Lincoln National Bank v. Kirk

Bischoff, J.

The action was upon a promissory note for $1,000, without interest, payable four months after date, and made by H. B. Kirk & Company, in their firm name, to the order of the defendant Breck, the firm being at the time composed of all the defendants. The only defense litigated was that the note was issued by the payee for his own accommodation and at his request discounted by one B. L. Luddington, pursuant to an agreement whereby the former consented to a deduction from the face amount ■of the note of a sum equal to the interest at the limit of the legal rate,- 6 per centum per-annum, and promised to pay $50 additional.

The note was produced upon the trial by the plaintiff, and bore the indorsements only of the payee, and. of Marietta Luddington, the wife of B. L. Luddington, in the order as named. Two witnesses only were called, B. L. Luddington, for the plaintiff; and Breck, the payee, for the defendants. The testimony of these witnesses, with the note and the certificate of protest, at the request of the plaintiff, and two cheques,. alluded to by the witnesses, one 'by Mrs. Luddington, to the order of H. B. Kirk & Company, admittedly received by the payee, and for the amount of the note, less a sum equal to the interest, at the rate of 6 per centum per annum, and the other for $50, given by the payee to B. L. Luddington, was all the evidence adduced. Luddington testified to the effect that when the payee applied to him to discount the note for the makers he undertook to have such done by the plaintiff explicitly, and upon Mrs. Luddington’s indorsement, in consideration of the payee’s promise to suffer a deduction equal to the interest at the limit of the legal rate, and to pay him (Luddington) $50 for his services in the procuration of such indorsement and discount. He further testified that the note was thereupon indorsed by Mrs. Luddington, *47and so discounted by the plaintiff, at the rate "of 5 per centum per annum, the avails being credited to Mrs. Luddington’s account with the plaintiff; and that later he paid the payee., by Mrs. Luddington’s cheque upon such account to the order of H. B. Kirk & Company, the makers, the amount of the note after deducting therefrom a sum equal to the interest, at the rate of 6 per centum per annum, and received from the payee, Breck, by cheque, to his order, $.50 for his services, as agreed. Break’s version of his negotiations with Luddington only differed from the latter’s in so far as the former denied that anything was said with regard to either Mrs. Luddington’s indorsement or a discount of the note by the plaintiff, and that he had any recollection that the $50 were' stated to be for Luddington’s services. In other words, Break’s testimony was to the effect that he supposed he was dealing with Luddington as the proposed lender.

The trial court directed a verdict for the plaintiff in the full amount of the note, with interest from its maturity, and protest fees added, to which direction the defendants excepted.

The burden of the present appeal is, that because Luddington was a Witness interested in the event of the action his credibility was to be determined by the jury, and that, therefore, it was error to withdraw the case from the latter’s consideration.

We do not accede to the defendants-appellants’ contention and are of the opinion that the case was rightly disposed of in the court below. The evidence was, in any aspect thereof, insufficient to support the defense, and the withdrawal from the jury of immaterial questions of fact is not error. Baldwin v. Doying, 114 N. Y. 452.

The defense was that the note was void in the hands of the plaintiff for usury on the part of B. L. Luddington, an alleged prior holder. The answer did not specifically mention Luddington as a holder, but, obviously, usury in the case at bar was predicable only of an agreement for excessive interest on the part of the holder of the note. Without substantiation of the defense by sufficient evidence, the mere production of the note by the plaintiff entitled the latter to a recovery. Lawson on Presumptive Evidence, 77; Mechanics & Traders’ Bank v. Crow, 60 N. Y. 85; Same v. Livingston, 6 Misc. Rep. 81.

The rule which requires the submission of the testimony of a witness shown to have an interest in the event of the action to the jury does not apply to a case where there is no conflict in the evi*48dence, or there are no circumstances from which an inference against the facts so testified to can be drawn. Kelly v. Burroughs, 102 N. Y. 93. It does not go to the length of enabling the jury to find, without evidence, a state of fact in conflict with the facts as they appeared from the testimony rejected.

Disregarding Luddington’s testimony, which, in the light of the defense, was, in effect, nó more than, a denial that he personally discounted the note, what was there in the evidence to show that "he did discount it? Seemingly at a loss to point at anything, the counsel for the defendants-appellants contents himself in his brief with saying that Luddington undertook ” to discount the note. The circumstance of Mrs. Luddington’s cheque to the order of the defendants, however, tended rather in the direction of Luddington’s denial of having discounted it for himself, and from Break’s version of his negotiations with Luddington it, at most, appeared that the latter entered into an executory agreement to discount the note for his own account, at a rate exceeding the limit of the legal-rate of interest. For aught that appears, Luddington never was a party to the note as holder or otherwise, and his agreement to discount the note for himself was never consummated. It is mere surmise or conjecture, therefore, to say that the note ever had an inception in Luddington’s hands, or that he was at any time more than its custodian. His mere proposal to discount the note at a usurious rate could not have the effect of tainting it-with usury in the hands of one who subsequently acquired it neither from him nor from a person in privity with him, but from the original parties, or some one in privity with such parties. To say that the evidence warranted a finding of usury by Luddington, and the avoidance of the note in the plaintiff’s hands, would require our approval of the proposition that the negotiability of a promissory note is forever destroyed after it has once been exposed to an offer to discount it. at a usurious rate, and that .by one not a party thereto. The circumstances present no element of an estoppel against the plaintiff. Hence, the payees’, or makers’ belief, that they were dealing with Luddington as lender was wholly immaterial. Lee v. Chadsey, 3 Abb. Ct. of App. Dec. 43.

Probably, in view of the force of what has been said, the counsel for the defendants-appellants urges that the jury were authorized by the evidence'to find that the note was first discounted by Mrs. Luddington acting by her husband as her agent, and to impute her agent’s exaction of more than the limit of the legal rate of interest *49to her. A conclusive answer thereto, however, is that the defense, as alleged, was not predicated of an agreement with or a loan by .Mrs. Luddington, but of an agreement with and a loan by her husband, and that no amendment of the answer* was asked for, or had. We cannot infer the substitution and litigation by consent of the parties of a different issue, since the evidence submitted without objection was admissible under the issue made by the pleadings; nor should an amendment of the answer be allowed upon appeal only to enable us to reverse the judgment.

Furthermore, Mrs. Luddington’s assent to her agent’s exaction of more than legal interest was a constituent of the defense of usury upon her part (27 Am. & Eng. Ency. of Law, 1004, and cases there collated), and the evidence was not open to a finding of the fact of such assent.

Clearly, a verdict for the defendants upon the issue made by the pleadings and tried would have been contrary both to the law and to the evidence.

The judgments of the General and the Trial Terms of the court below should be affirmed, with costs.

Daly, P. J., and McAdam, J., concur.

Judgment affirmed, with costs.