
    The Thames Loan and Trust Company, Respondent, v. George Hagemeyer and Others, Appellants.
    
      Usu'i'y —refusal to charge when a note had its inception.
    
    In an action upon a promissory note to which the defense of usury is interposed, where it appears that the note passed through several hands before '-it finally had a legal inception in passing into the hands of the person who purchased it for the plaintiff, when, if at all, the usurious transaction took place, it is error for the court to refuse to charge, where the evidence upon that subject is uncontradicted, that the note had its inception in that transaction.
    Appeal by the defendants, George Hagemeyer and others, from .a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 28th day of January, 1897, upon the verdict of a jury, and also from an order entered in said clerk’s office on the 25th day of February, 1897, denying the defendants’ motion for a new trial made upon the minutes.
    
      
      William 'G. Beecher, for the appellants.
    
      :Alfred J. Taylor, for the respondent.
   Rumsey, J.:

The action was brought to recover the amount of a promissory note made by George Ragemeyer & Sons to the defendant William IT. Chew. The defense was usury,. and the questions presented upon this appeal arise upon exceptions taken to the rulings of the court upon the trial.

The note was dated on the 7th day of Fovember, 1894, was .made for $5;000, and was payable in four, months after date to the order of W. IT. Chew. It is an undisputed fact.that this note was delivered to Chew without consideration and for the purpose only of enabling him' to procure it to be discounted and that it had no inception in his hands. It is also undisputed that Chew delivered it to one Cokefair to dispose of it and for no other purpose. It -was made to appear by Cokefair that, at the time he received the note from Chew," there was an arrangement between himself and Chew by which Cokefair was to have the. use of one-lialf of the proceeds of.the note until its maturity, less six per cent. Cokefair disposed of the note to James P. Foster, who bought it for the plaintiff. The transaction which was had between them at the time of the purchase of the note is not disputed. Foster, who' was sworn as a' witness for the plaintiff, testifies that he paid Cokefair the face .of the note, less six per cent; that he deducted six per cent from the face of the note, and applied twenty-five per cent of the proceeds on account of an indebtedness from Cokefair to him, and paid him-the remainder in cash. -Cokefair, who was sworn as a witness for the defendant; testified to substantially the same facts. It is apparent from these facts that there was some question as to just what amount was deducted from the note at the time of its purchase from Coke-fair. Foster says he deducted six per cent from the full face of the note. Six per cent from the face of the note would be $300, and if that sum was deducted from it it would plainly be usurious, because the note had only four months to run, and six per cent would be the. full legal interest for the year. But it was susceptible of the. meaning that he deducted interest at the rate of six per cent for the time during which the note ran, in which case the transaction, so-far as the deduction of the interest was concerned, would not be usurious.

It also appeared, and was undisputed, that he retained from the face of the note twenty-five per cent, which he said that he applied upon an indebtedness from Cokefair to him. If this was an actual indebtedness, and that sum was actually.due, the transaction was not usurious. But if the deduction was made for the purpose of enabling the person making it to retain the amount of twenty-five per cent from the face of. the note by way of premium upon it, the transaction was -clearly usurious. Cokefair and Foster were both parties- to the transaction which, if it was usurious, was an illegal one, and, therefore, the jury were at liberty to discredit, them testimony, and it was for the jury to say whether the transaction, at the time of the inception of this note, taken altogether, was a bona ficle transaction or whether it was a mere cover for usury, and this question was properly submitted to them.

But, we think, there was error in the refusal to' charge a request made by the defendant to the effect that, upon the uncontradicted evidence, the inception of this note was its sale by Cokefair to Foster. There is no dispute about the facts and there is no claim that this proposition was not a correct expression of the law, but the court refused to charge it and' submitted it to the jury to say whether the note then had its inception or not. In this refusal to charge we think there was error.' The question presented to the jury was whether the transaction which resulted in the sale of the note was bona fide or was a cover for usury. The transaction was not alone the delivery of the note by Cokefair to Foster, but it also included the delivery by Hagemeyer to Chew and by Chew to Cokefair; and at the time of the making of that arrangement between the last two named there was, as appeared from the testimony of Cokefair, an agreement between himself and Chew with regard to the proceeds of the note. This transaction may or may not have been a proper one, but it had no relation to the inception of the note, -and the question whether the note was usurious was to be determined by what occurred at the time of its inception; and the defendant was entitled to have the attention of the jury called precisely to what occurred at that time so that they could pass upon that occurrence and characterize it by their verdict as valid or ■otherwise, as they should, upon the whole, see fit. To that end the defendant-was entitled to have an instruction as to when the note had its inception, and the refusal to give that instruction was erroneous. On account of that refusal the judgment and order should be reversed and a new trial granted, with costs to the ajipellant to abide the event.

■Yak Brunt, JP. J., Williams, Patterson and Parker, JJ., concurred.

Judgment and order reversed and a new trial granted, with costs to the appellant to abide the event. •  