Summary
In Brown v. Champlin (66 N.Y. 214, at p. 221) Chief Judge CHURCH said: "That rule applies when the intent with which an act is done is the material point in issue, as the assignment of property with intent to defraud creditors, assault with intent to kill, and the like."
Summary of this case from People v. WeissOpinion
Argued April 21, 1876
Decided May 23, 1876
James A. Allen for the appellants. J.M. Humphrey for the respondent.
The learned counsel for the defendants asks for a reversal of the judgment in this action, upon three grounds. 1. That the recovery was for a different cause of action from that set forth in the complaint. 2. For usury. 3. For defect of parties defendant.
The first ground is clealy untenable. The complaint contains two counts; the first alleges the making and delivery by defendants of a bond in the penal sum of $10,000, conditioned to pay Breed and Young $5,000, and an assignment for value by the latter to plaintiff. The second count alleges, that the defendants covenanted under their hands and seals, to pay Breed and Young $4,000, which covenant was assigned by the latter to plaintiff for value. The recovery was substantially for the cause of action set forth, although some of the circumstances as proved and found attending it were not averred. It is found that the defendants and Breed and Young were stockholders in a North Carolina gold mining company, and agreed with the plaintiff for a loan to the company of $4,000, to be secured by a mortgage of the company upon its real estate in North Carolina, and the bond of the defendants. The omission to state the relation of the parties to the company, and the application for the loan, or that Breed and Young were nominal obligees only, or all the terms of the assignment, or that the loan was made to the company did not make a failure of proof of the cause of action set up in the complaint, nor a substantial variance, and certainly not one which could have misled the defendants. It is unnecessary to set forth the evidence or the circumstances attending the transaction. It is sufficient to charge the legal effect of a transaction, contract or instrument in writing.
The defence of usury is predicated, first, upon the fact that the bond was conditioned to pay $5,000, when only $4,000 was loaned upon it; second, that interest was payable in gold; and third, that for $2,000 of the $4,000 loaned the plaintiff gave his notes for twenty and thirty days, without interest. The bond, although in form for $5,000, was assigned in terms to secure $4,000, and was a security in the hands of the plaintiff for only $4,000, and was so intended by the parties, and has been so treated since by them in the payment of interest and principal. The circumstance that the interest was payable in gold is not set up in the answer as a fact constituting usury, and need not, therefore, be considered. The giving of the notes for twenty and thirty days, without interest, for a portion of the loan, is not found to have been done in pursuance of a usurious agreement, or with the intent to receive or secure more than the lawful rate of interest, and we may imply, for the purpose of upholding the judgment, a finding that there was no such intent. The only question, then, is, whether that circumstance constitutes usury in law. I think, very clearly, that it does not. It may have been done, and from the evidence was done, for the convenience of the defendants. The plaintiff had but $2,000 in money at the time, but said he would have it in a few days, and the notes were given at the defendants' request. The evidence repels the idea that this was resorted to to secure more than seven per cent. The defendants might have required the plaintiff to have made an allowance for the interest upon the $2,000, until it was advanced, but the defence of usury cannot be established, as a question of law, upon such a trivial and usual occurrence, and one so clearly capable of an innocent construction. The third ground, a defect of parties, has more plausibility. It is found that the defendants refused to deliver the bond to the plaintiff, unless Breed and Young would agree to become equally liable with them for the payment of the money which the plaintiff had agreed to loan to the company, and that, at their request, Breed and Young thereupon indorsed on the back of the bond the following: "For value received we become jointly liable, in all respects, with the original makers of the within bond." This instrument was not under seal. The learned judge who tried the action must have inferred that this was an arrangement for the benefit of the defendants to secure to them the right of contribution against Breed and Young, in case of payment by them, and we think this inference was fully warranted by the evidence. The plaintiff had no connection with, or knowledge of, this transaction. He loaned the money upon the defendants' personal responsibility, and neither required nor cared for Breed and Young's obligation. The defendants exacted it. Breed and Young were obligees named in the bond, and could not be obligors at the same time; nor did the defendants require that they should be, nor was the form of their undertaking apt and proper to constitute them joint obligors. If their agreement was with the defendants, the plaintiff could not have maintained an action upon it, but, if he could, it must have been separate from the action against the defendants. If it had been intended to make them joint obligors in the bond, a different form would have been adopted. If the plaintiff could have maintained an action upon it at all, the instrument must have been treated as a guaranty. The defendants will not be substantially injured because Breed and Young are unquestionably liable to contribute to them for their proportion of any amount which they will be obliged to pay, and they will also be subrogated to the rights of the plaintiff in the mortgage executed by the company. In equity the plaintiff was entitled to the mortgage, and Champlin would be deemed to hold it for his benefit. The objection of a defect in parties is, in this case, somewhat technical, and, as the transaction is capable of a construction which obviates it, that construction should be given to it.
The objection to the question to Breed and Young, whether they intended, by signing the indorsement, to adopt the seals of the obligors, was properly sustained. The question upon this part of the case was whether they did adopt the seals, and that depended upon what they did and said and not upon any mental emotion, and, if they did adopt them, their intent was immaterial. The rule of allowing a person to testify to an intent has never been carried to such an extent. That rule applies when the intent with which an act is done is the material point in issue, as the assignment of property with intent to defraud creditors, assault with intent to kill, and the like.
The judgment must be affirmed.
All concur. FOLGER, J., absent.
Judgment affirmed.