Case Name: Brown v. Wilcox and Sawyer
Court: Iowa Supreme Court
Jurisdiction: Iowa
Decision Date: 1863-12-21
Citations: 15 Iowa 414
Docket Number: 
Parties: Brown v. Wilcox and Sawyer.
Judges: 
Reporter: Iowa Reports
Volume: 15
Pages: 414–420

Head Matter:
Brown v. Wilcox and Sawyer.
1. Indorsee or usurious note. The indorsee of a promissory note who takes it with knowledge that it is tainted with usury, is not a bonot fide assignee within the meaning of § 1192 of the Revision of 1860, and cannot recover the consideration paid for the same, less the principal, from the indorser.
2. Same. When the first indorsee of a promissory note tainted with usury received it with knowledge of the usury, and delivered it to the maker upon the execution of a new note payable to himself, which included the whole usury previously reserved, which note he indorsed for a full and valuable consideration to another indorsee who had no knowledge of the usury, it was held that the remedy of the second indorsee was against his immediate indorser alone, and that he had no right of action against the indorser of the original note. Lowe, J., dissenting.
Appeal from Dubuque District Court.
Monday, December 21.
Plaintiee seeks to recover of defendant (as a usurer), tbe full amount paid by Mm for certain notes, less tbe prin cipal money, as allowed by section 1792 of the Revision of 1860. As shown by the petition, the facts are, that in 1857, defendant loaned to T. S. & D. S. Wilson, $665.58 at 80 per cent interest, talcing their notes therefor. They paid $200, the first note was surrendered and a new one taken from T. S. Wilson for $967.50, with 15 per cent. This was transferred to defendant, Sawyer, who took and surrendered it, as is alleged, without knowledge of the usury, and took two new notes for $500, and $467.50, payable to himself, which he transferred to plaintiff, who was in like manner ignorant of the illegality. To a suit brought on these notes, the plea of usury was interposed, and on the trial there was a recovery for $465.58. Plaintiff claims to recover the usury ($500) contained in said notes, and the costs in the case against Wilson.
Sawyer made default. Wilcox answers, alleging that Sawyer had full knowledge of the whole transaction, and knew that the notes were usurious; that he acted for defendant in getting the notes renewed; and further that defendant traded said notes to Sawyer for certain lands, the notes and lands being at the risk of each; that said Sawyer knew that said notes were founded upon a usurious contract and took them with the knowledge that the maker might plead usury. It is also averred that the lands conveyed by Sawyer were not worth $500; that he had no title to one hundred and sixty acres of the same, and that ■ the consideration was therefore less than three hundred dollars. It is also denied that plaintiff had no notice of the usury of said notes.
A demurrer to this answer was overruled. Plaintiff excepted and appeals.
B. TV. Poor for the appellant.
Bissell & Shifas for the appellee.

Opinion:
Wright, J.
This case involves a construction of section 1792 of the Bevision, which declares that " nothing in this act shall be so construed as to prevent the proper Iona fide assignee of any usurious contract recovering against the usurer, the full amount of the consideration paid by him for such contract, less the amount of the principal money; but the same may be recovered of such usurer in the proper action, before any court having competent jurisdiction."
That Sawyer, under the facts disclosed in this answer, could not recover of defendant, in virtue of the provisions of this statute, we think is quite clear. He is certainly not a bona fide assignee. Taking the answer as true, he bought with full knowledge of the usury, and can claim no protection under the statute.
We remark also, that as the answer denies that plaintiff took the notes without knowledge of the usury, he occupies no better position. But suppose he acted or bought these notes in ignorance of the usurious taint, can he recover of Wilcox? It seems to the majority of the Court that plaintiff's remedy is against Sawyer alone, who had knowledge of the usury; took new notes including the whole usury previously reserved, and sold the same for a full and valuable consideration. Defendant never transferred these notes to Sawyer and never received anything for them.
Whether defendant as a usurer, could be made liable to any subsequent bona fide holder (supposing the original notes not to have been surrendered), for the amount paid by such holder to the assignee of the usurer, less the " principal moneyor in other words, whether his liability is measured by what he receives, and not by what his assignee may receive, is a question of some doubt under the statute, and one not necessary to determine under the facts disclosed by the pleadings in this case. Nor for the same reason is it necessary to decide whether he is liable under the statute to any one but his immediate assignee.
We put the case upon the grounds above stated, and think the demurrer was properly overruled.