Case Name: James H. Smith and Mary J. Robinson, administrators, &c. of Robert M. Seymour, William W. Forsyth and Edmund A. Robinson, deceased, respondents agt. Silas Marvin and Sardis Allen, appellants
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1863-06
Citations: 25 How. Pr. 317
Docket Number: 
Parties: James H. Smith and Mary J. Robinson, administrators, &c. of Robert M. Seymour, William W. Forsyth and Edmund A. Robinson, deceased, respondents agt. Silas Marvin and Sardis Allen, appellants.
Judges: 
Reporter: Howard's Practice Reports
Volume: 25
Pages: 317–327

Head Matter:
COURT OP APPEALS.
James H. Smith and Mary J. Robinson, administrators, &c. of Robert M. Seymour, William W. Forsyth and Edmund A. Robinson, deceased, respondents agt. Silas Marvin and Sardis Allen, appellants.
An agreement is not per se usurious by which a commission merchant is to he paid or to have five per cent, commission, besides interest, for accepting and paying drafts drawn upon him by a person owning property sent to such merchant for sale on commission, and for the sale of which he receives a further commission of five per cent.
Whether such an agreement is usurious is a question of fact, to be decided by proof, whether the five per cent, commission was intended as a mere shift to cover a usurious premium for the use of the money advanced in paying the drafts, or as a just and reasonable compensation for the trouble and expense the merchant is put to in accepting and paying the drafts.
But if such advances are made pursuant to a usurious agreement, and the drawer of the drafts subsequently sends .property to the merchant, who sells the same on commission, and with the net proceeds thereof repays himself such advances, and the drawer of the drafts and owner of the property is furnished with a statement of the merchant’s account with him, showing the repayment,—such repayment of the advances is to be deemed to have been voluntarily made by the drawer of the drafts and owner of the property, if he does not object to such application of the proceeds of his property within a reasonable time after receiving the statement of the account showing such application.
Contracts affected by usury are not so utterly void but that they may be ratified 5 and therefore if a borrower repay a loan which he might have avoided for usury, he cannot recover the money back again.
He may, however, under our statute, recover back the excess which he has paid beyond the legal interest, if he bring his action within one year after paying the same.
It seems, he may still recover back such excess, at common law, at any time within six years after paying it.
June Term, 1863.
This was a suit in chancery that was commenced before the chancellor in the year 1843, by Robert Seymour, Edmund A. Robinson and William W. Eorsyth, who were commission merchants and did business at the city of Albany, in the firm name of “ Seymour, Forsyth & Co.,” against the defendants, who did business at Watertown, in the county of Jefferson, and at the city of Oswego, as partners in the name of “ Marvin & Allen,” for an accounting between such firms and the defendants, and two previous firms represented by Seymour, Forsyth & Co., from some time in the year 1838, and to recover a balance the last named firm claimed was due them from the defendants.
Robert M. Seymour was a member of all the firms represented by the original complainants, Seymour, Forsyth & Co. The first of those firms was composed of Seymour and David Wood, and did business at Albany from some time in the year 1838 until the first day of April, 1841, when Edmund A. Robinson became a member thereof. This was the second firm, and it did business at Albany in the name of Seymour, Wood & Co., until the 26th day of November, 1841, when Wood, died, and the firm business was continued by the survivors until the first day of January, 1842, when Forsyth became a member of such firm. This was the third firm, and the one that brought this suit.
The second firm succeeded to the business and assumed the liabilities of the first, and the third one succeeded to the business and assumed the liabilities of the second.
The business of these three firms was that of commission merchants. They received wool and sheepskins from the defendants from some time in the year 1838 until some time in the year 1842, and made advances thereon and sold such wool and sheepskins (except some which were unsold at the time this suit was commenced) as commission merchants, for the defendants; and they made statements from time to time of the accounts between them and the defendants, which they sent to the latter.
The defendants purchased the wool and sheepskins at and near Watertown and Oswego, and from time to time consigned the same to the firms represented by the plaintiffs at Albany for sale on commission; and on account thereof the defendants drew drafts from time to time on such firms, which were accepted and paid by them.
The above mentioned statements sent to the defendants, and which'they received, showed*balances due from
them as follows:
December 31, 1838 ...............$6,202 20
May 14, 1839 .................... 84*7 19
January 1, 1840________________ 1,491 94
August 1, 1840 _______________r_. 2,0*72 6*7
December 31, 1840 .........-..... 11,608 64
March 31, 1841 .................. 12,225 44
September 11, 1841».............. 3,628 *75
January 1, 1842 .................$10,119 88
September 5, 1842________________ 13,835 10
After the last mentioned date, and prior to the first day of January, 1843, the original complainants sold wool and sheepskins of defendants to the amount of $1,465.58, and when they commenced this suit in March, 1843, they claimed a balance was due them from the defendants of $1,109.58, subject to be reduced by the sale of the wool and sheepskins the complainants had in their possession belonging to the defendants, which had not been sold, and which the complainants offered in their bill to take at the market price, and which they subsequently sold before any accounting was had in the suit.
Among the defences set up in the answer was that of usury, which defence was predicated upon an agreement dated the 18th day of February, 1840, signed by Seymour & Wood, in the words and figures following, viz :
“ Terms. First. On condition we have the selling of all your wool and skins, we will do it at a commission of five per cent.,'including all charges except such as we pay out.
“ Second. We will advance or accept in two-thirds the value of the property put in our hands.
“ Third. We now advance $2,000 in cash, for ninety days, at five per cent, commission.
“ Fourth. No drafts to be made on property short of
1 at 3 months, from 20th February, say......$1,000 00
1 at 4 “ 20th February, say...... 2,000 00
1 at 4 “ 1st March, say......... 1,000 00
1 at 4 • “ 15th March, say........ 1,000 00
1 at 4 “ 1st April, say.......... 1,000 00
$6,000 00
“ Fifth. When your drafts fall due (if not put in funds) we are at liberty to sell the property at the market price to meet the same, or if we advance the money to pay the same, charge five per cent, on such advances.
“ February 18th, 1840. Seymour & Wood.”
Seymour & Wood advanced to the defendants, under the above agreement, the sum of $8,574.66, between the date thereof and the first day of August, 1840; which advances were charged to the defendants in the account rendered to them under the last mentioned date, and by which account a balance of $2,072.67 appeared to be due from the defendants to Seymour & Wood. In that account the defendants were credited with the net receipts from sales of wool and sheepskins, amounting to $13,825.75 ; and between the 18th day of February and the time of rendering such account, Seymour & Wood had paid out other moneys for the defendants, amounting to about $2,500, which was included in that account.
The defendants acquiesced in that account, as well as the others rendered, until a short time prior to the commencement of this suit.
The complainants put in a replication to the answer.
The suit was transferred from the court of chancery to the supreme court in 1847.
It is unnecessary to notice any of the proceedings or decisions in this suit until it was referred to Azor Taber, Esq., to restate the accounts in 1854. He stated the accounts and made his report, in which he charged the defendants with the $8,574.66 advances made under the agreement of February 18, 1840, and which they claimed he should reject as usurious; and he found due the complainants from the defendants $738.45, with interest from the first day of January, 1846. The defendants excepted to that part of the report which charged them with the $8,574.66. The case was afterwards'brought to a hearing at a special term of the supreme court, where said $8,574.66 was rejected as usurious, and a decree made in favor of the defendants for $19,902.99.
The complainants appealed therefrom to the general term of the supreme court in the fifth district, where the judgment of the special term was reversed, and a judgment was rendered against the defendants for $738.45, with interest, according to the report of Mr. Taber, and costs. The defendants appealed from the general term to this court.
The original complainants died during the progress of the action, and the present respondents, who are their administrators, were substituted in their places.
John H. Reynolds, for respondents.
George F. Comstock, for defendants.

Opinion:
Balcom, J.
The controlling point in the case is, whether the defendants were properly charged by the referee with the $8,574.66 advances the firm of Seymour & Wood made upon the wool and sheepskins, under the agreement of February 18, 1840.
By this agreement Seymour & Wood were to have a commission of five per cent, for selling the wool and sheepskins consigned to them, over and above the charges they should pay out, and also five per cent, commission on the advances they should make upon such property, besides interest on such advances.
The defendants' counsel insists that the provision allowing Seymour & Wood five per cent, commission on such advances, besides interest thereon, rendered the agreement usurious and void in all its parts. But I am of the opinion he is mistaken in this, and that the agreement is not per se usurious.
In Trotter Sr Douglass agt. Curtis, (19 John., 160,) the plaintiffs charged1 a commission of two and a half per cent, on the amount of money they advanced to meet the defendant's drafts when he failed to send them produce in time, and interest on the items charged in their account from the time they became due. And Chief Justice Spencer, in delivering the opinion of the court, said : " There is no pretence for saying that the commission charged by the plaintiffs for accepting and paying the defendant's drafts when the plaintiffs had not funds in their hands belonging to the defendant, out of which to pay the drafts when due, was usurious." In Nourse agt. Prime, (7 John. Ch. R., 77,) Chancellor Kent said : "Whether the commission for procuring the stock from Philadelphia was high or low, was a question for the parties to settle by their agreement;" also,' that "there must be an unlawful or corrupt intent confessed or proved before we can pronounce a transaction to be usurious." (See Condit agt. Baldwin, 21 N. Y. R., 221.) In Suydam agt. Bartle, (10 Paige, 94,) Chancellor Walworth said: " It is not per se usurious for an agent or factor to agree for a reasonable commission, to be paid by the principal, for accepting and paying bills with funds furnished by the latteralso that " if the agreement, by its terms, contemplated an advance of money to pay the bills when they became due, so that they should not be returned protested if the drawers did not furnish the means of paying them at the day, it would still be a question of fact, to be decided by proof, whether two and a half per cent, was intended as a mere shift to cover a usurious premium on such advances, or as a compensation for the trouble and expense of accepting and paying the bills by the complainants, as the agents of the drawers." In Suydam and others agt. Norton and others, (4 Hill, 211,) the agreement was this : " It is also mutual understood and agreed that all the produce sent to New York by Norton, Bartle & McNeil, except lumber, shall be sent to Suydam, Sage and Co., for sale on commission; that they shall at all times be put in funds for their liabilities by the time they become due; and that they shall be entitled to two and a half per cent, commission on all acceptances or advances met otherwise than with produce. It is understood that Suydam, Sage & Co. are to accept at all times to the amount of $20,000 ; that flour and other produce in their hands shall be considered as money at the market price, unless limited or ordered held for higher prices. It is also further agreed, that at the expiration of each and every year, all the liabilities and advances of the said Suydam, Sage & Co., for Norton, Bartle & McNeil, shall be paid up, and the account balanced by the said Norton, Bartle & McNeil;" and in an action by Suydam, Sage & Co., to recover the sum advanced upon one of the drafts of Norton, Bartle & McNeil, drawn, accepted and paid under such agreement, with interest and two and a half per cent, commission, a majority of the court lield that the transaction was not necessarily usurious. The proof in that case, that the charge of a commission on such advances was customary among merchants engaged in similar business, cannot be regarded as controlling the decision; for if the transaction was usurious no custom could have made it lawful.
The advances in this case having been made by Seymour & Wood in doing the business entrusted to them by the defendants, it was a question of fact whether the agreement for and charge of five per cent, commission on such advances rendered the transaction usurious. (See Ketchum agt. Barber, 4 Hill, 224; S. C., 7 id., 444; Dry Dock Bank agt. American Life Ins. and Trust Co., 3 Coms., 344.)
In Martin agt. Feeler, (8 Wend., 533,) Chief Justice Savage said: " Usury is a defence which must be strictly proved, and the court will not presume a state of facts to sustain that defence, where the instrument is consistent with correct dealing." (See Sizer agt. Miller, 1 Hill, 227; Merritt agt. Benton, 10 Wend., 117; 2 Kern., 223 ; 2 Hill, 635.)
The defendants did not give any evidence in this case to show that the commission agreed to be paid and charged upon the advances was unreasonable or more than a just compensation for the trouble and expense Seymour & Wood were put to in doing the business, aside from the direct commission they had for selling the wool and sheepskins ; and as the supreme court held that the transaction was not usurious, the fact is conclusively settled that the commission on the advances was not a shift or device to cover a usurious premium thereon, and we must so hold.
But if it were conceded that these advances were made upon a usurious agreement, I am of the opinion they were properly charged to the defendants by the referee; for the reason- that such advances were voluntarily paid by them to Seymour & Wood more than two years prior to the time the defendants first claimed the same were tainted with usury. When Seymour & Wood sold wool and sheepskins belonging to the defendants, they applied the avails thereof to the payment of such advances until the same were fully paid, as they had the right to do, so long as the defendants did not object. (See Van Rensselaer's Executors agt. Roberts, 5 Denio, 470 ; Allen agt. Culver, 3 Denio, 284.) In the account stated and rendered by Seymour & Wood to the defendants, August 1, 1840, the latter were charged with all the advances in dispute, and the commissions thereon, and credited with $13,825.75 net receipts of sales of wool and sheepskins, and they acquiesced in that account; and the defendants were subsequently furnished with other statements of the accounts between them and the firm of Seymour & Wood and their successors in business, showing that such advances, interest and commissions thereon were paid—in which statements the defendants acquiesced until it was too late for them to raise any unconscionable objections to the same. They were bound to object to the correctness of the accounts rendered to them, within a reasonable time after they received the same, which they did not do. (See Lockwood agt. Thorne, 1 Kern., 170; S. C., 18 N. Y. R., 285.) In Dix agt. Van Wyck, (2 Hill, 522,) Bronson, J., in delivering the opinion of the court, said : " Contracts affected by usury are not só utterly void but that they may be ratified ; and therefore if a borrower repay a loan which he might have avoided for usury, he cannot recover the money back again ; though under our statute he may recover the excess which has been paid beyond the legal interest."
The borrower may bring an action, under the statute, to recover back usury paid to the lender, within one year after paying the same, (1 R. S., 772, § 3 ;) or at common law at any time within six years after paying it. (Wheaton agt. Hibbard, 20 John., 290 ; 2 Seld., 115.)
I am aware that it has sometimes been asserted that a usurious agreement is incapable of ratification. (See 5 Denio, 236.) But the assertion is not strictly true; for when a usurious loan is voluntarily paid, the contract is certainly ratified, except as to the unlawful interest, which, as has been seen, may be recovered back.
The defendants' counsel insists that the payment of the advances in this case, if they are to be regarded as paid, was not voluntary. He relies mainly upon the decision in Mumford agt. American Life and Trust Co., (4 Corns., 463,) to sustain this position. But all that was said in that case was, that the payment of a usurious loan is not voluntary, if obtained by the lender out of collateral securities in his hands without the concurrence of the borrower, whereas in this the defendants voluntarily placed the wool and sheepskins in the hands of Seymour & Wood after the contract for the advances was made, and the latter sold such wool and skins with the concurrence of the former, and in a course of dealing with the defendants, most of which has never been objected to ; and it was also with the concurrence of the defendants that the avails of the wool and sheepskins were applied by Seymour & Wood, and their successors in the business, to the payment of the advances in dispute, as well as others. The payment of such advances, therefore, was voluntary, and the defendants were not entitled to recover them back, or have the same deducted from the account of Seymour & Wood, or their successors, who brought this suit.
The point has not been made that the defendants should have been credited by the referee with the alleged usurious interest upon the advances, independent of the advances themselves; and the claim of the defendants was that they were improperly charged with the advances, not the interest thereon separate from the same.
For these reasons, I am of the opinion the judgment of the supreme court in the action should be affirmed, with costs.
Judges Marvin, Davies, Rosekrans, Wright and Selden concurred.
Judge Emott was absent. Denio, Ch. J., did not sit in the case, having been counsel in it before he was elected judge.
Selden, J., delivered an opinion, in which he came to the conclusion that the agreement for the commission of five per cent., charged on the $8,574.66 advances, was not usurious ; but he did not discuss the other question in the case.