Court Opinion

ID: 5412331
Source: CourtListenerOpinion
Date Created: 2022-01-08 16:11:12.889104+00
Date Added: 2024-06-11T08:30:51.557016
License: Public Domain

Lehman, J. (dissenting).
Before the Negotiable Instru-
ments Law was passed, !he law of this State was clear that a note, void for usury in its inception, was void forever and could not be enforced, even by a purchaser in good faith and for a valuable consideration. While the term “ holder for value,” or “ holder in due course,”- has been applied to such a person in the cases, I do not think that this term is technically correct, because the instrument, never having come into existence, had no negotiable character and a purchaser could never be a “ holder in due course,” • See Eastman v. Shaw, 65 N. Y. 522. On the other hand, if a note had a valid inception, no defense by which the liability of any party thereon could be avoided could be raised against a bona fide holder.
I believe that section 96 of the, Negotiable Instruments Law was intended, simply, to put into the form of a statute the law of negotiable instruments as established by commercial custom and as declared by the courts. In the Schlesinger cases, 189 N. Y. 1; 191 id. 69, the Court of Appeals considered the question of whether the defense of usury could be raised against a bank which was a bona fide holder for value of commercial paper, void as between the parties for usury. The bank’s right to recover was sought to be upheld on two separate grounds: the Banking Laws, State and National, and the Negotiable Instruments Law. The judges held that the recovery could not be sustained on either ground. Three judges held that a recovery *203could be upheld under the Banking Laws, and one judge held that it could not be upheld under the Banking Laws, but could be upheld under the Negotiable Instruments Law. Opinion of Cullen, Ch. J., in Schlesinger v. Lehmaier, 191 N. Y. 69, 76; see also page 73.
I do not, therefore, consider that these cases can be deemed authorities upon the question here considered. The judgment should be reversed.
Judgment and order affirmed.