Williams v. Reynolds

Le Grand, C. J., delivered the opinion of this court. This suit was instituted by the appellees against the appellant on his promissory note. There is no question as to the genuineness of the note, nor of the ownership of it by the appellees. The defence set up is usury.

The plea in the case is non-assumpsit. The note was drawn in blank. By the testimony of J. Warden it appears, he is of the firm of J. & H. Warden, and that on the 27th day of July 1853, the appellant gave him the note in question. At the time the note was given Williams was indebted to the said firm to the amount of $52,828.08, and credit was given to Williams on the books of the firm, at the time of receiving the note, for its full amount.

After the ⁶⁴ note was given $2276.98 worth of wheat was purchased for Williams, and delivered to him by the firm; and they also paid drafts for wheat purchased for Williams in the county, to an amount not less than $8,113.99. The firm were making purchases of wheat for Williams nearly every day from the date of the note to its maturity. After the maturity of the note the account of the firm with Williams was presented to him, and in it was a credit for the full amount of the note with a charge of legal interest thereon. The account showed a balance due Williams of about $150, for which with the exception of a few dollars he subsequently drew on the said firm and was paid.

The note was placed in the hands of a Mr. Coakley to be disposed of, the precise words of instruction given to him, the witness Warden does not recollect. Coakley reported to the firm that he could dispose of it at twelve per cent, in which proposition the firm concurred. Neither the firm nor any of its members endorsed the note, nor did they, or either of them, enter into any obligation to pay the note, or any part thereof, in any event whatsoever. On cross-examination the witness said, the note was given in order to pay part of the said Williams’ indebtedness to the said firm, but nothing was said about discounting it; the object in taking the said note, was to lessen the indebtedness of said Williams to the firm, and to raise money to purchase wheat for Williams.

The broker, Coakley, testified the note was handed to him by the Messrs. Warden before its maturity, and before such maturity, was by him offered to the appellees, and by them taken at twelve per cent. The proceeds were handed over to the Messrs. Warden.

The appellees did not know from whence the note came. At the time of its delivery to the witness, the Messrs. Warden told him it was a legitimate one, and that Mr. Williams owed them the amount for money advanced. We are of opinion, on the case as proven, that there was no such taint of usury in the transaction as to prevent the recovery of the holders of the note, and therefore, the 49th section of the 3rd article of the constitution is not in any way involved in this controversy. ⁶⁵ The proof is all one way as to the indebtedness of Williams at the time of the giving, the sale and maturity of the note.

It shows he was indebted beyond its amount, and that he received from the firm a credit for its full amount. The question then is, did the purchase of the note before its maturity, by the appellee, at the deduction of twelve per cent., so impair their title as to preclude them from recovering its amount from the maker? We think not. To render a contract usurious there must be a loan, either express or implied, and an understanding that the money loaned is to be returned.

This is elementary law. In the 1st Yol.page 299, of Bouvier's Institutes, usury is defined as uthe illegal profit which is required by the lender of a sum of money, from the borrower, for its use. To constitute a usurious contract, the following circumstances are requisite; 1, a loan of money; 2, an agreement that the money lent shall be returned at all events; 3, that more than legal interest shall be paid. There must be a loan of money in contemplation of the parties, and if there be a loan, however disguised, it is sufficient; but a bona fide sale of a bill of exchange or promissory note is not usurious, although it may be sold below its value.” In the case before us at the time of the delivery of the note to the Messrs.

Warden, the consideration was full and complete, and continued to be so up to the time of its maturity.There can be no doubt if they had retained it