Lamoille County National Bank v. Bingham

Application by Surety of Uusurious Interest paid by Principal. A surety cannot avail himself of usury paid hy his principal.

Assumpsit on a promissory note. Plea, the general issue, with notice of special matter. Trial by jury, April Term, 1877, Rotce, J., presiding. The note declared on was for $800, payable to the plaintiff, without words of negotiability. It appeared that defendant signed the note as surety, and that Warren I. Atkins, another signer, was the principal, and the one for whose benefit the money was obtained; that after its execution, Atkins presented it for discount at the bank to which it was made payable, and failing in that, applied to George Wilkins to get the money on it, and that Wilkins took it and let Atkins have the money ; and that this suit was brought in the name of the plaintiff for the benefit of Wilkins, to recover the amount of the note. The note was not paid at maturity, but was suffered to lie a considerable time without any proceedings to enforce collection. The defendant offered Atkins as a witness, and offered to prove by him, in mitigation of damages, that at different times after the execution of the note, he had paid Wilkins some sum or sums as extra interest. To the admission of that testimony, the plaintiff objected, for that if Atkins had made payments of extra interest to Wilkins, not applied nor intended to be applied on the note, such payments created an independent right of action or defence, which he alone could enforce, either by a suit in his own name, or in defence of a suit against himself, but that the defendant could not avail himself of such payments if made. But the court overruled the objection, and held that all payments of extra interest as such, as well as any other payments, made by Atkins, would operate to extinguish so much of the amount appearing to be due on the note, and that the defendant might as fully avail himself of all such payments in this suit as Atkins could if he were a defendant ; to which plaintiff excepted. The admission of the testimony of Atkins was erroneous. The right to recover money paid as extra interest is a personal right. It is the separate, distinct, and independent right of the principal, and the surety in an action at law against him alone, can take no advantage of it as a defence. Ward v. Whitney, 32 Vt. 89 ; Churchill v. Cole, 32 Vt. 93; Davis v. Converse, 35 Vt. 503 ; JSwing v. Griswold, 43 Vt. 400 ; Low v. Prichard, 36 Vt. 183 ; Nichols v. Bellows, 22 Vt. 581; Austin v. Chittenden, 33 Vt. 553. Any sum paid by Atkins on the note in suit, even though paid as usury, may be applied in payment pro tanto of the principal. A payment, resulting in the reduction of the principal, inures to the benefit of all the signers. Ward v. Sharp, 15 Vt. 115 ; Nichols v. Barlow, 22 Vt. 581; JSwing v. Griswold, 43 Vt. 400.