, as so much money paid. The defendant to pay the costs.

The defendant now moved this court to reverse the decree, on the following grounds.

1. Because the Chancellor erred in admitting the testimony of J. W. Cantey as a witness for the complainant, he being one of the obligors to the joint and several bonds which the bill seeks to impair, and incompetent, as well therefor, as by reason of his interest.

*2.*That the complainant has no right to the interposition of this court, to avoid a judgment of the court of law, by matter of defence allowable in that court, and which, by proper diligence, he could have there submitted in the action on which the said judgment is founded.

3. That the complainant has no claim to the interposition of this court, having failed, in the case at law, to put himself in the position to submit any defence.

4. That the Chancellor erred in deciding that the fact of the defendant having advanced on the second bond more than the actual sums called for by its face, could not affect the original transaction; the appellant respectfully submitting, that equity will look to the true state of the facts, to sustain his lien obtained in the court of law, and will not impair the judgment of that court, by reason of the original contract having been founded on an usurious consideration, when it has been made to appear that the consideration really given was not affected with usury.

5. That the bill charging payments, and calling on the court to enjoin the judgment at law by reason of such payments, and interrogating the appellant specifically thereto, his Honor erred in ordering a reference upon them, the answer denying that any were made — contradicted only by one witness, and no circumstances, as the Chancellor in his decree admits.

*Preston and Moses,*for the defendants.

*W. F. Desaussure,*contra.

*48
      *Curia, per*Johnson, Ch.

The leading question involved in the grounds of this appeal, is as to the admissibility of James W. Cantey as a witness for the complainant, and that seems to have been distinctly settled in the case of *Endicot vs. Gillam,*decided in the Court of Appeals in 1828, in connexion with the case of the same plaintiff against *Briggs.*They are not reported, but will be found in the 4 vol. of the M S. Records of the Appeal Court. They were separate actions on a joint and several promissory note given by the defendants to the plaintiff. The defence relied on was, that the note was given for an unsound horse, and in the case against Gillam, Briggs, the actual debtor, was called to prove the unsoundness of the horse, and it was held that he was incompetent, on the ground of interest. That rule is directly applicable here, and I incline to think that there are circumstances in this case which tend to strengthen the objection to the competency of this witness. The .object of calling the witness James W. Cantey was to prove that the bonds were usurious, and that he had made payments on them to the defendant Blair. If established, the effect would be to reduce the amount of the judgment against the complainant, by the extent of the usury, and the amount of payments. The complainant could, therefore, have recovered against the witness only the amount which he would be compelled to pay on the judgment, and it might, I think, well be questioned, whether the satisfaction of that judgment would not be a bar to an action on the same bonds against the principal. If that be *the effect, it is*apparent that the preponderance of interest of the witness was on the side he was called to testify, and he was inadmissible on that account. But it is not necessary to decide that question here, as he is excluded by the case of *Endicot vs. Gillam.*Excluding this testimony, the case must be decided on the other evidence in the cause.

The defendant denies unequivocally that there was any usury in the bond for $2000, of the 10th March, 1829, and that is conclusive. He admits, with frankness, that there was an agreement between James W. Cantey and himself, that he should reserve twenty per cent, on the bond *for*$3337 50, of the 16th Feb. 1830, and seeks to avoid the effect-of the usury, oh the ground that he afterwards inadvertently advanced to James *W.*Cantey, in money, the whole amount of the bond. We agree with the Chancellor on circuit, that a contract originally usurious cannot be divested of the taint, as to the surety, even by a *49subsequent agreement between the lender or obligee, and the principal or obligor, and especially when, as in this case, the defendant, in making further advances to James W. Cantey, did so without his consent that they should be set down to the consideration of the bond, and, as is very apparent, without intending at the time that they should be so applied. The complainant’s testator was not, therefore, liable, beyond the amount actually agreed to be advanced on this bond, and which was so advanced.

My brethren are of opinion that the answer of the defendant as to the payments made to him by James W. Cantey, and their application, is conclusive, on the ground that it does not appear that the complainant might not, with due diligence, have obtained evidence of the fact of payment, and availed himself of it at law. These views cover all the grounds of appeal, on the part of the defendant; but the complainant also appeals, on the ground that there is error in that part of the decree which declares that the assignment of the judgment to Mrs. McKinon, “must be supported, as that of a purchaser for valuable consideration without notice,” from which it is infered that it was intended to charge the complainant with the whole amount of that portion of the judgment assigned to her, whether he was liable to the defendant for that amount or not, and the expression quoted would seem to import it. But when taken in con-nexion with what immediately follows, it is manifest that it was intended that if the sum due by the complainant on the judgment was not sufficient to pay both McWillie and Mrs. McKinon, the defendant was liable for any balance that might remain due to them. It is very clear that the assignee of a judgment cannot be placed on a better footing than the assignor.

It is ordered and decreed that the injunction heretofore granted to restrain the defendant from proceeding on his judgment at law, be, and the same is hereby, dissolved, so far as relates to the amount of the principal sum and the interest which has accrued on the bond for two thousand dollars, dated 10th March, 1829, and that the commissioner do ascertain what sums of money were advanced by the defendant Blair to James W. Can-tey on the bond conditioned for the payment of three thousand, three hundred and thirty seven dollars and fifty cents, dated 16th February, 1830.

Johnston and Dtjnkin, CC. concurred.

Harper, Ch. concurred in the results.