Majority
p. 65Blodgett vs. Wadhams.
Headnote
Plaintiff agreed to lend G. money at 10 per cent interest on his giving plaintiff defendant’s note for the amount. G. then exchanged notes with defendant, giving him a chattel mortgage as collateral security, and borrowed the money from plaintiff at 10 per cent interest, on the security of defendant’s note. Held, that the transaction was usurious,[1]A release from all liability on a note, to secure the amount of which a chattel mortgage is given as collateral security, discharges the mortgage.
Action on notes made to Green or bearer by Wadhams; one of §80, the other of §100. The defence was opened by a statement that the notes were taken, under the negotiation of a ten per cent loan by Green for the plaintiff, and on the plaintiff saying he would take a good note procured from Wadhams. That Green gave his notes in exchange for defendant’s, and a chattel mortgage to secure the amount. Green was offered as a witness, but objected to and released by defendant “ from any liability to me on account of the
p. 66
notes which are the subject matter of this suit.” Plaintiff still objected on the ground that the “ release applies only to the notes and not to the mortgage.” The judge held, that a discharge of the notes secured by the mortgage discharged the mortgage. A farther objection that release was insufficient generally, was overruled. Green was then sworn as a witness and testified that the plaintiff' told him he was not good ; but that if he would get defendant’s notes, he would lend him the money at ten per cent. Whereupon the notes were procured in the manner mentioned in the opening, and passed to the plaintiff at the ten per cent. Verdict for defendant. Plaintiff moves for a new trial on a bill of exceptions.
By the Courtj
The cross notes and mortgage were merely a collateral security for the notes in question; and the release by discharging Green from all liability on the latter discharged the whole.
To give notes taken under the circumstances of this case the character of exchange notes and protect them as bona fide, would be to allow the plainest evasion of the usury laws. A party, who gets notes to be discounted, always exchanges for them some sort of security; if not his own notes or his mortgage, at least his implied promise to indemnify tire accommodation maker or endorser. The whole is parcel of the usurious transaction.
New trial denied.