Carr v. Taylor — 62 N.Y.S. 849

Majority

p. 849

CARR v. TAYLOR.

(Supreme Court, Appellate Term.

February 23, 1900.)

Headnote

1. Usury.

A receipt, executed at the time of the delivery of a note given for a loan, showing that the maker gave and the payee received a sum for the use of the money in excess of the legal rate of interest, renders the entire transaction usurious and void.

2. Same—Purging Contract.

A usurious security can only be made good by canceling it, and giving a new obligation for the sum that ought to be paid, excluding all usury.

Appeal from municipal court, borough of Manhattan.

Action by Kate Carr against Georgiana Taylor. From a judgment for defendant, plaintiff appeals.

Affirmed.

Argued before BEEKMAN, P. J., and GIEGERICH and O’GORMAN, JJ.

Ryan & Richards, for appellant.

Mansfield Compton, for respondent.

The action is to recover $86.50,—a balance claimed to be due upon a promissory note made by the defendant to the plaintiff for $300, payable in one year from the date thereof, viz. February 1, 1897. The answer set up the defenses of usury and an accord and satisfaction. It appears from the evidence adduced upon the trial that, when the note in suit was given, the plaintiff was receiving from the defendant, at her establishment, instruction in the art of dressmaking, pursuant to an agreement in writing, by the

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terms of which the defendant agreed to employ the plaintiff, after the first three months’ tuition, at a stipulated salary. The plaintiff claims that the sum for which the note was given was delivered to the defendant to secure the faithful performance of the conditions of the said contract on her (plaintiff’s) part; but her testimony in this respect is contradicted by that of the defendant, who testified that said sum was loaned to her upon condition that she would pay plaintiff §27.65 for the use thereof for one year, and that a credit for said last-mentioned sum was then allowed the latter upon a “fifty-five dollars course of lessens in the Taylor system of dressmaking.” While the plaintiff denied the making of such usurious agreement, the following receipt signed and delivered by her to the defendant at the time of the delivery of the note in controversy shows conclusively that she is mistaken in her version of the transaction:

“New York, Feb. lst/97.

“In consideration of Miss Garr loaning to Mrs. Taylor the sum of three hundred (§300 °°/ioo) dollars, Mrs. G. Taylor gives Miss Kate Garr §27,65 as a bonus or interest for the use of said §300 oo/100 for 'one year from date; said §300 secured by G. Taylor’s note given Miss Carr, Feb. 1st, 1897, for one year. [Signed] Kate Carr.”

This writing clearly evinces the intention of the parties to pay, on the one hand, and to receive, on the other, interest in excess of the legal rate. The entire transaction is thus tainted with usury, and hence the note in question is void. 1 Rev. St. c. 4, tit. 3, §§ 2-5 (2 Rev. St. [Banks’ Bros. 9th Ed.] pp. 1854, 1855). While it is true that a usurious contract may be purged by the subsequent acts of the parties so as to become valid and enforceable (27 Am. & Eng. Enc. Law, 964), yet the proof, to my mind, does not afford any ground whatever for such a finding. Certainly no such effect can be properly claimed for the agreement contained in the following-writing:

“New York City, May. 27, 1897.

“Agreement made between G. Taylor and Kate Carr in view of a certain contract made between G. Taylor and Kate Carr on Feb. 1st, 1897, and in satisfaction, this Mrs. G. Taylor agrees to employ another dressmaker in the place of the present one, who is not satisfactory to Miss Carr, to instruct Miss Carr in the art of dressmaking until Miss Carr wishes to take a position at a salary, or goes in business for herself. Mrs. G. Taylor agrees to advance Miss Carr §3.00 weekly while she (Miss Carr) is taking her dressmaking lessons; said amount to be returned to Mrs. G. Taylor on or about Feb. 1st, 1898.

“[Signed] Mrs. G. Taylor.

“[Signed] Katie Carr.

“Witness: [Signed] G. Colon.”

It is well settled that a usurious security can only be made good by canceling it, and the giving of a new obligation for the real sum which ought to be paid, excluding all usury. Miller v. Hull, 4 Denio, 104 ; Jacobsen v. Bradley, 49 Hun, 152 , 1 N. Y. Supp. 676 . It is not even pretended that anything of the kind took place in the case at bar, and the very fact that the plaintiff retained possession of the note, and brought suit thereon, precludes the idea that it was regarded by either party as canceled or destroyed as an obligation by the agreement last above set forth. In this view, it is unneces

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sary to pass upon the question whether such contract constitutes, as claimed, an accord and satisfaction.

The judgment should therefore be affirmed, with costs. All- concur.