
    Sizer, vs. Miller, and others.
    M., having a large debt against one who had assigned his estate in trust for creditors, applied to the assignees for a loan of $13,000 from the trust fund, until a dividend should be made; whereupon the latter let him have notes belonging to the estate, which, estimating them at their nominal value, amounted to $8354,69, besides cash to the amount of $3745,31, and took therefor M.’s note for $13,000 with interest. Held, that though there was evidence tending to show the notes which M. received to have been worth at the time considerably less than he allowed for them, the transaction was not necessarily usurious, but depended upon the intent with which the loan was made.
    
      Held further, that a report of referees stating that they had examined the evidence, and were of opinion as matter of law that the transaction was usurious, implied that they had not passed upon the question as one of intent, and was therefore erroneous.
    
      Cowen, J. dissented, holding that the report did not necessarily imply this, but was equivocal; and there being evidence from which it might be sustained as a general report in favor of the defendants, the court ought not to interfere.
    
      Semble, it .is not admissible, in such cases, by way of rebutting the usurious intent, to enquire of the party who made the loan whether there was any intention, shift or device, on his part, to get more than seven per cent, &c; for that is calling on him to pronounce broadly upon the veiy point in dispute. Per Cowen, J.
    Motion to set aside the report of referees. The action was assumpsit on a note dated February 10th, 1837, made by the defendant James Miller and his sureties, whereby they jointly and severally promised to pay to the order of Hiram Pratt, Lewis F. Allen and Joseph Clary, assignees of B. Rathbun, the sum of §12,000, at the Bank of Buffalo, twelve months after date. The note was duly endorsed to the plaintiff. The defence interposed was that the note was usurious and void. After issue joined, the cause was referred to referees; - and on the hearing before the latter, the case was as follows:
    Rathbun became insolvent, and appointed the payees in the note his assignees, who subsequently sold his property and took a large amount of security in notes for the purchase money, and collected some cash. On the 4th of February, 1837, the defendant Miller, being one of Rathbun’s creditors, addressed a letter to the assignees, stating, that it would be inconvenient for him to lay out of the use of what was due ■ him till the estate was settled, and believing them anxious to do all in their power to relieve the creditors, he was induced to ask them to loan him a small portion of the funds belonging to the estate, until they should be needed for distribution, on his giving satisfactory security to refund the whole, or such part as he might have over and above his dividend of the estate. He specified his claim against Rathbun at §36,000, and the amount he wished to loan at §12,000; adding, that he asked the favor under a consciousness that the creditors were entitled to the use of the fund in preference to others.
    Clary, one of the assignees, testified on the part of the defendants, that when the letter was received, the assignees had not the amount of money requested, and that he so informed Miller; but offered him cash and notes on hand, if Miller would give good security; that the cash offered by the assignees was between three and four thousand dollars. Witness made a" list of the notes and gave it to Miller. There were upwards of thirty of them in all, ranging in amount from less than $40 to $800. Most of them were on interest; and the whole, including interest,' amounted to $8254,69, which, together with the cash offered, ($3745,31,) amounted to $12,000. Miller accepted the offer, and procured and gave the note in question for the loan. Clary further stated, that the estate alone was interested in the transaction, and that the business was conducted without reference to his own interest. He supposed the notes Collectable. Many of them were due. He was of opinion that they would not have sold in market for their face. He made the advance because Miller was a large' creditor, and witness would not have done it had such not been the fact. He and Miller both supposed the funds would be realized from." the notes, sooner than from the dividends of the estate^ He turned out exactly $12,000, because that was the sum Miller wanted. The notes consisted of such as had been taken by the assignees on selling the effects of the estate,' but they had somewhat depreciated in value. The witness denied that he made the taking of the notes a condition of Miller’s" having the money.
    In the course of Clary’s cross-examination by the plaintiff’s Counsel, the latter asked the witness if there was any intention, shift or device on his part in the transaction, to get or realize more than seven per cent, from Miller. The question was objected to by the defendant’s counsel, and the objection sustained.
    Further evidence was given tending to show, that the notes were worth considerable less than their face, at the time of the loan; some of them being in fact quite doubtful of collection.
    A majority of the referees reported that there was nothing due the plaintiffs; and being called on for a special report, after setting forth thé proceedings, they added—“ Whereupon the undersigned having considered thé foregoing testimony, &c. were of opinion, as matter of law, that the said noie was void' for usury, and thereupon reported that there was nothing due thé plaintiff.”
    
      The plaintiff’s counsel now moved to set aside the report.
    (S. Beardsley, for the plaintiff.
    (S. Stevens, for the defendants.
   Per Curiam.

The case states the special grounds on which the two referees proceeded who agreed in making the report. They have not found any intention in the trustees of Rathbun to take usury, or that there was any shift or device to evade the statute. Indeed, they have not drawn any conclusion of fact from the evidence, but say they are of opinion, “ as mat- ' ter of law, that the note was void for usury.” In this we think they erred. The evidence does not necessarily and as a matter of law make out the fact of usury, and there must consequently be a rehearing.

Cowen, J. dissenting.

If the advance to Miller is to be regarded as a loan, I apprehend we cannot disturb the report, unless the referees erred in rejecting the question put to Clary. There was sufficient evidence to warrant them in finding considerable disparity between the value of the* advance and the amount at which it was estimated. That being so, they. were authorized to take another step, and pronounce the transaction a device to cover usury. And though we might even differ from them, that furnishes no argument for setting aside their report. They occupied the place of a jury, and had to deal with a body of evidence upon which it was their peculiar province to form their own conclusions.

Considerable stress was, in the course of the argument, laid upon the maimer in which they have expressed themselves in stating their conclusion, viz. “A majority, &c, were of opinion, as matter of law, that the said note was void for usury.” ’ This is supposed to negate, by implication, that they thought that there was any device, and to indicate that they found the usury as the necessary result of the transaction. Were that so to he understood, it might form an argument for directing them to reconsider the matter. But it appears to me that the form of expression relied on, furnishes by no means a safe ground of judgment. The expression is equivocal. It may as well mean, matter of law arising on the fact of the device, which, on the whole case, they believed had been resorted to, as the more obvious features of the transaction. If they intended the one or the other, it was easy to say so; but leaving that doubtful, the safer course is to look at the report in an aspect which cannot be mistaken, viz. as a general report for the defendants, and inquire, whether the referees, sitting as a jury, were authorized, on the whole case, to find that the note was infected with usury.

The main effort of the plaintiff’s counsel on the argument was addressed to the point, that, to call the advance to Miller, as both he and Clary did, a loan, was to be guilty of a misnomer ; that the loan proposed was declined ; and, at least so far as the notes advanced were concerned, the whole was a mere exchange of credit. Had the advance consisted wholly of the notes, which were, no doubt, considered good at the auction, the case would furnish a better reason for adopting the view suggested. The transaction would have been literally an exchange of credits; and though at an obvious loss on the side of Miller, it was open to the explanation that he held a large debt against Rathbun’s estate, expecting no more than a partial and remote payment. The purchase of the notes, therefore, and paying a larger sum than they were worth, was, in effect, but throwing off something more of a bad debt than he would lose by awaiting the dividend. Yet, even in such case, the transaction beginning by an express proposition for a loan, it is too much to deny, that the substitution of depreciated notes might not very well be pronounced, by triors of the fact, one of those numerous disguises by which lenders seek to obtain with impunity more than seven per cent, for their money. The request was, in terms, for a loan of money at seven per cent.; and they might infer that it was made in depreciated notes at par,, to a man who wanted them for the sake of the money they would bring, no matter how much below their nominal amount. That the lender was a trustee, may detract from the weight of the evidence by which the loan is sought to be impeached; but it is a circumstance far from being conclusive. Had the exchange even been requested by the borrower, in the first instance, that would not be conclusive; but here it was proposed in answer to the request for a loan of money.

The case, however, is on its face more than a simple exchange of credit. The request was for a loan of $12,000; and the answer was, I cannot loan you money to that amount; but 1 will let you have about one third in money, and the residue in depreciated notes, taking your note on time upon interest with good security, for the uttermost farthing due on the notes you take, even including the interest accrued at the time,

' though that will not, in my hands or yours, carry interest.” Such a case is far from being met, or even rendered doubtful, by the cases to which we have been referred. (Bank of the United States v. Waggener, 9 Pet. 378, 400, 401. Stewart v. Mechanics’ and Farmers’ Bank, 19 John. R. 506 to 512.) On the contrary, these cases assume and express]y hold, that if the loan of depreciated notes be intended by the parties to have the effect of fetching more than seven per cent., it is usurious. To be sure they treat the question of usury as in such case resting upon intent, and hold that this must be found by the jury, or the court of chancery which comes in the place óf a jury on the question arising in that court. Another case cited was intended as an answer to the objection, that interest on the notes was cast, and made to draw interest as money. (Marvin v. Feeter, 8 Wendell, 533.) But the transaction there passed upon, was not á loan. It was a sale of the notes on which interest was cast, without the pretence of any shift to evade the statute of usury. Izi the case before us, several of the notes were not yet - due when they were transferred; these and others already due were ’of questionable value. Admitting them to have been equal to gold and silver in the market, yet no man would advance specie for the' interest accrued on notes not yet due, without a rebate. To this I admit the referees might answer, that it was such a trifle as the law would not regard; but we cannot thus answer for them. Besides, this circumstance does not stand alone. There was very little probability that any considerable portion of the notes would be promptly paid; and no one pretended that they could be sold in market short of a considerable sacrifice. Yet for the utmost nominal value of such a commodity, the assignees had received Miller’s note at twelve- months, with good security, on interest; and the referees were fully warranted in adding as an inference, though the^ fact was denied by Clary, that the notes were imposed as a condition of the loan. Upon no principle that I am aware of could our interference with this report as against the weight of evidence be deemed even plausible.

Clary was asked, whether there was any intention, shift or device, on his part, to get more than seven per cent. The question would have been very exceptionable as a leading one, had it not been put to the witness on cross-examination ; but it was exceptionable also, as calling on him to pronounce broadly upon the very point in issue before the referees. The answer must have been matter of opinion, as derived from what he remembered in respect to the operations of his own mind, even had it been confined to mere intention. Again, the question covered not only intention, but shift and device. This was about the whole issue, unless it be conceded that the transaction was usurious, per se. Why not put the question directly—“ in your opinion were you guilty -of usury ?” It would be a short, but I apprehend not a very satisfactory mode of inquiring into the point on trial. . The witness is thought to have been peculiarly qualified to speak concerning his own intent. So he was to the mere moral intent, the secret operations of his own mind. But these were not material one way nor the other. Whether his mind was ingeniously busied in avoiding, or obtaining seven per cent., would not alter the" result. There being a loan, and the note taken, and those sold, being such as the parties had agreed upon, the real value of the latter, as compared with the amount secured, was the test. The disparity of the latter being shewn, and that known to the parties, the shift or device was complete in fact; a provision for more than seven per cent, followed ; and the intention would be an inference of law. On the other hand, had the result been a provision for less than seven per cent., the legal inference would have been the other way, how strongly soever the party might have intended to secure usurious interest. That a man did or did not provide for a usurious rate of interest in his heart, makes no difference with the law. It deals with actions, and infers the intent with which they are done from the consequences that naturally flow from them. The question was. properly overruled. I think the motion to set aside the report of the referees should be denied.

A majority of the court, however, being of a different opinion, therefore,

Motion granted. 
      
      
         At the July term following (1841) tne rule for a reference was set aside by-consent ¡ and the cause ordered to be tried at the circuit.
     