8 Tenn. 392 | Tenn. | 1828
Fletcher owed Campbell five thousand dollars, and on the day the note fell due, C applied for payment; Fletcher
Suppose Talbot had made the note to Read and Gray, who had sold it at a discount over legal interest to Campbell, could the latter recover from Read, and Gray? or would the transaction between them be usurious? Thé note was genuine, and given in the fair course of trade. The endorsement was the making of a new note, and as a contract was collateral to, and independent of the note endorsed; even had this been forged, still the endorsement was valid. The question then simply resolves itself into this point, can parties in any case be guilty of usury; by the contract of endorsement upon a genuine negotiable paper? The jury have found, that the intention of the endorsement was to obtain exorbitant interest, on the part of the lender, and to evade the statute against usury.
If Read and Gray had made their note to Campbell at ninety days, and sold it at a discount of four per cent, pér month, it would have been usurious. If the endorsement was making a new note, it was equally usurious. ThiSj Upon principle, seems to be sufficiently clear. But it Is contended, that the statute against usury has been differently construed. 13 Johns. 52; 15 Johns. 55; 17 Johns. 176, 181; and 3 Johns. Ca. 66, are referred to. The courts of New York have certainly decided, that ás between efi-dorser and endorsee, the foregoing transaction would not havé been deemed usurious in that state. We are told the English authorities are so likewise. This we find hot to be the fact. The case of Parr v. Eleason, (1 East, 92,) dedded that an inriocéiit eñdórséé cóuld recover against the
If ¿xcessive gain was not intended in this instance, why
The difficulty in most of the cases has been, where the holder of the note or bill has sued the maker or acceptor, and the defendant has attempted to defeat the action, on the ground that the plaintiff claimed through a void endorsement and had no title to sue. Such were Lloyd v. Keach, (2 Con. Rep. 175,) Littell v. Hord, (Hardin’s Rep. 81,) Knights v. Putnam, (3 Pickering’s Rep. 184,) the case in 1 East, 92, and some of the English nisi prius cases; and thus far the case of Lawes v. Mazzaredo really goes. Perhaps the rule laid down by the Supreme court of Kentucky, (Hardin 81,) is the true one, as between endorsee and maker; that if the endorser does not complain, it does not lie in the maker’s mouth to set up the objection. This proceeds upon the ground that usurious contracts are not malum in se, but only voidable by the party injured, or those claiming under him. So far as the endorsement operates as a transfer of the note, it is an executed contract, which the statute does not apply to; it only is applicable to the new and collateral undertaking of the endorser to pay, on the failure of the maker, which is an exe-cutory contract and may be avoided. The right of property and of action is passed by the endorsement; if this is made without liability on the part of the endorser, the transaction cannot be impeached for usury though the note was sold at ever so great a discount; the transfer of property in the note is immediate on its being endorsed and delivered; the collateral undertaking to pay on failure of the maker, is yet to be executed, and a different matter, with which the maker of the note has no concern, and only avoidable at the election of the party thereto, the endorser.
We'have been somewhat particular in stating reasons why the maker cannot defeat the action of the endorsee, because the supreme court of the United States, in the cause of Gaither v. The Farmers’ and Mechanics’ Bank of Georgetown,
This case, and that in Starkie, go further than there is any necessity for us to go, and further than we would, if the necessity existed.
Judgment affirmed.