Clark v. Loomis

When a note or bill is sold at its inception, at a discount exceeding the legal rate of interest, having°no validity except that which such sale imparts, it is usurious and void. This rule has been acted upon in this state so long and so uniformly, that the courts are not at liberty to treat it as an open question. The fact, that it contains the words "value received,” does not estop any party to it from showing that it was usurious at its inception. The delivery to the parties, who discounted such a bill usuriously, of another bill made by the parties to the first one, and made and delivered merely as security for the payment of the first, and having no other consideration to support it. renders the second bill equally void as the first.

This action came before the court, on a motion made by the plaintiffs for á new trial. It was tried before Chief Justice Oakley and a jury, on the 21st of Hovember, 1855. After the evidence on both sides was closed, the Chief Justice dismissed the complaint, and the plaintiffs excepted to his decision. The case presenting only questions of law, an order was made at the trial, that they be heard in the first instance at the General Term. The complaint, first, alleged that Loomis, at the city of New York, on the 14th of July, 1851, drew a bill of that date, on Sis-son, directed to him at Poughkeepsie, New York, payable to order of Loomis at the Bank of Poughkeepsie, on the 2d of August then next, without grace, for $2,000, its acceptance by Sisson, and its endorsement by Loomis to J. J. Stewart & Go., and by the latter to the plaintiff, its nonpayment at maturity, and the acts necessary to charge the defendant Loomis as drawer and endorser. The complaint then proceeded and concluded as follows:—■ “And the plaintiffs further say, that afterwards, and on or about the 5th day of August, 1851, said defendants, or one of them, came to said plaintiffs and represented that they were not then able to pay said bill, but promised that if said plaintiffs would extend the time for thirty days, they would pay the same in full, to which proposition the plaintiffs readily acceded, and thereupon the defendants drew and accepted their certain, other bill of exchange, for the said sum of $2,000, dated said 5th day of August, 1851, and payable on the 1st day of September next ensuing, to the order of said defendant, Loomis, at said Bank of Poughkeepsie, and by him duly endorsed to said plaintiffs; which said last-mentioned bill was also in due form presented for payment at said bank, and payment thereof duly demanded; but said defendant Sisson then and there wholly failed and refused to pay the same, or any part thereof, whereof also the defendant Loomis had due notice. “ And the plaintiffs further say, that they are now the lawful owners and holders of said bills, and that the said defendants, and each one of them, are justly indebted to them thereupon in the sum of $2,001.50, principal and expense of protest, together with interest thereupon from the said 4th day of September, A. d. 1851. “ Wherefore, the plaintiffs demand judgment for the said principal sum, expense of protest, interest, and the costs of this action.” Loomis and Sisson for answer to the complaint, said, “ That the bill of exchange therein mentioned, was drawn by Loomis, to raise money for his own benefit, and was accepted by Sisson solely for his consideration, and was placed in the hands of J. J. Stewart & Go., as agents of Loomis, to procure a loan upon it. That plaintiffs agreed to, and did loan upon it $2',000, for which it was agreed they should be paid, and for which they were paid $20 interest, for the loan of 2,000 for fifteen days. That the transfer of it to the plaintiffs, on this loan was its first inception.” On the trial, the plaintiffs produced the two bills of exchange, and proved that the interest on $2,000, fw from the 4th day of September, 1851, to the time of the trial, was $590 x<nr and rested. The defendants proved that the bill of the 14th of July, 1851, was drawn by Loomis, to be negotiated for his own benefit, and was endorsed by Sisson, for his accommodation. That Mr. Loomis carried it to Mr. Canfield, one of the firm of J. J. Stewart & Co., and asked Canfield to try and sell it for him, who said he would do so. On, or about, the 19th of July, 1851, he sold it to the plaintiffs for $20 less than its face, and before delivering it and receiving the money, endorsed it with his firm’s name, that being required by the plaintiffs. That the bill of the 5th of August, 1851, was left with the plaintiffs for collection, by Loomis, “ and, if paid, the proceeds were to be applied to the first bill, the plaintiffs holding that.” The second bill was offered to the plaintiffs as a renewal of the first. They refused to receive the second draft other than for collection. They assigned, as a reason, that they had J. J. Stewart & Co. as endorsers of the first draft, and they would do nothing to lose their endorsement.” The bill of the 5th of August was also accepted by Sisson, solely for the accommodation of Loomis. When Loomis took the bill of the 14th of July to Canfield, nothing was said by either to the other about its being business paper, and no statements were made by Canfield to J. J. Stewart & Co., nor did the latter inquire in relation to the character of the paper. The two bills read as follows: “ $2,000. “ New York, July 14th, 1851. “ On the 2d of August next, no grace, pay to the order of myself, at the Bank of Poughkeepsie, two thousand dollars, value • ' received, and charge the same to account of “ Freeman Loomis. “Isaac Sisson, Esq., Poughkeepsie, N. Y.” “$2,000. “ New York, August 5th, 1851. “ On the first of September next, pay to the order of myself, at the Bank of Poughkeepsie, two thousand dollars, value received, and charge to the account of “ Freeman Loomis. “ Isaac Sisson, Esq., Poughkeepsie, N. Y.”, Each bill was endorsed by Loomis, and accepted, in due form, by Sisson. At the conclusion of the evidence given, the plaintiff’s counsel offered to prove that the current rate of exchange betwéen New York and Poughkeepsie, on or about the 19th day of July, 1851, and also on or about the 5th' day of August, 1851, was one half of oné per cent. The court rejected the evidence, to which plaintiff’s counsel excepted. The court refused to allow the case to be submitted to the jury, to which the plaintiff’s counsel excepted. The court thereupon dismissed the complaint as to both defendants, to which the plaintiff’s counsel excepted. The court then made an order, that the questions of law presented by the case, be heard, in the first instance, at the General Term, and that the entry of judgment, in the mean time, be suspended.