Case Name: Tucker vs. Wilamouicz
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1847-07
Citations: 8 Ark. 157
Docket Number: 
Parties: Tucker vs. Wilamouicz.
Judges: 
Reporter: Arkansas Reports
Volume: 8
Pages: 157–167

Head Matter:
Tucker vs. Wilamouicz.
The’indorsers of a note are competent witnesses to prove, iiran action by the holder against the maker, that the contract -was -usurious.
If the holder had knowledge of the usury at the time of transfer, the plea of usury is good against him: otherwise, where he received the note in good faith and without actual knowledge of usury.
A paper executed by the payee at the time of the transfer and delivery of a note and connected therewith, though not of itself sufficient to prove the usury, if conducing to such a result, is admissible in evidence: and it is for the jury to determine its effect.
Appeal from the Pulaski Circuit Court.
Assumpsit, by Ignatius Wilamouicz against Sterling H. Tucker, on a promissory note for $300, executed January 29th, 1845, by Jennings, as principal, and Tucker and Lincoln, as securities, to Baker, due six months after date, and endorsed by Baker to Brown & Fenno, and by them to plaintiff. •
Tucker filed three pleas: first, non assumpsit: 2d, usury — that Brown & Fenno entered into a corrupt and usurious agreement with Jennings to loan him two hundred dollars for six months, for which he was to execute a note to Baker for three hundred dollars, and procure Baker’s endorsement to them; and that in pursuance of this corrupt and usurious agreement, the note sued on was executed to Baker, and by him endorsed to Brown & Fenno: 3d, usury — similar to second plea, except that it alleges the usurious agreement to have been ’made between Brown and Jennings, instead of Brown & Fenno and Jennings. To the first plea plaintiff took issue, and filed five replications to each of the other pleas: 1st, that no usurious contract was made: 2d, that the note was not given upon the usurious contract: 3d, that the note was assigned to plaintiff before it fell due for a valuable consideration, and that he had no notice of usury: 4th, that before he purchased the note, Tucker knowing of the usury, and that plaintiff was about to buy it, told him it was valid and would be paid: and 5th, that plaintiff was the bona fide holder of the note, and became so without notice of the usury, and that before he purchased said note, Tucker, knowing of the usury, and that he was about to buy the note, assured plaintiff that the same was valid and would be paid. The five replications to the second plea were, in substance, duplicates of the foregoing. Issues were made up upon the replications, the cause submitted to a jury, and verdict and judgment for plaintiff. Defendant moved for á new trial, which was refused, he excepted and took a bill of exceptions, setting out the evidence, &c. from which it appears:
On the trial, plaintiff read the note sued on, and endorsements, to the jury as evidence, and closed. The defendant then offered in evi dence the following instrument, after proving the body of it to be in the hand-writing of Jennings, and the signature to be Brown’s:
“Little Rock, Feb’y 24th, 1845.
Received of Mr. Richard T. Jennings a note bearing date February the 1st, 1845, for three hundred dollars: said note is hypothecat-ed to William Brown, jr., for the sum of two hundred dollars, which two hundred dollars being paid to date of note aforesaid is to be considered a full compensation, and to entitle said Jennings and securities to lake up said note from the hands of the said William Brown, jr., without interest. The securities are S. H. Tucker, and Lemuel R. Lincoln: the principal in said note is Richard T. Jennings.
Wm. Brown, Jr.”
The note referred to in this instrument was admitted to be the one sued on. The plaintiff objected to the reading of this paper to the jury, the court excluded it, and defendant excepted. Defendant then offered' to establish his pleas of usury by the testimony of Brown <fc Fenno, the endorsers of the note sued on, but the court refused to permit them to be sworn as witnesses for that purpose, to which defendant excepted.
Defendant appealed.
S. H. Hempstead and L. R. Lincoln, for appellant.
We contend that the paper which the court refused to receive as evidence, Avas competent and admissible: it bears intrinsic evidence of being co-temporary with the loan: it is important as a link in the chain of evidence to sIioav the malaJides of the transaction. It is believed to be an uniform rule, Avith few if any exceptions, that acts, declarations, and admissions cotemporaneous with the original transaction, or connected Avith it, and tending to elucidate the nature of it, are of the res gestae and competent evidence. Kent v. Lowen, 1 Campb. 177. Beauchamp v. Perry, 1 Barn. & Adolphus, 89. Murray v. Be-il mne, 1 Wend. 196. 1 Phil. Ev. 231, 257. 2 Phil. Ev. by Cow-en & Hill, note 444, page 585; note 481. Cox v. Gordon, 2 Dev. 522. Allen v. Duncan, 11 Pick. 309. Pool v. Bridges, 4 Pick. 378. Colb v. Whiteley, 3 Gill & J. 188 to 199. Bingham v. Cabot, 3 Dali. 19. Tompkins v. Baltmarsh, 14 Serg. & M. 275. Norton v.Pettibone, 7 Conn. 319. Davis v. Pierce, 2 Term Rep. 55. Griswold v. Bard, 4 J. R. 230. Smith v. Fenner, 1 Gall. 170. Ivat v. Finch, 1 Taunt. 141. This paper exhibits decisive marks of an usurious contract. The parade as to the hypothecation and payment of the note at a future period with only two hundred dollars; and without interest, clearly indicate the necessity of the borrower on the one hand, and the ingenuity of the lender, in cloaking the transaction, on the other. Usury may be and usually is shown by circumstanees, and is reached through the medium of presumption rather than positive evidence. Train & Collins, 2 Pick. 145. Me Campbell v Gill, 1 J. J. Marsh. 89. Lear v. Yarnell, 3 Marsh. 419. Loyd v. Scott, 4 Pet. 205.
There is some discrepancy in dates, it is true, but that can always be explained by parol proof, and can never furnish a ground for excluding testimony. 1 Phil. Ev. 192. Trowbridge v. Sanger, 4 Ark. 183. Deakins v. Hollis, 7 Gill & J. 311. 3 Phil. Ev. 1454. Houliston v. Smith, 2 Carr. & Payne, 22.
■ The effect of the ruling of the court was to preclude all enquiry into this paper, and deprive the jury of the unquestionable right of determining the true nature of the transaction. The court assumed the ■ province of the jury — determined law and fact at the same time, in utter disregard of the well settled doctrine that usury depending as it does on intention, and which is to be collected from circumstances, is a pure question of fact for the jury, and for the jury alone, to decide. Smith"V. Brush, 8 J. R. 84. Latov. Merills, 6 Wend. 268. Andrews v. Pond, 13 Pet. 65. Hall v. Haggart, 17 Wend. 280. Fullon Bank v. Benedict, 1 Hill, 480.
Usury consists in the corrupt intent to take or receive more than the legal rate of interest for the loan of money, and it is immaterial by what device this is effected, and hence the intention of the parties must be the criterion. Comyn on Usury 1: 3 Inst. 150, c. 78:1 Wils. 295. What effect this paper might have had upon the jury is not the question, no one can determine that; but the enquiry is whether it was legal evidence. We think the court erred in refusing to receive this paper, and in refusing to permit Brown and Fenno the endorsers to testify, and for these errors a new trial must be granted.
The admissions or declarations of an assignee or an endorser of a note or bill made while he is holder, are evidence against his assignee or indorsee and all persons claiming under him. This doctrine which has been firmly established with regard to negotiable paper, rests on this basis, that as the predecessor might have furnished all the necessary evidence to show the state and condition of the title in his own hands, the successor must take that title cum onere, for the law cannot allow third persons to be deprived of that evidence by any-act of transfer. The rale is well stated by Ricbabjdson, J. in Snelgrove v. Martin, 2 McCord 241, as follows: UI take the general rule of the common law to be that whenever the act or declaration of a party then interested would be evidence against him, it will be evidence against his subsequent assignee or party claiming under him. ’ ’ Kent v. Lowen, 1 Campb. 177. Coster v. Mersey, 7 Moore 9Q. Col-lenridge v. Farquharson, 1 Stark. Rep. 259. Bulkley v. Landon, 3 Conn. Rep. 76. Thomas v. Denning, 3 Har. & J. 242. 2* Phil. Ev. 663. Jordaine v. Lashbrook, 7 Term Rep. 597. Stande-ferd’s Ad'r v. Shultz, 5 Ben. Monroe 584. Beauchanvp v. Perry, 1 Bam. & Ad. 89. 2 Phil. Ev. page 644. Cosier v. Symons, 1 Cam. & P. 148. Peclcham v. Potter, id. 232. Haddon v. Mills, 4 Cam. & P. 486. Barough v. White, 6 Dow. & Ry. 379. Crayton v. Collins, 2 McCord 457. Sprague v. Kneeland, 12 Wend. 161. Kellogg v. Krauser, 14 Serg. & R. 137. Scott v. Coleman, 5 Lift. 349.
A security tainted with usury is void even in tire hands of an innocent holder without notice of the usury. Gaither v. Formeros Bank Georgetown, 1 Pet. 41. Mann v. Swann, 14 J. R. 272. Jor-daine v. Lashbrook, 7 Term Rep. 597. Taifs Ex'rs v. Han-num, 2 Yerg. 352. Hunt v. Brand, 5 Ben Monroe 563, 584. Bridge v. Hubbard, 15 Mass. 96. This rule we admit has been so far modified by legislation, that a holder who receives a bill in good faith and for a valuable consideration, and without actual notice of the usury, will be protected. • Rev. Stat. 470. But as this is an exception to a general rule, it is sufficient for a defendant to show in the first instance that the note or bill was usurious and void in the hands of the payee or endorser, and this casts on the holder the burden of bringing himself within the statute. Seymour v. Strong, 1 Hill 564. Wyattv. Campbell, M. & M. 80., 22 Eng. C. L. Rep. Thomas v. Newton, 2 Carr. & P. 606. 12 Eng. C. L. Rep. Chitty on Bills 87.
The policy of courts in modern times is to remove the obstacles to the disclosure of truth, and to apply objections to the credit rather than the competency of witnesses. Brown and Fenno under whom Wil-amouicz claimed were competent witnesses either for the plaintiff or defendant. 2 Phil. Ev. 20, notes 117 and 118. They were competent for the defendant in error, because they were warrantors, yet they had their remedy over against the makers; for the plaintiff in error, because their interest if any was opposed to him. A remedy over will equalize and balance the interest of a witness. Bayley on Bills 374,422. 1 Camypb. 408. Peake's N. P. cases 6. 7 Term Rep. 601. 2 Phil. Ev. Cowen & Hill’s edition, note 118, page 131, and 'cases there cited. A joint maker not sued is competent for the holder against the co-maker. York v. Blott 5 M. & N. 71: the drawer for the acceptor, 1 Campb. 55. 1 T. R. 300. 2 Bast 458, or for plaintiff or defendant; 5 Esp. Rep. 119. 5 T. R. 578. 2 Stark. Ev. 180, and the endorser to prove usury in the inception of a note or bill. 2 Phil, on Ev. note 78, and cases there cited.
Watkins & Curran, contra.
1. The paper offered in evidence was properly excluded. It did not conduce to prove the issue. It showed a lawful contract; though more than legal interest is reserved upon a contract for the loan of money, yet if it be part of the agreement that the borrower may discharge himself of any' interest at all, by the payment of the principal on a certain day, the case does not fall within the statute of usury. Chitty on contracts 706; 2 Hawkes, 2 Bk. C. 82. s. 3; Roberts v. Trinyane, Cro. Jac. 309; Floyer v. Edwards, Cowper 113, 115; Morrissit v. King, 2 Burrow's R. 891. The question whether this paper showed a legal or usurious transaction was not a question for the jury even if it was competent as being a part of the res gesta,. The construction of a written instrument is always a question for the court.
2. The endorsers were incompetent witnesses for the purpose they were offered. The leading case in England upon the subject is Walton, ass’e of Sutton v. Shelley, 1 Term R. 296. In that case Sed-ley the endorser was called to prove the instrument sued on usurious, but Ld. Mansfield and the other learned Judges held that “upon general grounds of public policy the witness was inadmissible, it being of consequence to mankind that no person should hang out false colors to deceive them by first fixing his signature to a paper and then afterwards giving his testimony to invalidate it.” And the court in corroboration of this opinion refer to the spirit of that maxim of the Roman law, nemo allegans suam turpitudinarn est audiendus. The rule in Walton v. Shelley, has been adopted and followed in the Supreme Court of the United States. The United States v. Dunn, 6 Pet. 51; Bank of Metropolis v. Jones, 8 Peters 1.2; Henderson v. Anderson, 3 Hotoard Rep. 73; see also Taylor v. Luther, 2 Sumner C. C. R. 235; and in N. H. Hanion v. Page, 1 N. Ha/mp. Rep. 60; Be-gant v. Richardson, 2 N. H. 212; Haddock v. Wilmorth, 5 N. H. 187; and in Mass., Waner v. Murry, 3 Mass. 27; Parker v. Love-joy, 3 Mass. 585; Churchill v. Sutton, 4 Mass. 156; Baker v. Pren-tiss, 6 Mass. 430; Jones v. Coolidge, 7 Mass. 199; Manning v. Wheatland, 10 Mass. 506; Hartford Bank v. Haney, 17 Mass. 94; Packord v. Richardson et al., 17 Mass. 122; King v. Putnum, 3 Pick. 184; Thoyer v. Crossman, 1 Metcalf 416; and in Penn., Shaw v. Wallis, 2 Yeates 17; Hopbum v. Cassell, 6 Serg. 1 Ratol. 113;Bk. of Montgomery v. Walker:, 9 Serg. R. Rawl. 229; O’Brien v. Davis, 6 Watts 498; Harrisburg Bank v. Foster, 8 Watts 304; and in Maine, Dearing v. Sawtell, 4 Greenl. 191; Chandler v. Martin, 5 Greenl. 374; and in La., Shamberry v. Carnagine, 10 Martin Rep. 18; Cox v. Williams, 5 Martin; and in Va., Racing v. Reeder, 1 Hen. & Munf. 175; In Vermont the case of Jor-daine v. Lashbrook, was followed in Nicholds v. Holdgate, 2 Ark. R. 138; but that decision was subsequently disapproved by all the Judges in Chandler v. Mason, 2 Vermont Rep. 198.
The rule of exclusion does not apply as between the original parties to the transaction, or where the holder of the paper is privy to the illegality of the. consideration. McFerrcm v. Powers, 1 Serg. & Rawle 102; Sanger v. Felton, 1 Rawle Rep. 141; Patterson v„ Williams, 3 Dallas 506; The paper sought to be impeached must not only be negotiable or assignable, but it must have been actually negotiated or transferred; else the rale of exclusion does not apply. Blagg v. Phmnix Ins. Go., 3 Wash. C. C. R. 7; Baird v. Coch-raine, 4 Berg. & Raíale 397; U. S. v. Dunn, 6 Pet. Rep. 51; U. B. v. Laffer,, 11 Pet. Rep. 86; Fox v. Whitney, 16 Mass. 118. Brown v. Downing et al., 4 $. & R. 494; Locker v. Haynes, 11 Mass. Rep. 498; Doe v. Stakes, 2 Hawk. Rep. 235. But the cases cited show that it is not necessary to entitle a party to the benefit of this rule of exclusion, that he should be strictly a bona fide holder for a valuable consideration, without notice, within the meaning of the law merchant, it is enough that he is an assignee or endorser, and that appearing no party to the paper will be heard to impeach it until it is shown that the holder at the time he obtained the paper had actual notice of the defence, and for that reason the 8th sec. of our statute would not affect the rule. It is true that in the American courts there is a conflict of authority. Some follow Walton v. Shelley, and others Lashbrook v. Jordaine; but we submit that the weight of authority is greatly in favor of Walton v. Shelley, and even if it was not, inasmuch as it is an open question in this state, reason and policy should be sufficient to turn the scale in favor of the rule of exclusion. The case of Lashbrook v. Jordaine, was decided long before the rule in Walton v. Shelley was recognized and adqpted by the Supreme Court of the United States, and all the decisions in the State Courts against that rule were made before any adjudication upon the subject by the Supreme Court of the U. S. These, we take to be, strong reasons in favor of the rule of exclusion. In addition to those already stated Lashbrook v. Jordaine is liable to the following objections: 1st. That case and all those which have followed it proceed upon the supposition that the opinion of the court in Walton v. Shelley is based entirely upon the maxim of the civil law nemo allegans suam turpitudi-nem est audiendus, and conclude, inasmuch as that maxim is not now recognized in courts of common law, that the foundation of that case is swept from under it, but this is a mistake. It is true that Ld. Mansfield, in delivering the opinion, refers to the spirit of the maxim in support of his reasoning; but the true ground upon which he bases his opinion is entirely independent of and would exist even though the maxim were denied. This maxim would apply to the parties, whereas the rule is adopted for tire protection of third persons not cognizant of the facts constituting the defence. As to the true reason of the rule, vide Broiunv. Downing etal., 4 Serg. & R. 497. Hempburn v. Cassel, 6 Serg. & R. 115.
2d. The case of Jordaine v. Lashbrook, was an exception to the rule; for the reason that in that case the witness was called to show that a fraud had been committed upon the revenue laws, the protection of which was deemed of more importance than commercial paper.
3d. The opinion in Jordaine v. Lashbrook, was not unanimous; the Judges were divided. This of itself, even tho’ that case neither formed an exception to, nor misconceived the grounds of the rule in Walton v. Shelly, should be deemed a strong circumstance against the authority.

Opinion:
Oldham, Judge.
The paper signed by Brown and offered to be given in evidence by the defendant below, was improperly excluded by the court. The paper itself may not be sufficient to establish the plea of usury, but being connected with the transfer and .delivery of the note by Jennings to Brown and Fenno, it was certainly admissible in evidence as a part of that transaction. It was for the jury to determine whether the note for three hundred dollars was in fact and in good faith hypothecated to Brown or Brown and Fenno, by Jennings, to secure the payment of two hundred dollars, or whether that shape was given to the transaction, through artifice, with the intent, and for the purpose of concealing a usurious contract. For that purpose the paper was admissible in evidence, but of its effect the jury was to determine. The doctrine as to the declarations or admissions of the endorser of a bill or note, made before endorsement, we conceive has nothing to do with the question presented.
After the exclusion of the receipt by the court, the defendant below offered to prove the note usurious, by Brown and Fenno, the endorsers; but the court held them incompetent, and refused to permit them to be sworn. Whether the endorser of a bill, or note, who is a party to the usurious transaction, is a competent witness to establish that fact, is a question that has been much discussed, and upon which there is a contrariety of authorit}*-. The first case, in which the negative of the proposition was held, was Watson v. Shelly, 1 J. R. 296, and the principle there held was "that no party, who has signed a paper or deed, shall ever be permitted to invalidate that instrument he hath so signed," and the reason given by Lord Mansfield, in delivering his opinion, was "that it was of consequence to mankind that no person should hang out false colors, to deceive them, by first fixing his signature to a paper, and then afterwards giving his testimony to invalidate it."
The later case of Jordaine v. Lashbrook, 7 Term R. 601, is in favor of the competency of the endorser. That was an action upon a bill of exchange against the accepter, and it was held that the payee, who was also endorser, was a competent witness for the defendant to prove that the bill, which was unstamped and purported to be drawn in Hamburg, was in fact drawn in London, and therefore, void for want of a stamp.
In 2 Philips Ev. 71, Cowan & Hill's notes, will be found a collection of American cases arranged in chronological order, showing the diversity of authority upon the subject, and the various modifications which die doctrine has received.
In 1 Phil. Eo. 43, it is said that the case of Watson v. Shelly, is the first in support of the rule of exclusion, and the contrary seems to be fully established.
Without going into a discussion of the authorities cited by counsel, from a careful examination of them, we are prepared to adopt the rule as laid down by the Supreme Court of New York, in the case of the Bank of Utica v. Hillard, 5 Cow. 153, "That every person, not interested in the event of the suit, nor incapacitated by his religious tenets, nor by the commission of an infamous crime, is a competent witness. All other circumstances affect his credit only."
The reason given by Lord MaNSFIeld in favor of the rule of Watson v. Shelly, will-not apply in the case before the court, to exclude Brown and Fenno as incompetent. If Wilamouicz received the note in good faith and for a valuable consideration, and had not at tbe time of receiving it, or paying such consideration, actual notice that it had been originally given for a usurious consideration, the testimony of Brown and Fenno will not affect him; but the note is valid in his hands, regardless of the usury in its inceptions between the original parties. Rev. St. ch. 80, sec. 8. If he had actual notice at the time of receiving and paying for the note, that it was tainted with usury, he cannot say that he was mislead as by false colors, by the signatures of the endorsers, and consequently cannot complain that it is unjust that the endorsers should be called to prove a fact, of which he was advised when he took the note. He cannot say that he is injured by the endorser being called as a witness to prove a note void for usury of which he became possessed under a full knowledge of the fact. He took the note with his eyes open, and subject to the consequences. If he had no notice of the usury, the testimony of the endorsers will not affect his right of recovery.
Judgment reversed.