Scheidig v. Bemis — 34 N.Y. St. Rep. 992

Majority

p. 992

Fred Scheidig, App’lt, v. Edward H. Bemis et al., Resp’ts.

(Supreme Court, General Term, Third Department,

Filed December 12, 1890.)

Headnote

Bills and notes—Usury—Evidence.

Plaintiff sued upon a note, made by defendants, payable to the order of plaintiff, for the “sum of eighty-five dollars and fifty-eight cents, wiih three years interest at six per cent., at the First National Bank of Glens Falls, N. Y., one year from the date of said note.” The complaint was dismissed upon the ground that the note was. usurious upon its face and the referee declined to receive plaintiff’s evidence as to the consideration. Held, error; the note was not usurious upon its face; and in any event usury is a defense which must be both pleaded and proven. Evidence as to the consideration should have been received.

Appeal from judgment dismissing complaint, entered upon the report of a referee.

This action was brought upon a promissory note made by the defendants payable to the order of the plaintiff for the “sum of $85.58 with three years’ interest at six per cent., at the First National Bank of Glens Falls, N. Y, one year from the date of ■said note.”

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The answer of the defendants does not deny any allegation of the complaint, but sets up a plea of usury, alleging that plaintiff ■agreed to extend the time of payment of the said sum of §85.58 for one year, upon condition that the said defendants should execute their note for that amount, “ and also pay to the plaintiff 'three years’ interest upon the said §85.58, one year from date thereof, being $10.26 more than the lawful interest upon the same.”

The defendants moved for a dismissal of the complaint and for judgment upon the ground that the complaint did not state facts sufficient to constitute a cause of action.

The plaintiff then offered to prove that at the time of .the making and delivery of said note, the defendant Edward H. Bemis was owing plaintiff $85.58 for goods purchased by him three years previous thereto, and that said note was given to secure said indebtedness ; that at that time the said defendant Edward H. Bemis was indebted to the plaintiff in the sum of $85.58 with three years’ interest thereon ; to which offer the defendants’ counsel objected and the referee sustained the objection of defendants and plaintiff duly excepted. Thereupon the referee granted the motion of the defendants and dismissed the complaint, with costs.

To which ruling the plaintiff’s counsel duly excepted.

II. Prior King, for app’lt; D. S. Potter, for resp’ts.

The defendant must make out his title to relief on the ground of usury by allegation and proof. Long Island Bank v. Boynton, 105 N. Y., 656 ; 8 N. Y. State Rep., 54.

He cannot assert that the complaint in this case shows no cause of action, because the note is not void for usury unless there was a loan or forbearance of money, goods or things in action. 2 R. S., m. p. 772, § 5.

If real estate is sold and the purchase money mortgage is antedated, this is not usurious. Frank v. Davis, 23 Abb. N. C., 419 ; 25 N. Y. State Rep., 207.

The cases cited by defendant, holding that obligations which, on their face, appeared to be made by a married woman, showed no cause of action, do not apply..

This note does show a cause of action, unless it should appear that the consideration therefor was such that more than six per cent interest was agreed upon. But the note itself does not show what was the consideration for which ir was given.

It was undoubtedly competent for the plaintiff to show, if it became necessary to do so, the' consideration of the note, so as to disprove any usury which might be asserted by defendant

But furthermore the note is not “prima facie usurious.” This is distinctly laid down in Marvin v. Feeter, 8 Wend., 533 .

The defense there was two-fold. First, that the original notes for which the notes in suit were given were usurious. Those original notes, bearing date March 17, 1828, bore interest from November 24, 1827, and it was claimed that therefore they were usurious. The court said: “ If the notes were to be considered

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evidence of money lent at their date there would, perhaps, be more than seven per cent reserved.

11 But it is well known that notas are given for property sold and for other business transactions .as well as for money lent If a merchant sells goods upon credit, and six months after the sale the purchaser gives his note bearing- interest from the time of the sale, the transaction is an honest one.” To the same effect is the language of the court in Ewing v. Howard, 74 U. S. (7 Wall.), at 505.

We cannot learn from the note itself what was the consideration for which defendant gave it; whether he received the goods or money, or if money, how much.

Until that is shown the note does not show that it is usurious. A merchant selling goods may charge for credit more than the legal rate of interest and the transaction will not be usurious.

Judgment reversed, referee discharged, new trial granted, costs to abide the event.

Landon and Mayham, JJ., concur.