
    Enoch W. Clark and others v. Isaac Sisson and another.
    A bill of exchange payable to the order of the drawer, and accepted for his accommodation, has no legal inception until it is endorsed to a third person for value.
    Hence if the endorsee, in discounting the bill, deducts more than the legal rate of interest for the time it has to run, the transaction is usurious, and the usury, when proved, will be a bar to his recovery, although it may appear that the true character of the bill was not made known to him.
    Although a positive representation when an accommodation bill is first negotiated, that it is business paper, will entitle a holder for value to recover, and exclude the defence of usury, it is settled that when no inquiry is made, the defence is not excluded, merely by an omission to disclose the true character of the bill.
    A second bill, made, accepted and transferred, purely as a renewal by a substitution of the first, is subject to the same defence.
    New trial granted; costs to abide event.
    (Before Oakley, Oh. J., Campbell and Hoffman, J.J.)
    March 4; March 24, 1855.
    Appeal by tbe defendants, from a judgment in favor of tbe plaintiffs, for $2,685.36, including costs.
    Tbe action was against tbe defendant, Sisson, as tbe acceptor, and tbe defendant, Loomis, as tbe drawer of two bills of exchange —each is for tbe sum of $2,000 drawn by Loomis, in New York, payable to bis own order, and endorsed by bim, and addressed to Sisson at Poughkeepsie, and there accepted.
    Tbe first bill was dated on tbe 14th of July, 1851, and was payable at tbe Bank of Poughkeepsie, without grace, on tbe 2d of August, then next. Tbe second was dated August 5th, 1851, and was payable at tbe same bank on tbe 1st of September, then next. Tbe complaint stated that tbe second bill was taken only as an extension of credit on tbe first, and demanded judgment only for tbe sum of $2,000, with expense of protest and interest from tbe 4th of September, 1851.
    Tbe defendants answered jointly, and admitting tbe allegations of tbe complaint, set up as a defence usury in tbe negotiation and transfer to tbe plaintiffs of tbe first bill.
    
      The cause was tried , before PAINE, J., and a jury, in April, 1853.
    On the trial, the bills in question haying been produced and read, the plaintiffs rested, and it was then proved, on the part of the defendants, that the defendant, Sisson, accepted the first bill for the accommodation of the drawer, Loomis, and that it was placed by him in the hands of W. H. Canfield, one of the firm of J. J. Stewart & Co., to be sold on his account; that Canfield sold it to the plaintiffs, who deducted $20 from the $2,000, for which the bill was given, and paid him the balance in cash. It did not appear that when the bill was sold any representation as to its character was made by Canfield, nor that when it was placed in his hands any such representation was made to him by Loomis. As to the second bill, it was proved that Loomis, in the presence of Canfield, placed it in the hands of the plaintiffs for collection, under an agreement that if paid the proceeds should be applied to the satisfaction of the first, which the plaintiffs retained. No interest was paid when the second bill was taken, nor agreed to be allowed.
    The bills were transferred in New York, and it was proved that at that time the current rate of exchange between the city and Poughkeepsie was £ of 1 per cent. This evidence was admitted, subject to the objection of the counsel for the defendants. When the testimony was closed, the defendants insisted that the court should compel the plaintiffs to elect upon which bill they claimed to recover, and that if they elected the first, they should surrender the second. The court denied the motion, and the defendants excepted.
    In charging the jury, the Judge {inter alia) said, that if the jury should think that the plaintiffs had no knowledge of the purpose for which the bill of July was made, and that Canfield represented that it was business paper, or intentionally concealed from them that it was accommodation paper, with the view that they should buy it under the impression that it was business paper, then, and in either case, the defendants were estopped from saying that it was not business paper, and could not maintain the defence of usury. To this portion of the charge the counsel for the defendants excepted.
    The counsel requested the Judge to charge, that if the bill was in fact accommodation paper, then the plaintiffs, whether the fact was known to them or not, could not be entitled to recover.
    The Judge refused so to charge, and the counsel excepted.
    The cause was then submitted to the jury, who found a verdict for the plaintiff for $2,229.89.
    
    A new trial was refused at Special Term, and a judgment for the plaintiffs then entered on the verdict.
    
      J. Van Burén for the defendants,
    now contended that the judgment ought to be reversed, and a new trial be granted, upon the following grounds:
    I. The bill of exchange, dated July 14th, 1851, having been drawn by the defendant, Freeman Loomis, upon and accepted by the defendant, Isaac Sisson, without consideration, and for the accommodation of the drawer, had no validity previous to the transfer to the plaintiffs, and having been discounted by plaintiffs at a usurious rate of interest was void. {Powell v. Waters, 8 Cow. 687; Dowe v. Schutt, 2 Denio, 621; Jones v. Hake, 2 J. C. 60; Wilkie v. Boosevelt, 3 J. C. 66; King v. Eidge, 4 Price, 50, cited 7 Wend. 601; Truman v. Commission Co. 14 Johns. R. 44, 55; Bennett v. Smith, id. 355.)
    II. The Judge who tried the cause erred in charging the jury that if they thought the plaintiffs had no knowledge of the purpose for which the bill of July was made, and if they thought that Canfield represented this as business paper, or intentionally concealed from them that it was accommodation paper, with a view that they should buy it under the impression that it was business paper, then in either case, the defendants were estopped to say that it was not business paper, and could not maintain the defence of usury. 1. There was not a particle of testimony showing that Canfield did represent this as business paper, or that he knew to the contrary, or that he intentionally concealed the fact that it was accommodation paper, and the Judge submitted to the jury questions not made by the evidence. {Lahron v. Woram, 1 Hill, 91.) 2. The plaintiffs did not show they were deceived, or acted upon any deception. {Truscott v. Davis, 4 Barb. S. C. 495.) 3. Their character of bond fide holders did not entitle them to recover. (1 R. S. 772, § 5, amended by Act of 1837.)
    HE. No representation or concealment by Canfield, could have the effect to charge the defendants. 1st. Because he sold the paper upon the endorsement of J. J. Stewart & Co., and without any assumption to act for the defendants, or either of them. 2d. He was not acting under any authority from or for the benefit of the defendant Sisson. {Dowe v. Schutt, 2 Denio, 60; Truscott v. Davis, 4 Barb. S. C. 495.)
    IV. The Judge erred in refusing to charge as requested, that if, in fact, the bill was accommodation paper for Loomis, then, whether the plaintiffs knew it or not would not alter the facts, or entitle the plaintiffs to recover as business paper.
    In the absence of any proof of false representations as to the character of the paper by which the plaintiffs were deceived and defendants estopped from setting up usury, the request was in every respect proper. {Dowe v. Schutt, 2 Denio, 621; Holmes v. Williams, V. C. G-ridley, 10 Paige, 328; Truscott v. Davis, 4 Barb. S. C. 495.)
    V. The bill of exchange, dated August 5th, 1851, having been simply left for collection, and, if paid, applied on the first bill, furnished no ground for a recovery, and the Judge erred in overruling the defendants’ objection to any recovery upon it, and in allowing the plaintiffs to go to the jury on the bill.
    
      M. S. Bidwell, for the plaintiffs,
    insisted that the exceptions taken on the trial to the Judge’s ruling and charge ought to be overruled, and the judgment to be affirmed with costs, and argued as follows:
    The exception taken by the defendants to the Judge’s refusal to compel the plaintiffs to select which of the two bills they sought to recover on, or to surrender one of the bills, &c., is certainly groundless.
    This refusal was manifestly right for more than one reason.
    1st. There was no issue upon the drawing, acceptance, presentment, or non-payment of these bills, or the due notice of nonpayment. The sole question was as to the alleged usury. If that was not proved, the plaintiffs were entitled, upon the allegations contained in the complaint, and not denied in th¿ answer, to a verdict for the amount. It was therefore not necessary to produce or prove either of the bills.
    
      2d. It was alleged and proved that the second bill was given, not in satisfaction or payment of the first bill, but as a mere collateral security for it; if paid, the proceeds were to be applied to the first bül, the plaintiff holding that, (fol. 13, 32, 34, 35.) {Pring v. Clarkson, 1 B. and C. 14; Byles on Bills, 2d Am., 5th London ed. 185; 145 Law Lib. 1ST. S.)
    A party who has double or collateral security for his debts may proceed to judgment and execution on each and all his securities; although he is entitled to no more than one satisfaction for the debt, he certainly is not bound to give up or cancel one before he can go to the jury or have a- verdict on the others. {Claxton v. Swift, Lutw. 882; Hooper’s Case, Leon. R. 2 pt. 110; White v. Cwyler, 6 T. R. 176, 177; Drake v. Mitehel, 3 East, 251; Dyke v. Mercer, 2 Show. R. 388-394; Union Bank v.' Laird, 2 Wheat. 394; Wise v. Prowse, 9 Price’s R. 393; Byles on Bills, 45 Law Lib. N. S. 306.)
    The plaintiffs might, therefore, even in separate suits, have recovered judgment on both these bills.
    . A fortiori they may ask for a verdict for the amount of the single debt for which both have been given, without previously surrendering or cancelling either. {Ryder v. Bilis, 8 Car. & Pay. • R. 357.)
    The judgment would as effectually extinguish both as if they were actually cancelled.
    3d. The practice of requiring a note given for an antecedent debt to be surrendered or proved to be lost, before the plaintiff can recover for such antecedent debt, does not therefore apply to a case where the judgment recovered would on its face be an ex-tinguishment of both notes.
    4th. Besides, this is a mere rule of practice, to be enforced or not at the discretion of the Judge, at trial, as he may deem necessary for the security of the defendant. {People v. Baker, 3 Hill R. 159; Rapelye v. Prince, 4 Hill, 123, 124.) And not a matter stricti juris, which can be the ground for an exception. {Holmes v. De Camp, 1 J. R. 33, 37.)
    The object of the court, in requiring the surrender of the note in such cases, is to protect the defendant against any future suit; but in the ease under consideration, the verdict affords him full security.
    
      5th. Even under the old system of pleading and practice, a plaintiff could not be compelled to elect which count in assumpsit he would proceed upon. (Norris v. Dinham, 9 Cow. 151.)
    There was no error in the charge of the Judge, that if the jury should think that the plaintiffs had no knowledge of the purpose for which the bill of July was made, and that Canfield represented it as business paper, or intentionally concealed from them that it was accommodation paper, with a view that they should buy it under the impression that it-was business paper; then, in either case, the defendants are estopped to say that it was not business paper, and could not maintain the defence of usury; nor was there error in his refusal to charge that if, in fact, the bill was accommodation paper, then, whether the plaintiffs knew it or not, will not alter the facts or entitle the plaintiffs to recover as business paper.
    His charge contained the true doctrine applicable to the case, and there was no error in his refusal to alter or modify it as requested.
    This doctrine is established by the authority of express adjudications, as well as by general principles, not only of justice and good faith, but of legal and equitable jurisprudence. (Holmes v. Williams, 10 Paige’s R. 826, 333; Aldrich v. Reynolds, 1 Barb. Ch. R. 43; Ramsey v. Clark, 4 Humph. R. 234; Taylor v. Bruce, 1 Virginia (Gilmer’s) R. 42; Whitworth v. Adams, 5 Rand. R. 333; Law v. Sutherland, 5 Gratt. 357, 360, 361; Smith v. Beach, 3 Day, 268; Middleton Bank v. Jerome, 18 Conn. R. 448; Murray v. Harding, 3 Wils. R. 395, 396; Davison v. Franklin, 1 B. & Adol. R. 142.)
    There was no error in the charge of the Judge, that it was for the jury to say whether, under the circumstances, there was a representation that the bill was business paper.
    The bill purported to be drawn and accepted for value received. It was, per se, prima facie evidence that it was founded on a valuable consideration, and that the acceptor had in his hands funds of the drawer to the amount of it.
    In other words, it was a written statement or representation signed by the drawer and acceptor that it was business paper. (Griffith v. Reed, 21 Wend. R. 504, 505; Suydam v. Wes fall, 4 Hill’s R. 216; Mandevüle v. Welch, 5 Wheat. R. 282; 1 Story’s Ec[. Jut. § 385; Watson's Exrs. v. McLaren, 19 Wend. R.' 563, 564; Pickard v. Sears, 6 Ad. & El. R. 474; Town v. Needham, 3 Paige’s R. 555; 1 Cow. & Hill’s notes, 204.)
    Canfield’s possession of the bill was presumptive evidence of bis ownership of it. (Lowney v. Perham, 2 App. R. 235; Lord v. Appleton, 3 Sbepl. R. 270.)
    His endorsement of it in the name of bis firm was additional evidence of bis ownership.
    Moreover, be did not apply to the plaintiffs to borrow money, or to have the bill discounted, but be sold the bill; be took it to the plaintiffs as a bill to sell, as be bad been in the habit of doing with other paper that be bad himself bought.
    Finally, the defendants not only previously authorized all that Canfield did and said, but they afterwards ratified it, by drawing and accepting the bill of 5th August, 1851.
    It is clear, therefore, that, as to the charge of the Judge that it was for the jury to say, under the circumstances, whether there was a representation that the bill was business paper, there was no error of which the defendants can complain.
   By the Couet.

Hoffman, J.

On the 14th of July, 1851, the defendant, Loomis, drew a bill upon the defendant, Sisson, to his own order, payable at the Bank of Poughkeepsie, on the 2d of August then ensuing, without grace, for the sum of $2,000. Loomis endorsed and transferred the same to J. J. Stewart & Co., who transferred the same, by endorsement, to the plaintiffs. The bill was accepted by Sisson, and, upon presentment for payment, was dishonored, and due notice given to Loomis.

The complaint, after stating these facts, proceeds to allege, that on or about the 5th of August, 1851, the defendants, or one of them, came to the plaintiffs, and represented that they were not then able to pay the bill, but promised that if the plaintiffs would extend the time, they would pay the same in full, to which the plaintiffs acceded; and thereupon the defendants drew and accepted their other bill of exchange for the said sum of $2,000, dated the skid 5th of August, 1851, and payable on the first of September next ensuing, at the bank of Poughkeepsie, to the order of the defendant, Loomis, and which was endorsed by him to the plaintiffs; that such bill was presented for payment, but the defendant, Sisson, did not pay it, of which refusal Loomis had notice.

They aver that they are holders of the said hills, and demand judgment for $2,001.50 principal, and expense of protest, with interest from the 4th of September.

The answer sets up, that the bill of exchange, therein mentioned, was made by Loomis, and accepted by. Sisson, for the purpose of obtaining a loan of money for the use of Loomis, without any funds in Sisson’s hands for the payment thereof, and without any consideration paid to Sisson for his acceptance; that the said bill was transferred to, or placed in the hands of J. J. Stewart & Co., as the agents of Loomis, to procure a loan of money thereon for him; that the plaintiffs agreed with said agents to loan upon such bill the sum of $2,000, “ for which loan it was then and there agreed by and between the plaintiffs and the said agents, that the plaintiffs should receive the sum of twenty dollars interest for the loan of said money for fifteen days.” That the said agreement was carried into effect by payment of the twenty dollars, contrary to the statute, &c.

It may be noticed that the bill had nineteen days to run from its date.

On the pleadings, then, there is an issue raised of usury in the note or bill, plainly meaning the first bill; and as the answer omits entirely to meet the allegation as to the second bill, that allegation must be taken as true, and the question will be whether on the assumption of its truth, coupled with the other facts proven, it would constitute a defence.

The witness Canfield, of the firm of J. J. Stewart & Co., proves the Usury as alleged in the answer. Sisson proves that the acceptance was purely for Loomis’s accommodation; and Loomis, called on behalf of Sisson, proves the same thing.

That this bill had no legal inception until it was delivered by Canfield, of the firm of Stewart & Co., as the agents of Loomis, to the plaintiffs, seems clear. (Dour v. Schutt, 2 Denio, 621; Hall v. Wilson, 16 Barbour, 548; Holmes v. Williams, 10 Paige, 326.) The counsel of the respondents insists, that what took place in the negotiation for the loan was equivalent to a representation that the bill was business paper. If this were so, the plaintiffs might be entitled to recover against Loomis, who received the money. This is established by the cases, and is well argued by Vice-Chancellor Gridley in Holmes v. Williams, and is briefly and explicitly stated by Chancellor Walworth upon the appeal. While, however, as in the present case, the borrower is silent, and the lender makes no inquiry, and it turns out to be accommodation paper then first receiving vitality, the defence will be allowed.

2d. As to the second bill, whether the version given in the complaint, or that by the defendant Loomis on his examination, be accurate, seems immaterial. It was at the best a substituted security or renewal taken by the' parties to the usury in the first note, and extending the period of payment a few days. The case of Powell v. Waters, (8 Cowen, 690;) Puthill v. Davis, (20 John. Rep. 286;) and Holmes v. Williams, (ut supra,) appear to be decisive of this question.

As there then appears to be error in the charge of the Judge, there must be a new trial, with costs to abide the event.  