
    Ernst Oeser & Co., Respondent, v. Gerhard J. Behrend and Jacob B. Bleichrode, Appellants.
    (Supreme Court, Appellate Term, First Department,
    March, 1915.)
    Negotiable Instruments Law, § 96 — when defense of usury not available — action on promissory note brought by bona fide holder.
    Under section 96 of the Negotiable Instruments Law the defense of usury is not available in an action on a promissory note brought by a bona fide holder in due course for value and before maturity.
    Pendleton, J., dissents.
    Appeal by defendants from a judgment of the City Court of the city of New York, entered on a verdict directed for plaintiff and an order denying a motion for a new trial.
    
      Cohen Brothers (Lawrence B. Cohen and Sumner L. Samuels, of counsel), for appellants.
    William J. Miller, for respondent.
   Shearn, J.

In an. action on a promissory note brought by a bona fide holder in due course for value before maturity the defendants, the makers of the note, plead usury. It has been twice held by this court that the defense of usury is not available in such a case, under section 96 of the Negotiable Instruments Law (Laws of 1897, chap. 612). Klar v. Kostiuk, 65 Misc. Rep. 199; Emanuel v. Misicki, 149 N. Y. Supp. 905. See, also, Crusins v. Seigman, 81 Misc. Rep. 367.

It is especially important that in a court constituted, as is the Appellate Term, of justices changing from month to month, there should be continuity of decisions. Aside, therefore, from the merits of the legal question presented, regard for repeated decisions of this court requires the affirmance of the judgment below, holding the defense unavailable.

Under these circumstances, and as this case will doubtless go to the Court of Appeals, no purpose would be served by extending this opinion. I desire to say, however, that I do not agree that this decision practically writes the inhibition against usury from the statutes, but rather with Mr. Justice Laughlin, in Schlesinger v. Kelly, 114 App. Div. 546, when he said: ‘ ‘ The usury laws remain in full force, but to facilitate the free circulation' of negotiable paper by protecting holders thereof in due course for value in their right to enforce the same, the usury laws are to that extent superseded by the'provisions of section 96 of the Negotiable Instruments Law.”

Judgment affirmed, with costs.

Guy, J., concurs.

Pendleton, J.

(dissenting). The action is on a promissory note. The defense is usury. Plaintiff: is a bona fide transferee of the note before maturity for value and without notice. That notes void for usury are void in whosoever hands they may come has been the settled law of this state is too plain for argument. Gen. Business Law, § 373; Claflin v. Boorum, 122 N. Y. 385. This rule the learned trial justice held has been changed by section 96 of the Negotiable Instruments Law. It provides as follows: “A holder in due course holds the instrument free from any defect of title of prior parties and free from defenses available to prior parties among themselves, and may enforce payment of the instrument for the full amount thereof, against all parties liable thereon.”

The question is thus squarely presented, whether under the above provisions a note void'for usury under section 373 of the General Business Law is, nevertheless, enforceable in the hands of a bona fide transferee who took it in due course for value and without notice. Do those provisions refer to notes void in their inception, or only valid notes ? Did the legislature intend to thereby change the substantive law, or is the statute declaratory only and a codification of existing law? The decision's on the question are not uniform. The ruling made at the trial has the support of Schlesinger v. Kelly, 114 App. Div. 546; Klar v. Kostiuk, 65 Misc. Rep. 190; Emanuel v. Misicki, 149 N. Y. Supp. 905. Opposed are Schlesinger v. Gilhooly, 189 N. Y. 1; Schlesinger v. Lehmaier, 191 id. 69; Crusins v. Siegman, 81 Misc. Rep. 367. Not much assistance is derived from an examination of the statute itself. It must, in fairness, be admitted that the language is about as susceptible of one construction as the other. The argument of the leading case relied on by plaintiff (Schlesinger v. Kelly, 114 App. Div. 546) is based on the view that the statute grew out of an attempt to secure uniformity in all the states ancl to free negotiable instruments or papers purporting to be such as far as possible in the hands of innocent holders from latent or local infirmities and to hold this included infirmities going to their inception equally with others was more consonant with the purposes of the act, and there is much force, undoubtedly, in this argument. On the other hand, while surrounding circumstances may be considered in construing ambiguous legislative enactments, the language used is, after all, the primary source from which to determine the legislative intent, and as repeal by implication is not favored, where the words are as consistent with an intent not to change or repeal, such would seem to he the natural effect to he given to them. As express words would seems the more natural way of effecting an intended change, the fact they are not used would indicate that no change was intended, and such inference cannot hut he strengthened, where, as in this statute, the legislature by express provisions repealed other parts of the existing statutory law. Laws of 1897, chap. 612, § 340, the original statute. The inference would seem reasonable that if it had intended a further repeal it would have included it in that section.

That the change in the law contended to have been effected is of far reaching scope is manifest. Paper otherwise void becomes valid, so soon as it reáches the hands of a holder for value without notice, and it would seem to follow must be the subject of sale or gift by him, even to those having notice of the original infirmity ; otherwise, he would he in the position of having a claim he could enforce, hut not sell. If a valid claim, it must be subject to the usual laws governing the sale and transfer of property and the owner’s right to sell or dispose of it by gift or devise or transfer for the benefit of creditors could not be curtailed by the proviso that he find a transferee equally uninformed as himself. This would also follow from section 97 of the same act. It is not difficult to see that, as affairs are conducted, if the rule of construction contended for is to be adopted the legislature might almost as well have written off the inhibition against usury from the statute books of the state, and it can scarcely be accepted that so drastic a change was intended to be made by implication. Courts must assume that if the legislature intended so far reaching an alteration of law, it would have used express words to effectuate its purpose.

The judgment must be reversed and a new trial granted, cost to appellants to abide the event.

Judgment affirmed, with costs.  