
    J. G. Smedberg, Administrator, &c., of C. G. Smedberg v. Simpson.
    The possession of an usurious note by the indorsee, is presumptive evidence that he received it before it became due, for a valuable consideration, without notice of the usury.
    Where a new security is given to such a bona fide holder of an usurious note, by one of the parties thereto, after it became due ; it was held to be valid, notwithstanding the holder of the usurious note was apprised of the usury therein, after he became its holder, and before the new security was given.
    July 13;
    July 27, 1848.
    Assumpsit against the defendant, as the indorser of a promissory note made by Edwin Wilcox, payable to and indorsed by F. Whittlesey, for $1297 45, dated January 11, 1844.
    At the trial, before the Chief Justice, in November, 1847, the defendant proved that this note, and one of $3000, were given by the maker to C. G. Smedberg, about the 30th January, 1844, in settlement of two notes for $2000 each, then held by Smedberg. Those two notes originated in large loans made in 1842, by one Halliday, to a house in which Wilcox was a partner; and were made by Wilcox in 1843, were indorsed by Whittlesey, and were delivered to Halliday on account of the loans so made in 1842. When the two notes fell due, they were held by Smedberg, and were protested for non-payment. In December, 1843, Smedberg issued an attachment against Whittlesey, on the two notes, as a non-resident debtor, and the sheriff levied on bank stock of W. valued at about $3000. Wilcox arranged to have the attachment settled and discharged, by giving to Smedberg the note in suit, and a note for $3000, the two making the amount of the two $2000 notes, with the interest and costs of the attachment; and thereupon those notes were given up to Wilcox, and the attachment was discharged. The stock was pledged to secure the note of $3000. The defendant indorsed the note in suit at the request of Wilcox.
    The defendant then offered to prove, that the loans made by Halliday to Wilcox’s firm were usurious, and that the two notes of $2000 each were usurious. The plaintiff objected to the evidence, and it was excluded by the judge.
    The defendant then proved by Wilcox, that during the negotiation of the settlement of the attachment proceedings, he informed both Smedberg and his attorney, that those two notes ivere usurious. The defendant then renewed the offer to prove the usury in those notes, and in the original transaction; insisting,
    
      First. That on making the proof thus offered, the plaintiff could not recover upon the note in suit, as his intestate took it with notice that the two notes of $2000 each, were usurious.
    
      Second. That on making such proof, the plaintiff could not recover, without proving that his intestate took the two notes of $2000 each, for a valuable consideration, and without notice at the time that they were usurious. The judge decided, that the evidence was inadmissible, and excluded the same. The counsel for the defendant excepted to these decisions of the judge.
    The cause was submitted to the jury upon other questions involved, and they rendered a verdict for the plaintiff for the amount of the note. The defendant moved for a new trial.
    
      J. S. Bosworth, for the defendant,
    relied on Chapman v. Black, (2 Barn. & Ald. 588;) Powell v. Waters, (8 Cow. 692, 695, per Jones, Chancellor, and Colden, Senator;) and Morgan v. Tipton, (3 McLean, 339.)
    
      J. W. Gerard, for the plaintiff.
   By the Court.

It was decided by the assistant vice-chancellor, in respect of the note for three thousand dollars, given at the same time with the note in question, that the law derived a presumption from Smedberg’s possession of the two notes of $2000 each, that he had received them before they became due for a valuable consideration, and without notice of the usury. (Smedberg v. Whittlesey, 3 Sandf. Ch. R. 320.) He also held, that the giving of the new notes, without objecting to the validity of the former, was of itself an admission that Smedberg was a bona fide holder of the old notes, without notice of their usurious character. Smedberg recovered in the chancery suit, on the well settled principle, that where a party to an usurious note or bill, gives a new security for it to one to whom it has been transferred for a valuable consideration, without notice of the usury, the new security is valid, although the holder could not have recovered on the note or bill.

We concur fully in the decision of the assistant vice-chancellor. This case differs from the one decided by him, in the single fact that it is here proved, that Smedberg knew the parties alleged the $2000 notes to be usurious; not when he received them, but after they became due, and before he received the new securities given in their stead. We are unable to perceive how this affects the case. The principle on which such new securities are upheld is, that the holder of the tainted bill or note, is innocent of the illegality connected with it, and if prevented from recovering it, will suffer loss without any fault on his part. It is morally just that he should be paid, and this forms a sufficient consideration to support a new security made by a party to the usurious obligation. Now, the justice of his claim for payment, rests upon his ignorance of the usury when he received the usurious paper. It is no less just because he afterwards hears of the usury. Notice of it then comes too late to affect his situation. It cannot restore to him the consideration which he paid for the security. It does not make him any the less a bona fide holder for a valuable consideration.

As to Chapman v. Black, cited by the defendant, we are not disposed to attach much weight to it, for the reason that in its ruling anterior to the point to which it is cited, it is adverse to our own decisions. Thus, Chapman v. Black holds, that a business bill of exchange, sold at less than its face, and paid for partly in cash, and partly in usurious notes of the seller, is void for usury, in the hands of the buyer. Our courts hold, that no rate of discount on such a transaction can make it usurious, provided it be an actual sale. (Cram v. Hendricks, 7 Wend. 569; Powell v. Waters, 8 Cow. 696, per Colden, Senator.)

We were also referred to the opinions of Jones, Chancellor, and Golden, Senator, in Powell v. Waters, as showing that the holder of the usurious security, must remain ignorant until after he obtains the new security, in order to render the latter valid. But we do not so understand those opinions. They seem to us clearly to refer to his ignorance when he receives the original tainted security. This is very evident from the converse of the proposition, as stated by Senator Golden, at page 696.

We have no doubt that the ruling at the trial was right, and the motion for a new trial must be denied. •  