Union National Bank of Pittsburgh, Respondent, v. George M. Wheeler, Appellant

Union National Bank of Pittsburgh, Respondent, v. George M. Wheeler, Appellant. (Argued February 2, 1875; decided February 16, 1875.) It seems, that where a corporation is prohibited from availing itself of the defence of usury, an indorser or other surety upon its paper cannot avoid liability thereon upon the ground that the corporation has agreed to pay a rate of interest beyond that allowed by law as to natural persons. (Chubch; Oh. J., and Allen, J., dissenting.) This action was brought upon two bills of exchange, drawn by the Brady’s Bend Iron Company (an incorporation organized under the laws of Pennsylvania), upon defendant, as its treasurer, at No. 5é Cliff street, New York, payable to the order of defendant, individually. It was accepted by him as such treasurer, payable at the American Exchange Bank of New York, indorsed by him individually, and discounted by plaintiff at Pittsburgh, Pennsylvania. One of the defences was usury. The evidence was, that at the time of the discount of the paper, nothing was said about exchange. Plaintiff’s officers were simply asked if they could do the paper; they replied they would, and gave therefor the face, less a sum amounting to about ten per cent for the time the paper had to run. There was no evidence as to the rate of exchange between Pittsburgh and New York. The court found the sum retained, and that nothing was said about exchange, but refused to find that the bills were discounted by plaintiff at a rate of interest exceeding seven per cent, and that no exchange was charged. Held, no error; that as there was equal silence as to the rate of interest to be charged as in reference to the exchange, no inference could be drawn of .an absence of intent to charge exchange, and that the whole sum retained was for interest. But, held (Chuboh, Ch. J., and Allen, J., dissenting), that had the court found as requested, and defendant had excepted to the legal conclusion that plaintiff was entitled to judgment, the result would be the same; that assuming the bills to be Hew York contracts, the corporation not being able to avail itself of the defence of usury, the indorsers on its paper could not; the court citing Rosa v. Butterfield (33 H. Y., 665); State Bank of Ohio v. Hoge (35 nf., 65), and distinguishing Merchcmts> Ex. Nat. Bank v. Com. Warehouse Oo. (49 id., 636). M. Ex. Nat. Bk. v. C. W. Co. (49 N. Y., 636) distinguished. The evidence was and the court found, that the legal rate in Pennsylvania was six per cent, but there was no evidence of a prohibition against receiving a greater amount, or of any forfeiture consequent upon an agreement therefor. Held, that if the bills should be regarded as Pennsylvania contracts, the result would be the same, as the law of that State, as proved, only fixed the rate in the absence of an agreement; and the parties were left to agree upon any rate. The charter of the Iron Company contained a section authorizing it to borrow money and create indebtedness, as its board of directors might deem necessary, and to issue the ¡securities of the company therefor, at a rate of interest not exceeding seven per cent. Held, that this simply prohibited the issuing of time securities providing for the payment of more than seven per cent interest, but permitted the company to borrow money at any rate permitted by the State laws, and did not affect the paper in question. Thomas M. Wheeler for the appellant. Joseph M. Dixon for the respondent. [MAJORITY] All concur; except Church, Ch. J., dissenting; Allen, J., concurring on the first ground stated in the opinion.