Case Name: John Wallis vs. Nelson
Court: Constitutional Court of South Carolina
Jurisdiction: South Carolina
Decision Date: 1824-01
Citations: 1 Harp. 144
Docket Number: 
Parties: John Wallis vs. Nelson.
Judges: JYott, Justice, concurred.
Reporter: South Carolina Law Reports
Volume: 16
Pages: 144–155

Head Matter:
John Wallis vs. Nelson.
.Action by indorsee against indórser of a note. Defendant gave notice of an intention to offer himself as a witness, to prove- ■ usury. To prevent this, plaintiff offered himself as a witness, and swore that he obtained the note for - a full consideration of one D. Defendant was then examined and swore that he endorsed the note, for the accommodation of the maker, and passed it to D, at an usurious discount. D, being'then examined, denied the usury sworn to by defendant. Held, that under the provisions of the statute of usury, defendant was an incompe-. tent witness, and new trial granted for that cause.
Tins was an action of assumpsit, on a note drawn by one-Happoldt and made payable to the defendant, Nelson, who en-: dorsed it; and it was afterwards indorsed by one Christopher Happoldt. Plaintiff afterwards got it into his possession and brought this action for its recovery. The defence was usury/ and the usual notice was given to the plaintiff by defendant that he should avail himself of the benefit of the provisions of the usury act, and offer his own evidence at the trial. The plain-; tiff, to prevent the defendant’s being sworn, tendered, under the provisions of the act, his own evidence, and was accordingly' sworn.
He swore that he got the note in question from one Dunn, to whom he had paid the full value, and that there was no usury, to his knowledge, in the transaction^ but that he -was ignorant of what had passed between the parties to the original transaction. The defendant then offered his own evidence, which was objected to, on the ground that the plaintiff having sworn there was no usury to his knowledge in the transaction, the defendant could not be sworn under the provisions of the act. The court overruled the objection and permitted the defendant to be sworn, who stated that the note had been drawn by Happoldt and endorsed by himself, to raise money, and that it was taken at an usurious discount by Dunn; who refused positively to advance the money, until the note was endorsed by the witness. Dunn was then called by the plaintiff and sworn. He stated that he had got full value for the note from the plaintiff and had given full value for it to the defendant, for Happoldt, and there was no usury in any stage of the transaction. Dunn’s name was not on the note. Under the charge of the court, the jury found a verdict for defendant. The plaintiff now moved for a new trial on the ground, that the defendant’s evidence was improperly received.
Hunt, for the motion.
It is evident, that the statute of usury only had reference to actions, between the original borrower and lender, and intended to permit the defendant to give .evidence; in cases where the truth of the transaction was supposed to be known to the plaintiff, and he refused to swear. The terms of the act are “as such transactions are generally carried on where only borrower and lender are present together,” ike. “be it enacted,” &c. “that the borrower or party,” which by a very natural construction may be made “borrower who is a party,” shall be a good witness. “Unless the person or persons against wliom such evidence is offered, will deny upon •oath in open court, the truth of what such evidence offers to -swear against him.” What else can the defendant in any such action swear against the plaimtiff, but the fact of usury? Which ..if the plaintiff will deny; will deny that he has practised usury; the defendant is incompetent.
There is reason to believe that Wallis, -was the original -•lender of the money in this case, and that Dunn was only the broker who negotiated; it does not appear, that Dunn paid the money to Happoldt, ’till he had discounted the note with Wallis. Certainly Dunn is not a party to the note, which L file contract in the case. If this he the fact, it will not make usury in Wallis, that Dtrnn retained fifty dollars of the money in it’s passage through his hands.
[JYbit, Justice. As Dunn’s name does not appear on the note, may not Nelson be regarded as the endorser to Wallis? And if as between them,-the contract was fair, is not Wallis entitled to recover against hvm, though there may have been usury between Happoldt and Dunn, as if a note- be drawn by A. and endorsed, upon a usurious consideration, by B. to C, who endorses and discountsit bona fide, in bank; is not C. liable on his indorsement as a new and valid contract?] ''
Even admitting however, that the transaction was usurious on the part of Wallis, and that he committed perjury, yet ifhé was-the lender, the defendant Nelson was an incompetent witness, for Wallis denied the usury. In such case, if plaintiff swear falsely, defendant has no remedy but to prosecute for perjury. If Wallis was notthe lender, still the defendant-was incompetent; for I have endeavoured to shew that by the act, only the party to the usurious contract, defendant, is permitted to give evidence against the party plaintiff. The consistent and sensible construction of the act is, that if the plaintiff will deny usury o».his part, the defendant shall not be admitted to prove it. The result will be,that although an assignable instrument, like the one now sued on, is void as against those who became parties to it on a usurious transaction, yet in the hands of an innocent and bona fide--holder, it cannot-be. proved so by the defendant’s own testimony.
In the case' of the executors of Thomas vs. Brown, 1 M‘ Cord, 557, the defendant was. admitted to prove the usury,where the party to the usurious contract was dead. There thO-plaintiffs neither did nor could offer to deny the usury, on the' part of him they represented. Here the party to the contract charged to be usurious, whether it were Wallis or Dunn, was living, and was examined on oath, and denied the usury. Were cited, Putnam vs. Churchill, 4 Mass. Rep. 516; Binney vs. Merchant, 6 Mass. Rep.. 190; 3 Day’s cases, 268; PVilhie vs. Rosevelt, 3 Johns. Rep. 206.
Desaussure, contra.
The defendant Nelson, was certainly-not the endorser to Wallis, for there is a subsequent endorser Christopher Happoldt. In cases of this sort, the court.will look through appearances. Nelson became a party to this note on a usurious transaction. No doubt a party who takes a note, which is void for usury, may indorse it, bona fide, and become liable on the new contract, which is not infected with the original taint Such was the case of Fleming and Mulligan, 2 Ms Cord, 1,76. If Wallis obtained the note bona fide, he obtained it of Dunn, and against him no doubt he had a good right of action.
The legislature manifestly regarded the statute against, usury as a remedial'act; and it must be liberally construed in suppression of the mischief intended to be remedied. It makes the “borrower or party,” a competent witness; that is, the party from whom the-usurious rate of interest is demanded. As not the usurious rate of interest demanded of the defendant in' this case? By his indorsement, he became liable to pay six hundred dollars and received five hundred and fifty. The law removes in .this- instance, the general incompetency of a witness in his own cause. This, the case-of the executors of Thomas vs. Brown, shews; defendant is competent, unless plaintiff knows •the transaction, and: -will 'deny all the. circumstances which he offers to swear; not deny generally that he knew of or practised Usury, but submif-.to examination and deny in detail.
It is- argued that if Wallis was not the Iendor, Dunn was; that he knew "«11 the facts and denied what defendant swore. This argument would have been applicable, if when Nelson offered to swear, Dunn had been offered to contradict him. But this was not done, apd Nelson was certainly a competent witness when he was sworn; he was not objected to, on the ground that Dunn was the proper witness to pie-clude him. The testimony of both went to the jury, to whom it belonged to decide between them, and they famid, no doubt most correctly, that it was a case of usury! 'Were cited, Jones vs. 2 Johns, ca. —?*-, Ldghtner vs. Iiagood, 2 Bay, 178; Wilkes vs. Brimmer wife, 2 Mi-Cord, 178,
Hunt, in reply.
"Nelson was introduced to make himself a competent witness, first to prove Dunn Mhe'lender and then to, prove the usury. But for his testimony Wallis would have ap-. peared the lender.

Opinion:
The opinion of the- 'Court was delivered/ by
"Mr. " Justice ~¿Huger.
The usury act declares "that whereas it is to be feared that; evil minded persons" &sg. may violate that act, "from the hope> that their offences may not "be discovered for want of proof, as such transactions are generally carried on where only borrower and lender are present together; for remedy whereof, it is enacted, that whenever any suit is depending touching any usurious bond, specialty, contract, promise or agrtement or tailing of usury, the borrower or party to such usurious bond &c. &c., shall be a good and sufficient witness Sic. Sic. provided that if the person or persons, against whom such evidence is offered, will deny upon oath, in open court, the truth of what such evidence offers to swear against, him, then such evidence shall not. be admitted to be sworn." Formerly this act was regarded with peculiar favour. Usury was thought an offence not only against the law's of the state, but the laws of Heaven. On this suject,. however, public opinion has undergone a most thorough change. It is now only regarded, as malum 'prohibitum, and meets with no other denunciation than is justly and properly due to every offence against the laws of the country.
Whatever, therefore, may have been the rules formerly adopted for the construction of this act, I cannot give my sanction now, to any other mode of interpretation than that which is adopted in the construction of the other acts of the legislature. 1 cannot consent to inflict the penalties of this act in a doubtful case. It is highly penal and no one should suffer under it, unless he be-proved, in the mode prescribed by the laws, to have violated it. If a new 'mode 'of proceeding be prescribed by statute, it must be followed, but no further than is necessary to give effect to the plain intention of the legislature. It is, to say no more, in opposition to all our received notions of propriety, to permit a defendant to swear off his debt. The act, however, does, permit this, under particular circumstances. But the very circumstances under which the defendant is permitted to swear, shews the jealousy with which the legislature, itself regarded the privilege it was conferring. The borrower, or party to the contract, is not to give evidence, if the person against whom such evidence is offered, will deny upon oath the truth of what such evidence offers to swear against him. The evidence of the borrower appears to have been intended'to -act in terror cm.. Thu lender is forewarned that if he does lend, it is at the risk of losing his money by the evidence of defendant, or of adding the crime of perjury to the offciice of Usury; the alternative is, however, with him; if he choose to deny on oath ihe truth of What such evidence offers to swear, the borrower shall not he permitted to swear. It is immaterial to the admission of the borrower's evidence, whether the lender swear falsely or not. The plaintiff, in consequence of the notice given, that the defendant would give his evidence if the plaintiff did not, was Sworn, and he denied the usury; hut it was said that as the circumstances stated by the defendant were not denied, he could be admitted to his evidence. It was certainly not the intention of the act to permit the borrower to swear, unless the lender refused to exculpate himself on oath. In this case the plaintiff, if he were the lender, did exculpate himself; if he were, however,not the lender on usury, Dunn was; and Dunn did excidpate-himself on oath in open court as the act requires.
It is said that Dunn's evidence was not offered until the defendant had been sworn. He was, however, objected to as an incompetent witness before he was sworn; hut this, at most,is hut contending for a form, which may embarrass hut cannot aid the administration of justice. It is very much like the old rule which required every objection to the competency of a witness to he made on the voire dire, and if once examined in chiefj, however flagrant his incompetency might appear, he could not be disposed of. The courts have long since adopted a different rule, more convenient and much better calculated, in every respect, to aid the advance of justice. If at any time the incompetency of a witness appear, his evidence must he rejected; see Dunford and East, 719; and Phillips, 96. Substantially, the provisions of the act were complied with on the part of' the plaintiff. The lender did exculpate himself on oath, and the defendant was, therefore, incompetent and ought not to haye been received.
The motion must, therefore, he granted.
JYott, Justice, concurred.