
    Gilliam v. Clay and Others.
    March, 1832.
    (Absent Tucker, P.)
    Witnesses — Competency of Obligee and Assignor to Prove Bond Usurious. — The obligee and assignor of a bond is not a competent witness for the obligor, in any controversy between the obligor and as-signee, to prove that the contract was founded in a usurious transaction between the assignee and obligor.
    James Gilliam executed his bond, dated the 28th January 1819, to Charles Gilliam for 2000 dollars, payable two years after the date. Charles Gilliam, by assignment expressing that it was made for value received, and dated the 11th February 1819, assigned the bond to Charles Clay. And James Gilliam, by deed of trust, dated the same 11th February, conveyed certain real estate in Bynchburg, to trustees, to. secure the payment of the debt to Charles Clay, the assignee of the bond. Charles Clay gave this bond to his son Oden Clay, and then died. The money not being paid, Oden Clay the holder of the bond required the trustees to make sale of the trust subject, and pay the debt out of the proceeds, and they accordingly advertised it for sale, in pursuance of the deed. •
    * Whereupon, James Gilliam exhibited a bill against Oden Clay and the trustees, in the superiour court of chancery of Bynchburg, alleging, that he (James) applied to Charles Clay, the assignee, for a loan of money, and negotiated the terms of the loan, which were usurious ; that he offered his own bond and the real security he afterwards gave, but Clay told him that the bond must be executed to a third person, and assigned by the obligee to him; .that thereupon, he executed his bond for the 2000 dollars to his brother Charles Gilliam, Charles assigned it to Clay, and James executed the deed of trust to secure the payment to Clay ; that no consideration passed between Charles the obligee, and James the obligor, or between Clay the assignee, and Charles his assignor ; that the sum which Clay actually paid him (Janies) was only 1450 dollars ; Clay retaining the other 550 dollars, by way of discount at the rate of thirteen and three quarters per cent, per annum, computed on the amount of the bond, which was the usurious premium agreed to be paid by James Gilliam for the loan. Therefore, the bill prayed an injunction to inhibit the trustees from selling the trust subject, and general relief. The injunction was awarded.
    The defendant, Oden Clay, answered, that his father had given him this bond as an advancement ; and, as to the allegations of usury, that he was intirely ignorant on that subject.
    The trustees also, in their answers, disavowed all knowledge of the usury charged.
    The only proof which the plaintiff adduced of the alleged usury, was the deposition of Charles Gilliam, the obligee in the bond, and as-ignor thereof to Charles Clay ; and this deposition stated the facts charged in the bill, explicitly and positively.
    The chancellor was of opinion, that Charles Gilliam the assignor, was not a competent witness to prove the charge of usury ; and, therefore, dissolved the injunction, and dismissed the bill. From this decree the plaintiff appealed to this court.
    '“'Leigh, for the appellant.
    It is settled, that in an action by an indorsee and holder of a note negotiable at bank against the maker, the first as well as any other indorser is a competent witness for the maker, to prove usury, either between the maker and payee, or between the maker and any indorsee. Taylor v. Beck, 3 Rand. 316. Yet, in such an action, the holder must in his declaration shew his title from the payee and first in-dorser, just as in an action upon a bond by the assignee against the obligor, the assignee must in his declaration shew his title from the obligee and assignor. If, in this case, the assignee had brought debt on the bond against the obligor, andthe obligor to sustain the pTeaof usury, had called the assignor to prove usury as between the obligor and as-signee ; how would the assignor have been interested in the event? His intei'est would he, that the assignee should succeed against the obligor, since a recovery against him would, in all likelihood, prevent the assignee from having recourse against himself: in this view, his interest would be against the party adducing him as a witness. If the obligor should he cast, he certainly could never have any action against the obligee. But if the assignee should be cast ill his action against the obligor, and that upon the plea of usury, as between him and the assignee, sustained by the evidence of the assignor, the assignee would have his action against the assignor upon the contract of assignment; and in this action, the record of the action against the obligor would indeed be evidence, but evidence only to prove due diligence to recover of the obligor, and to prove that the recovery was defeated by the defence of usury ; but it would not be evidence, as between the assignor and assignee, that there was usury in fact between the obligor and assignee. If the assignor should rely upon that defence, he would have to prove it by the testimony aliunde ; he would not be allowed to sustain the' defence, by the exhibition of a verdict founded on his own evidence. But here is a bill in equity exhibited by the obligor against the assignee and his trustees, praying general ^relief, upon which the court might have properly awarded an injunction only to stay the sale of the trust subject which the obligor had mortgaged to the assignee of his bond, until the question of usury should be tried and determined at law. Marks v. Morris, 2 Muni. 407; Martin v. Lindsay’s adm’rs, 1 Leigh, 499; Fitzhugh v. Gordon, 2 Leigh, 626. I do not see how the assignor can have any interest, that a decree to that effect should be rendered for the obligor. Such a decree would he no evidence for any purpose whatever, in an action at law by the assignee against the obligor on the bond, or against the assignor on the contract of assignment, or in an ejectment by the trustees for the trust subject; since the suit and decree in equity, would be res inter alios acta.
    Johnson for the appellee Clay.
    The holder of a note negotiable at bank (which stands on the footing of a foreign bill of exchange) may sue the maker, or the first or any other indorser ; and though, in either case, he is obliged, in his declaration, to shew his title from the first indorser, yet in an action against an indorser he is never bound to shew the record of any action he may have prosecuted against the maker, and his failure to recover the contents of the note from him. But in an action by an assignee of a bond against the assignor, the plaintiff is obliged to shew the record of any action he may have brought against the obligor, to prove due diligence and his failure to recover or get satisfaction of the debt from him, in order to entitle himself to recover it from, the assignor. Suppose the assignee in this case, had brought his action on the bond against the obligor ; he had pleaded usury as between him and the assignee, and called the assignor to prove the plea true ; the assignor had been admitted as a witness, and proved the usury ; and a verdict had been found upon that evidence, and judgment rendered, for the defendant: then, if the assignee had brought an action against the assignor on the contract of assignment, he would have been bound to shew in his declaration, *due diligence against the obligor, and the reason of his failure to recover the money of him, and for that purpose to shew the record of his action against the obligor : but that record would shew, that his claim was tainted with usury, without at all shewing how it had been proved to be so ; and so, by his own shewing, he would not be entitled to recover against his assignor. It is thus that in an action at law by the assignee against the obligor, the assignor would have an interest to sustain the obligor’s plea of usury as between the assignee and obligor ; and therefore, would be an incompetent witness to such a purpose. If incompetent at law, he is equally so in this suit in equity. If his evidence should be admitted here, as a foundation for the decree suggested by the appellant’s counsel, to injoin the sale under the deed of trust till the question of usury shall be tried at law, it is not easy to see, why it would not be equally admissible on the final hearing, as a foundation for a final decree that the claim is usurious. If the evidence were admitted here for any purpose, the record of this suit, containing the deposition of the assignor, would be admissible evidence in any controversy at law between the assignee and obligor; and so the deposition of the assignor would be in fact read on the trial of the action at law.
    Leigh, in reply.
    In the trial of an action of debt on the bond brought by the assignee against the obligor, upon the plea of usury as between them, if the assignor was called and admitted as a witness to prove the plea, there would be no difficulty whatever in exhibiting on the record the fact of such evidence being adduced and ■ admitted, by a bill of exceptions ; and if it was not done, it would be the assignee’s own fault. And, in his action against the assignor, he would not be bound, in framing his declaration, to follow the usual form ; there is nothing to prevent him, after shewing the record of his action against the obligor, from averring and proving that the obligor’s plea of usury between him and the assignee, had been sustained by the evidence of the assignor contrary to the truth of the facts ; and so, resting his claim against the assignor upon the contract of assignment *expressed to be made for value received, and putting it on the assignor to prove the usury if he relied on it in his defence, by other evidence than a verdict founded on his own testimony. Suppose, in an action by an assignee of a bond against the obligor, the obligor should plead usury between him and the obligee, and should sustain the plea by evidence unquestionably competent, and so defeat the action ; would the record of that action be such conclusive evidence of the usury, in the subsequent action by the assignee against the assignor, as to preclude the assignor from shewing a fair and legal consideration given by him to the obligor ? If in such case, the record would not conclude the assignor’s defence, neither would the record, in the present case, conclude the assignor’s claim against the assignee.
    
      
      Witnesses — Competency of Assignor of a Bond to Prove Usury. — For tbe proposition that tbe assignor of a bond is not- a competent witness for tbe obligor in any controversy between tbe obligor and as-signee, to prove that tbe contract was founded in a usurious transaction between tbe assignee and obligor, tbe principal case is cited in Chapman v. Hiden, 2 Pat. & H. 97; Wise v. Lamb, 9 Gratt. 299, 306, and note; Thornton v. Gordon, 2 Rob. 727.
      See monographic note on "Witnesses” appended-to Claiborne v. Parrish, 2 Wash. 146; monographic note on “Bonds” appended to Ward v. Churn, 18 Gratt. 801; monographic note on "Usury” appended to Coffman v. Miller, 26 Gratt. 698.
    
   CARR, J.

The only question is, Whether 'Charles Gilliam, the obligee and assignor of the bond, is a competent witness to prove the usury between the obligor and assignee, alleged iu the bill? I think he is not a competent witness. I am well aware, that objections to the competency of evidence have been much narrowed by the later adjudications, and that to disqualify a witness, he must have some legal, certain and immediate interest in the result of the cause, or in the record, as an instrument of evidence. Has-not this witness such an interest? In Taylor v. Beck, we decided that an indorser might be a witness, where his evidence operated against his interest; as if he was. called to prove some vice in the transaction between himself and the maker of the note,., not touching'the contract between himself and the holder. But here the effect of the evidence would be very different. The witness stands as obligee and assignor: he is examined to prove, that he gave no consideration for the bond ; that he received none for the assignment, but was a mere instrument, in effecting an usurious loan, made by his assignee to his obligor. It is seen, at a glance, that this evidence, so far as it may avail, renders the whole transaction — the bond, the assignment, and the deed of trust, utterly void; and thus clears the witness of his liability as’ assignor. *It is objected, however, that this is not a bill for final relief, but merely seeking to stay the hand of the trustee, till the assignee of the bond shall sue on it at law, and thus-give the obligor an opportunity of pleading and proving the usury. This objection admits, in effect, that, if this were a bill for final relief, this witness could not be heard ; and very properly admits it; for he would be, by his evidence, establishing the usury, upon which the court would decree the whole transaction void, and cancel the deed, bond and assignment. But does it make any difference, as to the competency of the witness, whether this be a bill for final relief or not? If so, and we are to have the usury proved in this proceeding, by evidence which would not be heard on a bill for relief ; it is carrying the principle of Marks v. Morris to a fearful extent indeed. Here is a transaction perfectly fair on its face; a bond executed, and assigned for value, and a deed of trust to secure it. A court of equity is called on to injoin the trustee, because the transaction is usurious, and to send the assignee to law to sue on his bond, for the express purpose of enabling the obligor to establish the usury, and thereby get clear of the whole debt.. Before we take this strong and decisive step, must we not be well satisfied that usury has been practised? and must not that conviction be wrought by competent disinterested testimony? Suppose a bill filed charging usury, and professing to be full handed with proof; and that the answer denies the charge, and no proof of it is produced : would we not dissolve and dismiss at once? But between no proof, and a witness directly interested in establishing the usury, where is the difference? Surely, our minds cannot be impressed with the existence of usury ip this proceeding, by a witness whom we would reject for his interest, if we were hearing the case finally, and who would be utterly incompetent to give evidence, in a trial at law on the bond, of which he is the obligee and assignor. The fountain is polluted at its source and the waters cannot be pure.

The other judges concurred, and the decree was affirmed.  