President of the Northampton Bank v. Allen

An incorporated banking company loaned a sum of money at a discount of six per cent, with an agreement, on the part of the borrower, to redeem the identical bank notes received by him on the loan, if they should be returned to the bank during the continuance of the loan, with specie, and also to purchase of the company, with specie, during the loan, a certain amount of other bank notes not current at par— this was held to be a lawful agreement, and the note given to secure the loan not usurious.

Assumpsit by thé plaintiffs, as endorsees, against the defendant, as endorser of a promissory note given by Matthew Coffin, dated June 10, 1809, for 7000 dollars, payable to the defendant, or his order, at the Northampton Bank, in six months from the date, “ in the notes of said bank, or such other bank notes as are received at said bank at that time without a discount,” and by the defendant endorsed to the plaintiffs. The general issue being joined, the same was tried April term, 1811, before the late Judge Sedgwick, and a verdict taken for the plaintiffs, subject to the opinion of the Court upon the judge’s report of the evidence at the trial. From that report it appears that the only evidence offered in support of the action was the note in writing, subscribed and endorsed as declared on. At the foot of the note was the following memorandum : “ Five thousand dollars * of the [ * 285 ] above sum are in Northampton Bank bills, numbered from one to two hundred, dated July 1, 1809; which bills I engage to redeem, whenever they return to the bank for specie, by paying the same according to a former contract with me.—Matthew Coffin.” Before the maturity of the note, the plaintiffs, as a banking company, stopped payment, and have never done business since. The signatures to the paper were proved, as were also the necessary demand and notice. By the testimony of Levi Lyman, who had been the cashier of the bank, it was proved that, some time previous to the transaction, which was the ground of this action, the bank had loaned to Matthew Coffin 14,000 dollars, for twelve months, and that, at the time of that loan, a promise was made, in writing, in substance like the writing on which this action is brought, which had the guaranty of S. Hinldey, Esq. Coffin, at the time of that loan, made an agreement with the officers of the bank, which was reduced to writing, and subscribed by him, (but which at the time of the trial was either-lost or mislaid;) the purport of which was, that., if any of the Northampton Bank bills, which were received from the bank by him, and which were distinguished by marks put upon them, should be returned during the term for which the loan was made, he, Coffin, would, on notice within ten days, receive them from the bank, and pay specie for such of them as had been by the bank redeemed by specie; and that, at the end of every three months, he would receive one thousand dollars from the bank in certain paper described as foreign bills, which were circulating, and which were generally received for purchases and in payments at par, but were in the market, when exchanged for specie, at a discount of about two per cent.; and that he would pay for them at their nominal amount in specie. In order to ascertain the market discount on foreign bills, all inquiries were confined to the market of Boston ; and no evidence was given, or offered, or proposed, of any other market. Lyman further testified that, at the time of the loan on which this action was brought, [ * 2S6 ] besides * the written memorandum on the note, it was agreed by Coffin that he would, every ninety days during the loan, receive 500 dollars in those foreign bills, and pay for them an equal amount in specie, and that there might have been a writing to that effect, which, however, he could not find. Lyman also swore that the consideration, paid to Coffin for his note, was 5000 dollars, in bills of the Northampton Bank, 1000 dollars in foreign bills, and a draft on the agent of the plaintiffs in Boston for 1000 dollars, in the last-mentioned bills ; that Coffin was a broker, and well acquainted with the value of bills in Boston and in the country; and that there were no bills not issued in Boston which were receiver there in exchange for specie without a discount. It appeared in evidence that there was deducted from the money loaned, at the time of the loan, a discount at the rate of six per cent, per annum. Coffin, upon being released by the defendant, was admitted as a witness, although objected to by the plaintiffs. He testified that the second loan of 7000 dollars was made upon the same principles ns the first of 14,000 dollars. On this evidence it was agreed that the jury, after ascertaining the damages, should find a verdict for the plaintiffs, subject to the opinion of the Court upon any question of law upon the facts ; and the verdict was to be altered or amended conformably to law.