Farmers' and Mechanics' Bank of Genesee v. Joslyn et al.

*Farmers’ and Mechanics’ Bank of Genesee v. Joslyn et al. Usury.—Practice. The discount of a renewal note, at a usurious rate of terest, does not in. validate the original contract, which was untainted witi usury. Where issues of fact are ordered to be formed, in an < putable action, the judge, on the trial, may submit other issues to the jm •, which are raised by the evidence. Appeal from the general term of the fc ipreme Court, in the eighth district, where a judgmei ; rendered in favor of the plaintiffs, in a foreclosure 5 lit, had been affirmed. This was a suit by the Farmers’ *; Mechanics’ Bank of Genesee against Daniel M. Josl; n and others, for the foreclosure of a mortgage given as a continuing security for the payment of all commercial paper, then or thereafter to be held by the plaintiffs, on which the said Daniel M. Joslyn was liable, or might thereafter become so. The complaint, as originally framed, alleged his liability in the sum of $1500, with interest, for which the plaintiffs held his note, bearing date the 24th December I860, payable sixty days after date. The defendants, other than William Joslyn, who disclaimed any interest in the mortgaged premises, alleged by way of defence, that the note of that date was void for usury, having been discounted at a rate of interest exceeding seven per cent. The court, at special term, directed the trial of issues of fact, presenting the question, whether the note was discounted at a usurious rate of interest. On the trial of the issues before the same judge by whom they had been directed and framed, it appeared, that the note in question was given in renewal of a previous note to the plaintiffs, which matured on the 10th of December, and that such prior note, which was free from any taint of usury, was never paid, otherwise than by the discount of the renewal note, and that the whole amount remained due, except one month’s interest, which was paid. The plaintiffs’ counsel, thereupon applied for the framing of additional issues, for the purpose of presenting the whole case together. The defendants’ counsel *objected, insisting that no such issue was presented by the pleadings; that there was no opportunity to plead or prove any defence they might have to the original note; that the verdict should be confined to the issues as settled, and that the court had no power, at that time, to change or modify the previous order. The judge granted the application, no affidavit being made by the defendants of prejudice or surprise. And on the issues, as modified, the jury found that the renewed note was discounted at a usurious rate of interest, but that, with the exception above stated, the original note was due to the plaintiffs, and that it remained unpaid, otherwise than by the proceeds of the usurious discount. A case was made by the defendants, upon which, with the findings of the jury the cause came on. for hearing at special term, before Hoyt, J. At the hearing, the plaintiff moved for leave to amend the corn-plaint, in conformity with the proof and the findings. The motion was resisted, on the ground, that such an amendment would wholly change the plaintiffs’ cause of action, and that the defendants would have no opportunity to try an issue thus presented; no affidavit was made on the part of the defendants. The amendment was allowed by the court, and the defendants were not permitted to put in a further answer. The learned judge found substantially the same facts as those found by the jury, and directed the usual judgment of forelosure and sale, for the amount of th.e original note, with interest. And the judgment having-been affirmed at general term, the defendants took this appeal. Humphrey, for the appellants. Ganson, for the respondents. Also reported in 4 Trans. App. 308. [MAJORITY — Porter, J.] Porter, J. The judgment is in exact accordance with the legal rights of the parties. The court refused to enforce the illegal agreement, and it also declined to permit its perversion to a use, injurious to the plaintiffs and beneficial to *the defendants, but to wl’ch the latter were not entitled, either in conscience or in law-. The infected contract did not absolve the mortgagor from his antecedent obligations, nor did it impair the rights of the plaintiffs under a prior and valid agreement. It is true, that the usurer is not permitted, at his own election, to allege his illegal act, as a ground for reinstating an old security; but it is equally true, that a party, who claims to be the victim of exaction, cannot avail himself of the invalidity of a later contract, as a shield from liability on one of earlier date, which was honest and free from vice. (Brown v. Dewey, 1 Sandf. Ch. 57; Swartwout v. Payne, 19 Johns. 294; Billington v. Wagner, 33 N. Y. 31; La Farge v. Herter, 9 Id. 241; Crane v. Hubbell, 7 Paige 413.) It appeared on the trial, that the paper in question was discounted for the sole purpose of renewing a note previously due and dishonored, and of which the payment was secured by the mortgage set forth in the complaint. To meet the case in this new phase, the judge submitted to the jury such additional issues, as were essential to bring to the view of the court, all the facts material to a just and intelligent decision. • To this we see no well-founded objection. He was invested with the same power at the circuit, which he exercised at special term, in framing the original issues; it was a question addressed to his sound discretion. We think, he was clearly right in the disposition which he made of it; but, if we entertained a different opinion, we should not be at liberty to reverse the judgment on a question of mere practice, in respect to which the court below is the ultimate arbiter. .The order of the court, conforming the pleadings to the proof and the findings, was made in the exercise of a like discretion. It involved no change in the form of the action, nor in the nature and substance of the claim. The defendants were not taken by surprise, and they suffered no legal prejudice from the amendment. The judgment should be affirmed. Judgment affirmed.