Court Opinion

ID: 6577416
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:35:30.400654+00
Date Added: 2024-06-11T15:57:09.131651
License: Public Domain

Ellsworth, J.
The difficulty which we have felt in this case has arisen from the manner in which the question of usury was submitted to the consideration of the jury. The note in question of $7,000, being given for a clear and admitted indebtedness of that amount from George Kellogg to the appellant, is good and valid on the face of it for what it expresses; and if tainted with usury, it must be because it is a part of the premium or compensation for the loan of another $7,000 which the appellant made on the same day to Kellogg or to Kellogg and Atwood, essentially for and at the request of Kellogg, for which Atwood and one Parkburst gave their promissory notes. There being then a debt equal to the two sums, to wit, $14,000, justly and legally due to the appellant, it would seem, looking at the face of the transaction, as if there was no usury of necessity, or per se, in the notes taken. To find usury then in the note here in question we must look beyond the note itself; and the appellee, with this view, has attempted to show that the note is so involved with the loan of the same date of $7,000, as that it is a part of the premium and compensation for that loan, and *445therefore is usurious and void. This is certainly possible, and it is actually so if the parties at the time so intended, which is the question now to be decided. We repeat, it is not so of necessity.
In looking at the loan of $7,000, we regard the question of usury as one of fact more than of law. The question is this,—was more than legal interest taken or reserved for the forbearance of the loan ? Or, in the language of the New York statute, (which is the law ,of the case,) did the appellant, for the forbearance of the $7,000 loaned, directly or indirectly take or receive, in money, goods or things in action, or in any other way, any greater sum or greater value for the loan than at the rate of seven per cent.” The fact that the loan was made at the same time and on the same occasion that the present note was given, and perhaps also, the requiring of the giving of the security as a precedent condition to a further advance of money by the appellant, are not decisive of the question of usury, though they have ao important bearing upon the character of the transaction. It is no unusual or unreasonable thing for a man to refuse to loan more money unless he is first secured for what he has already loaned; and to this end he may take security for the oldLdebt by mortgage or indorsed notes or otherwise; and this is not usury, if nothing more than getting security is intended. In such a case, the new security is not the premium or compensation for the loan about to be made, although it may precede or accompany the act of loaning, or even be made a sine qua non of it, though it might be otherwise in a case where one who is a stranger-to the old debt should give the security for it. We do not say that the person making Ihe further loan, at legal interest, does not derive an advantage beyond the premium for the new loan; but it is not the premium for the loan; it is only a collateral incident, Hence, in these and kindred eases, it comes to be a question of intention or bona fides; a question what is the real character of the transaction; whether what is done is a cover for taking usury, or is free from any such design and therefore an unexceptionable and legal transaction. It may be either, and *446we regard the matter as having been thus treated in this instance, and in this respect the charge was quite as favorable for the appellee as he had a right to ask. As already intimated, we did have doubts if this question of fact, on which the case was made to turn, was submitted to the consideration of the jury with sufficient exactness and clearness; nor are we now entirely free from doubt; but after much deliberation, we have come to the conclusion that the final clause of the judge’s charge lays down substantially what is necessary on this point. The jury, under that portion of the charge, must have been satisfied that the securing the former debt of $7,000 was no part of the premium or compensation for the loan of seven thousand dollars, and that there was no agreement or understanding to that effect, but, on the other hand, that it was understood that the note in question would be paid out of the profits of Kellogg in the contemplated enterprise, and that Atwood, by his indorsement, was willing to guarantee that it should be so, provided thirty months could be allowed to do it in.
As to the other part of the motion, we think that the case does not fall within the rule of the court for granting a new trial for a verdict against evidence. To make the most of it, the evidence in behalf of the appellee was balanced by the counter evidence, and besides, usury is not a particularly favored defense in our courts of justice.
There was no error in the rejection of the evidence offered, to prove how the cotton-gin business, in the end, and long after the giving of the note in question, turned out.
We have not overlooked the cases cited by the defendant’s counsel on the trial. They are not, in our judgment, inconsistent with the views we have herein expressed.
A new trial is not advised.
In this opinion the other judges concurred.
New trial not advised.