Haywood v. Jones

Headnote

TJswry — must be pleaded.

Motion by tbe defendant for a new trial on exceptions ordered to be heard in tbe first instance at tbe General Term, after a verdict in favor of tbe plaintiffs, directed by tbe court.

Tbe action was by tbe indorsees against tbe maker of a promissory note. Tbe defense was that tbe note bad never been delivered, and bad no legal inception. It appeared that tbe note bad been wrongfully taken from tbe maker’s possession by one Lewis, who sold it to one Lowry at a usurious discount.. Subsequently tbe plaintiffs purchased tbe note from Lowry. Hpon tbe bearing at tbe General Term, it was urged that tbe usury affecting tbe transfer of tbe note to Lewis rendered it void. With reference to this tbe court at General Term

said: “ It is said that tbe note was usurious. If tbe question bad been presented by tbe pleadings, so that it could have been litigated at tbe trial, it may be that tbe transaction with Lowry would have been adjudged usurious, as be advanced less than $1,000 for tbe note. And, of course, tbe note, if usurious in its inception, would have been void in tbe plaintiff’s bands. But tbe defense of usury is not available to tbe defendant, as against the plaintiffs in this action, because it is not pleaded. It is a well-established rule of pleading, founded on tbe plainest considerations of justice, that where a contract or other cause of action, valid on its face, has been assigned, tbe defendant should not be permitted to defeat tbe plaintiffs’ claim, on the ground that tbe contract was void in its inception, by reason of fraud, illegality, or tbe like, without apprising him specifically of tbe facts relied on to establish such defense. Especially does this rule apply in respect to tbe defense of usury, tbe effect of which, if sustained, is to set aside tbe entire contract, and to deprive tbe party purchasing of even tbe money advanced. (Fay v. Grimsteed, 10 Barb., 321 ; Gould v. Horner, 12 id., 601; Watson v. JBcdley, 2 Duer, 509 ; Soott v. Johnson, 5 Bosw., 213 , 221; Meeha/nicd JBamJc of WilUamsbv/rgh v. Foster, 11 Barb., 87 .)

Tbe printed case with which we are furnished does not show that

the question of usury was even suggested at the trial. The testimony respecting the amount advanced by Lowry for the note was called out by the defendant after he had rested his defense, and had resumed the case in order to reply to testimony introduced by the plaintiffs tending to show that they purchased in good faith.

The defendant’s counsel cites the cases of Sail v. Wilson ( 16 Barb., 548 ) and Sweet v. Chagoma/n (Y Hun, 5Y6). In the latter the defense of usury was pleaded. In Sail v. Wilson, a promissory note, tortiously obtained, was sold by the wrong-doer to one Bigelow at a discount, and by him transferred to the plaintiff without consideration. The case is distinguishable from the one in hand by the very material circumstance that there the plaintiff, not having parted with value, stood in Bigelow’s shoes, and was affected by whatever impeached his good faith. And on that ground the case was decided. (Op. of Allen, J., 555.) But upon the point that the defense of usury, to be availed of, must be pleaded, the case is in accord with the other authorities above cited.”