Court Opinion

ID: 5460046
Source: CourtListenerOpinion
Date Created: 2022-01-09 19:32:50.627624+00
Date Added: 2024-06-11T08:32:50.448416
License: Public Domain

By the Court,

Sutherland, J.
This action was brought on a penal bond, dated the 14th day of March, 1854, conditioned for the payment of $10,000, at the expiration of one year from the first day of January, 1854, without interest. The complaint alleges that the defendant, being indebted to the plaintiffs in the sum of $10,000, for the purpose of securing such indebtedness executed the bond.
The defendant in his answer admits (although it is not alleged in the complaint) that the plaintiffs, on or about the first day of March, 1854, loaned the defendant $10,000; and then avers that this loan was made upon a corrupt and usm rious agreement, setting forth the agreement at large in the answer; and further avers that the bond on which the ac*661tian is brought was executed in pursuance of that corrupt and usurious agreement.
The answer also sets up a counter-claim for moneys alleged to have been had and received by the plaintiffs to and for the use of the defendant. The issues in the action were referred to the Hon. O. A. Peabody to hear and determine.
He found and reported, among other things, that the bond was executed under and in pursuance of the agreement set forth in the complaint; that the agreement on its face was made with a usurious and corrupt intent, and was void; and that the bond made under or in pursuance of it was also void.
The agreement, (which is under seal,) after reciting that the defendant was indebted to the plaintiffs in the sum of $10,000, “ heretofore advanced by them tohim, or to the firm of Ingalls & Putnam, in the course of their business transactions, the whole of which indebtedness the party of the first part had assumed upon the dissolution of said firm,” contains a mutual covenant that the plaintiffs shall be interested in the business of the defendant, to the extent of said sum of $10,000, and that the same shall for the period of one year from the 1st day of January, 1854, and for as much longer as the parties shall thereafter agree, be deemed and taken as part of the capital of the business of the defendants; and the agreement also contains a guaranty on the part of the defendant to pay and allow to the plaintiffs the gross net sum of $3000 yearly and every year, during the continuance of the said agreement, as their proportion of the profits and emoluments of the said business. The agreement then provides that in order to secure the repayment of the said sum of $10,000 to the plaintiffs, the defendant shall execute his bond and a mortgage on his real estate, mills, &c. in Saratoga county, conditioned for the payment of said sum of $10,000, at the expiration of one year from the date thereof. The agreement further provides that the defendant will, during the continuance of the agreement, and of its extension, if extended, ship and consign to the plaintiffs all paper manu*662factured by Min at Ms mills in Saratoga, to be sold by the plaintiffs upon such commission as is usuaEy charged by commission paper merchants in the city of blew York.
[New York General Term,
February 4, 1861.
Clerke, Ingraham and Sutherland, Justices,]
It is quite clear to me that the conclusion of the referee on these facts, that the bond was void, was erroneous. It is a conceded fact, and if not conceded the defendant would have been estopped from denying that the bond was given, not for money loaned at the time when either the bond or the agreement was made or subsequently, but for $10,000 which had been advanced to the defendant or to his firm previous to the making of the agreement. The agreement may have been made with an usurious intent, and as to the covenant to pay the plaintiffs the gross sum of $3000 for their share of the profits may have been usurious and void on its face, but that could not affect the bond given for, and only for, moneys previously, actuaEy and bona fide loaned or advanced. The agreement itself, on its face, shows that the $10,000, for wMch the bond was given, was not loaned under or in pursuance of the usurious agreement, conceding it to be usurious.
It appears to me to be a very extraordinary conclusion to arrive at, that the plaintiffs must lose their $10,000, wMch they actuaEy leaned or advanced before they thought of any usury or usurious agreement, because subsequently they may have undertaken to get more than seven per cent for it.
The bond may have been -given in pursuance of the agreement, hut the $10,000 was not loaned in pursuance of the agreement,' but before. The bond was given for an honest debt and for nothing else, bic usury was. included in it.
Without examining any other question in the case, it is plain to me that the conclusion in relation to the bond, at wMch the referee arrived, was erroneous; and that the judgment should be reversed and a new trial ordered, with costs to abide the event,
New trial granted.