10 Paige Ch. 76 | New York Court of Chancery | 1843
The allegations in the complainants5 bill, which are not denied by the defendants in their affidavits read in opposition to this application, are in substance, that in April 1839, Church borrowed of the defendant Jones $200 for six months j for the use of which money, for that time, Jones was to receive at the rate of ten per cent per annum. Church, together with the complainants Yilas and Bacon as his sureties, thereupon gave to Jones their joint and several negotiable note for $210, payable in six months, for the amount of the loan and interest for that time, including the additional three per cent for the usurious premium. At the end of the six months Jones agreed for a forbearance of the loan for six months longer, at the same usurious rate of interest; which was then paid in advance by Church; Several other agreements for extension were made in the same manner, except that in one or two of the last the usurious premium was not paid down, but only 'agreed to be paid; and a part thereof never was paid. In April 1842 Jones commenced a suit on the note, against Church and his-sureties, in the name of the defendant Piercy, as endorsee of the note. Upon the trial of that suit, Jones was called as a witness to establish the defence of usury. But" he swore that the suit was brought for his benefit, and the court thereupon decided that he was not bound to give evidence to prove the usury j in accord
At the time of filing the original bill Church had not been discharged under the bankrupt act; and of course could not be a witness to establish a defence which went to discharge himself from liability as well as his sureties, although they released him from liability to them. And as an answer on oath from the defendants in this court was waived by the bill, there appeared to be no foundation for a suit here to litigate the question of usury. The complainants now ask for leave to amend their bill, by abandoning the charge that the original note was void onaccount of the three dollars included therein for the usurious premium, and to put their defence upon a ground which is personal to themselves; to wit, that they were discharged as sureties by the subsequent agreement -with the principal debtor to extend the time of payment without their consent.
The counsel for the defendants supposes that this was a defence which the complainants might have availed themselves of in the suit at law; and that Jones might have been used as a witness for that purpose. In this, however, the counsel is clearly wrong; for the statute only protects the plaintiff when he is called as a witness to establish a defence of usury. To have made out the defence for the sureties that time had been given to the principal debtor,
An agreement with the principal debtor, which is to discharge his sureties on the ground that time of payment has been given to him without their consent, must be such an agreement as the debtor himself has the right to have enforced against the creditor. It must therefore be founded upon a sufficient consideration, and not upon a mere agreement to do what the debtor was legally bound to do before such agreement was made. An agreement to give time, in consideration of payment of a part of the debt, where the debtor is bound to pay the whole immediately, or to pay interest on a debt where the law would give the creditor interest while payment was withheld, or in consideration of a parol promise which is void because it is not in writing, will not therefore discharge the surety; as such agreements
The case is otherwise, however, where the usurious premium for the forbearance of the debt for the stipulated period is paid down; as was done in the case of Miller v. McCan, (7 Paige’s Rep. 451.) The statute prohibits the taking of usury, and subjects the party receiving it to indictment and punishment. But there is no law forbidding the borrower, or the debtor, from giving what he pleases for the loan or forbearance of money; and there is no reason why he should be deprived of the benefit of an agreement extending the time of payment of his debt, where the contract is executed on his part by the actual payment of the consideration for such extension, in advance. Since the decision in Miller v. McCan, the same question has been brought before the court of appeals in Kentucky, and has been decided in the same way. (Kenningham v. Bedford, 1 B. Mon. L. & Eq. Rep. 325.) The sureties in this case, therefore, were in equity discharged from the payment of this note, if the agreements for thee xtensions of payment were made, as alleged in the bill, without the knowledge or consent of the complainants, or of either of them. And as this is a defence which they could not have set up and proved in the suit at law, they are not too late in filing their bill to obtain relief here.
If the defendants serve such a consent on the complain