
    John Wallis vs. Nelson.
    
      .Action by indorsee against indórser of a note. Defendant gave notice of an intention to offer himself as a witness, to prove- ■ usury. To prevent this, plaintiff offered himself as a witness, and swore that he obtained the note for - a full consideration of one D. Defendant was then examined and swore that he endorsed the note, for the accommodation of the maker, and passed it to D, at an usurious discount. D, being'then examined, denied the usury sworn to by defendant. Held, that under the provisions of the statute of usury, defendant was an incompe-. tent witness, and new trial granted for that cause.
    
    Tins was an action of assumpsit, on a note drawn by one-Happoldt and made payable to the defendant, Nelson, who en-: dorsed it; and it was afterwards indorsed by one Christopher Happoldt. Plaintiff afterwards got it into his possession and brought this action for its recovery. The defence was usury/ and the usual notice was given to the plaintiff by defendant that he should avail himself of the benefit of the provisions of the usury act, and offer his own evidence at the trial. The plain-; tiff, to prevent the defendant’s being sworn, tendered, under the provisions of the act, his own evidence, and was accordingly' sworn.
    He swore that he got the note in question from one Dunn, to whom he had paid the full value, and that there was no usury, to his knowledge, in the transaction^ but that he -was ignorant of what had passed between the parties to the original transaction. The defendant then offered his own evidence, which was objected to, on the ground that the plaintiff having sworn there was no usury to his knowledge in the transaction, the defendant could not be sworn under the provisions of the act. The court overruled the objection and permitted the defendant to be sworn, who stated that the note had been drawn by Happoldt and endorsed by himself, to raise money, and that it was taken at an usurious discount by Dunn; who refused positively to advance the money, until the note was endorsed by the witness. Dunn was then called by the plaintiff and sworn. He stated that he had got full value for the note from the plaintiff and had given full value for it to the defendant, for Happoldt, and there was no usury in any stage of the transaction. Dunn’s name was not on the note. Under the charge of the court, the jury found a verdict for defendant. The plaintiff now moved for a new trial on the ground, that the defendant’s evidence was improperly received.
    Hunt, for the motion.
    It is evident, that the statute of usury only had reference to actions, between the original borrower and lender, and intended to permit the defendant to give .evidence; in cases where the truth of the transaction was supposed to be known to the plaintiff, and he refused to swear. The terms of the act are “as such transactions are generally carried on where only borrower and lender are present together,” ike. “be it enacted,” &c. “that the borrower or party,” which by a very natural construction may be made “borrower who is a party,” shall be a good witness. “Unless the person or persons against wliom such evidence is offered, will deny upon •oath in open court, the truth of what such evidence offers to -swear against him.” What else can the defendant in any such action swear against the plaimtiff, but the fact of usury? Which ..if the plaintiff will deny; will deny that he has practised usury; the defendant is incompetent.
    There is reason to believe that Wallis, -was the original -•lender of the money in this case, and that Dunn was only the broker who negotiated; it does not appear, that Dunn paid the money to Happoldt, ’till he had discounted the note with Wallis. Certainly Dunn is not a party to the note, which L file contract in the case. If this he the fact, it will not make usury in Wallis, that Dtrnn retained fifty dollars of the money in it’s passage through his hands.
    
      [JYbit, Justice. As Dunn’s name does not appear on the note, may not Nelson be regarded as the endorser to Wallis? And if as between them,-the contract was fair, is not Wallis entitled to recover against hvm, though there may have been usury between Happoldt and Dunn, as if a note- be drawn by A. and endorsed, upon a usurious consideration, by B. to C, who endorses and discountsit bona fide, in bank; is not C. liable on his indorsement as a new and valid contract?] ''
    Even admitting however, that the transaction was usurious on the part of Wallis, and that he committed perjury, yet ifhé was-the lender, the defendant Nelson was an incompetent witness, for Wallis denied the usury. In such case, if plaintiff swear falsely, defendant has no remedy but to prosecute for perjury. If Wallis was notthe lender, still the defendant-was incompetent; for I have endeavoured to shew that by the act, only the party to the usurious contract, defendant, is permitted to give evidence against the party plaintiff. The consistent and sensible construction of the act is, that if the plaintiff will deny usury o».his part, the defendant shall not be admitted to prove it. The result will be,that although an assignable instrument, like the one now sued on, is void as against those who became parties to it on a usurious transaction, yet in the hands of an innocent and bona fide--holder, it cannot-be. proved so by the defendant’s own testimony.
    In the case' of the executors of Thomas vs. Brown, 1 M‘ Cord, 557, the defendant was. admitted to prove the usury,where the party to the usurious contract was dead. There thO-plaintiffs neither did nor could offer to deny the usury, on the' part of him they represented. Here the party to the contract charged to be usurious, whether it were Wallis or Dunn, was living, and was examined on oath, and denied the usury. Were cited, Putnam vs. Churchill, 4 Mass. Rep. 516; Binney vs. Merchant, 6 Mass. Rep.. 190; 3 Day’s cases, 268; PVilhie vs. Rosevelt, 3 Johns. Rep. 206.
    
      Desaussure, contra.
    The defendant Nelson, was certainly-not the endorser to Wallis, for there is a subsequent endorser Christopher Happoldt. In cases of this sort, the court.will look through appearances. Nelson became a party to this note on a usurious transaction. No doubt a party who takes a note, which is void for usury, may indorse it, bona fide, and become liable on the new contract, which is not infected with the original taint Such was the case of Fleming and Mulligan, 2 Ms Cord, 1,76. If Wallis obtained the note bona fide, he obtained it of Dunn, and against him no doubt he had a good right of action.
    The legislature manifestly regarded the statute against, usury as a remedial'act; and it must be liberally construed in suppression of the mischief intended to be remedied. It makes the “borrower or party,” a competent witness; that is, the party from whom the-usurious rate of interest is demanded. As not the usurious rate of interest demanded of the defendant in' this case? By his indorsement, he became liable to pay six hundred dollars and received five hundred and fifty. The law removes in .this- instance, the general incompetency of a witness in his own cause. This, the case-of the executors of Thomas vs. Brown, shews; defendant is competent, unless plaintiff knows •the transaction, and: -will 'deny all the. circumstances which he offers to swear; not deny generally that he knew of or practised Usury, but submif-.to examination and deny in detail.
    It is- argued that if Wallis was not the Iendor, Dunn was; that he knew "«11 the facts and denied what defendant swore. This argument would have been applicable, if when Nelson offered to swear, Dunn had been offered to contradict him. But this was not done, apd Nelson was certainly a competent witness when he was sworn; he was not objected to, on the ground that Dunn was the proper witness to pie-clude him. The testimony of both went to the jury, to whom it belonged to decide between them, and they famid, no doubt most correctly, that it was a case of usury! 'Were cited, Jones vs. 2 Johns, ca. —?*-, Ldghtner vs. Iiagood, 2 Bay, 178; Wilkes vs. Brimmer wife, 2 Mi-Cord, 178,
    
      Hunt, in reply.
    "Nelson was introduced to make himself a competent witness, first to prove Dunn Mhe'lender and then to, prove the usury. But for his testimony Wallis would have ap-. peared the lender.
   The opinion of the- 'Court was delivered/ by

"Mr. " Justice ~¿Huger.

The usury act declares “that whereas it is to be feared that; evil minded persons” &sg. may violate that act, “from the hope> that their offences may not “be discovered for want of proof, as such transactions are generally carried on where only borrower and lender are present together; for remedy whereof, it is enacted, that whenever any suit is depending touching any usurious bond, specialty, contract, promise or agrtement or tailing of usury, the borrower or party to such usurious bond &c. &c., shall be a good and sufficient witness Sic. Sic. provided that if the person or persons, against whom such evidence is offered, will deny upon oath, in open court, the truth of what such evidence offers to swear against, him, then such evidence shall not. be admitted to be sworn.” Formerly this act was regarded with peculiar favour. Usury was thought an offence not only against the law's of the state, but the laws of Heaven. On this suject,. however, public opinion has undergone a most thorough change. It is now only regarded, as malum 'prohibitum, and meets with no other denunciation than is justly and properly due to every offence against the laws of the country.

Whatever, therefore, may have been the rules formerly adopted for the construction of this act, I cannot give my sanction now, to any other mode of interpretation than that which is adopted in the construction of the other acts of the legislature. 1 cannot consent to inflict the penalties of this act in a doubtful case. It is highly penal and no one should suffer under it, unless he be-proved, in the mode prescribed by the laws, to have violated it. If a new 'mode 'of proceeding be prescribed by statute, it must be followed, but no further than is necessary to give effect to the plain intention of the legislature. It is, to say no more, in opposition to all our received notions of propriety, to permit a defendant to swear off his debt. The act, however, does, permit this, under particular circumstances. But the very circumstances under which the defendant is permitted to swear, shews the jealousy with which the legislature, itself regarded the privilege it was conferring. The borrower, or party to the contract, is not to give evidence, if the person against whom such evidence is offered, will deny upon oath the truth of what such evidence offers to swear against him. The evidence of the borrower appears to have been intended'to -act in terror cm.. Thu lender is forewarned that if he does lend, it is at the risk of losing his money by the evidence of defendant, or of adding the crime of perjury to the offciice of Usury; the alternative is, ■however, with him; if he choose to deny on oath ihe truth of What such evidence offers to swear, the borrower shall not he permitted to swear. It is immaterial to the admission of the borrower’s evidence, whether the lender swear falsely or not. The plaintiff, in consequence of the notice given, that the defendant would give his evidence if the plaintiff did not, was Sworn, and he denied the usury; hut it was said that as the circumstances stated by the defendant were not denied, he could be admitted to his evidence. It was certainly not the intention of the act to permit the borrower to swear, unless the lender refused to exculpate himself on oath. In this case the plaintiff, if he were the lender, did exculpate himself; if he were, however,not the lender on usury, Dunn was; and Dunn did excidpate-himself on oath in open court as the act requires.

It is said that Dunn’s evidence was not offered until the defendant had been sworn. He was, however, objected to as an incompetent witness before he was sworn; hut this, at most,is hut contending for a form, which may embarrass hut cannot aid the administration of justice. It is very much like the old rule which required every objection to the competency of a witness to he made on the voire dire, and if once examined in chiefj, however flagrant his incompetency might appear, he could not be disposed of. The courts have long since adopted a different rule, more convenient and much better calculated, in every respect, to aid the advance of justice. If at any time the incompetency of a witness appear, his evidence must he rejected; see Dunford and East, 719; and Phillips, 96. Substantially, the provisions of the act were complied with on the part of' the plaintiff. The lender did exculpate himself on oath, and the defendant was, therefore, incompetent and ought not to haye been received.

The motion must, therefore, he granted.

JYott, Justice, concurred.

Richardson, J.

I concur; because my understanding of the evidence of Wallis is, that he denied the usury expressly; and, therefore, the defendant, Nelson, was an incompetent wife-Mess under the act.

Colcoc1', Justice.

— In this case, there is a difference of opinion, and it is thought important that the view which is eater-iained of the law, by those of the bench who are opposed to 'the decision, should be expressed: 1st. Because the decision, : it is believed; is in opposition to the adjudged cases of our own courts: 2ndly, Because the decision, as 1 think I shall clearly -jsbew, destroys the act against usury.

The plaintiff moves for a new trial on the grounds:

r J st. That his oath, should have been taken as conclusive; and consequently that the defendant should not have been permitted to give evidence:
2nd. That he being an innocent indorsee, ignorant of the ..consideration.for-which the note was given, cannot be affected by the usury.

I shall consider the last ground, first: For if it be established that the plaintiff cannot recover on the endorsement of Nelson, which endorsement was on the note from the first, and on which the money was lent, it follows of course, as I shall shew, that the defendant was properly admitted according to .the provisions of the act. In the consideration of the case, the "fact of usury is taken for granted; because it is too clear- under all the testimony to be doubted byany one-and because the jury have so found. The doctrine.^apon this subject, so far as.it lias been decided by our courts, being found in a number, .of adjudged cases, I will take a view-of the whole subject; and J am further inclined to this course, because I think on questions -where there is such a serious division of the bench, too much labour cannot be expended on a case.

The act against usury, declai*es that “ no person or per.sons whatsover, upon any contract, shall take directly-or indi-rectly, for loan of any money, wares,or merchandize,-or other commodities whatever, above the value of seven pounds, for the forbearance of one hundred pounds for one year, and so after that rate for a greater or a less sum, or for a-larger, or a shorter time; and that all bonds and specialities, contracts, promiseá and assurances whatsoever, made after the time aforesaid, whcreupon or whereby a greater rate of interest shall be resefv-. ed or taken, shall be utterly void and of none effect.” " What was the contract here, and by whom was it made? It was for the loan of money, at the rate of 50 per cent, per annum, and it was'made by the defendant; it is a contract whereby a greater rate of interest than that which the law allows has been obtained and consequently, by the provisions of the act, utterly void and of none effect; and yet upon this contract it is said Nelson is to be’ made to pay the debt.

The object of the statute being to- prevent the taking a greater rate of interest than that allowed by law. The most effectual mode, of accomplishing the purpose, was to decláre the contract void; that .is to- say, no one shall be made answerable for a debt contracted under such circumstances. But it is said the law only means that this shall be the case as to- the parties themselves, and to them.alone who make the contract. This exception or limitation is not to be found in the act itself Where then is it to be found? It is answered in the policy of the law. This cannot be; for it is clear to-demonstration that this would at once destroy the law itself; for it is easy to pass such notes at full yalue as any others, when it is understood that in the- hands of a person, ignorant of the usury, they would*" be binding. Let the usurer pu-U-his notes into circulation, and he’is safe;-- again, it is said, it is unjust that" a man who pays-tile full valúe of a note, without a knowledge of the usury, should ■lose his debt. The first answer to this.is, he does not lose his debt, he who has passed the note to him is responsible to him.-; But he may he insolvent.*- This is a common-risk against which the' law does not protect. Every-man is left free to contract with whom he pleases. If he gives credit to an insolvent man, the fault is his own; and the ease of a* had note is like the case of a blind horse; the purchaser is not only not protected- - against such an- imposition, but he is not entitled to commiseration; for the exercise of the faculties- which he possesses may protect him against it. It is as easy to inquire of the makerB and indorsers of a note, whether it was given for a valuable consideration, as to try a horse.-.,

The plaintiff then can find no protection in the law itself, none in its policy, nor any.in the' common protection which the law thinks proper to afford. Now let us see what the adjudged cases -say on this subject; and I begin with our own. In 2 Bay 30, in the case of Payne Trezevatt(, this very point was- made and determined; and the plaintiff was ignorant, as the witness Stated, of the original contract between the defendant and Sarce-das, made through the medium of House, the Broker. The court say, admitting Payne to have been an innocent holder, for a valuable consideration; yet as the note was absolutely void in its creation, he cannot recover against the drawer. In 2 M'Cord, p. 178, in the case of Wills vs. Brummer and Wife, the same principle applied, even to one of the original parties to the note, is maintained; that ignorance of the usury shall not alter the law; and again in a subsequent case of Flemming vs.. Mulligan, the very ground, was taken (the fifth) and the opinion on that ground (whether arising out of the facts of that particular case can make no difference, because it is ex-' pressly taken and expressly decided on,) is thus expressed, “ according to the settled construction of the statute against usury, where unrestricted by any subsequent enactments, a negotiable instrument, if usurious in its original concoction, is void in the hands of a bona fide holder;” and besides the case already noticed from 2d. Bay, other authorities are referred to, In support of this position; the first of which is in 15 Johnson, p. 56, where it was recognized as law, though in the case the doctrine did not apply. The next was the case of Jones & Hake, 2 Johns. Ca. 60, where the plaintiff was, as far as appears, an innocent indorsee, and yet the court held that he ought not to recover;, the next was the case of Ackland, vs. Pearce, 2 Campbell, 599., where it was held that the drawer’s ignorance should not alter the law; and lastly, 2 Phillips on Evidence, page 13, note, and Comyn on Usury, 161 to 182, where all the cases on this subject are collected, and where it is said, in totidem verbis, that c: a bona-fide holder cannot recover on a bill founded in usury.” S® neither can he recover upon a bill where the payee’s indorsement, through which he must claim, has been made on an usurious contract; and there too will be found the distinction between-cases arising under common law, and cases of usury and other cases arising under statutes, declaring such instruments void in fheir creation. A want of attention to this distinction is, as J conceive, the canse of the difference of opinion. “ Independently,” says Mr. Phillips, “ of statute provisions, where a negotiable instrument is voidable between the original parties, either by its being founded on a consideration prohibited by the common law, or where it was without consideration at its commencement, it is notwithstanding g-ood in the'hands of an indor-see for valuable consideration, withoutnoUce.” As between immediate parties, those parties between whom there is ;i privity of contract, the want of consideration or .the subsequent discharge of the debt is a valid defence, but an indorsee without notice and for valuable consideration is not affected by fraud'or other transactions between the original parties, (to which there are exceptions which arc pointed cut;) one of the" cases referred to will be sufficient; in 5 Mass. 286, a case which the judge supposed to be analogous to the cases of usury and gaming,' he says, “though in an action by an innocent indorsee, against the maker of a note, want of consideration or an illegal one, if unknown to the plaintiff, forms no legal defence at common law,’ yet between the same parties, a consideration illegal by statute and a legislative declaration that the instrument declared on, shall be deemed utterly void, will certainly defeat the action.” I refer merely to a few English cases, collected in order, on usury, 'where the same position is laid down.- _ See page 105, 106.

It has been said, that in the argument of the case of Fleming and Mulligan, it was conceded that the hank where the note had been discounted by Fleming, could have recovered. The concession is again made, and it was therefore that the note, came back into the hands of Fleming. His indorsement to the bank, was a new contract for a full consideration, and) though written on the back of an usurious note, was not therefore void-But the bank could not have!recovered against any of the parties to the original contract, nor would they ever discount a note under the circumstances under which this plaintiff discounted this. If Mr. Dunn had applied to them, I have no hesitation . in saying they never would have discounted it for him, without his endorsement, nor indeed can I bring my mind to the belief that any man would do so in an honest transaction. Í have said that if it were shewn that the plaintiff could not maintain hia section against the defendant, aliho’ considered, as art innocent indorsee, that it would follow that the defendant was properly, admitted as awitness, and I think it has been satisfactorily shewn that both on principle and authority, an innocent indorsee cannot, maintain an action on an usurious note, against any of the parties to the usurious contract. I proceed then to the second ground.

The plaintiff did not deny but that the note may have been thus illegally made; all he knew, as he said, >vas that he gave Dunn a full consideration; he did not know whether there was usury or not. The subject then was open for investigation and the defendant ivas offered as a witness. How could the court refuse him? The act says, he shall be a competent witness and shall be sworn. The words are “the borrower or party to such usurious bond, &c. shall be and is hereby declared to-be a good and sufficient witness in law, provided, that if the person or persons against whom such evidence is offered, will deny upon oath in open court to be administered, the truth of what such evidence offers to swear against him, then such witness shall notbé sworn.” Now, as there was no denial of what the borrower or party (if he can be distinguished as only aparty,) was willing to swear, it follows that he was rightly admitted, and his evidence was considered as out-weighing that of Dunn’s, and in my opinion very properly. It is said, his (Nelson’s) incompetency appeared afterwards, and therefore his testimony ought to have been rejected; but that incompetency can be shewn in no other way than by saying that Wallis denied the usury. If that is a denial of the usury, words have lost their meaning. If this is to satisfy the provisions of the statute against usury, it is a repeal of the statute. Now admitting that the statute is impolitic, which I by no means think is the case, I think it better to leave it to the legislature to act, than in this way to remove what has been for ages considered as a necessary shield against the practices of the fraudulent and against the destruction of the circulating medium of the country, and what in the language of the preamble to tips act “the constant experience of all states and nations for ages past has deemed necessary.”

But another objection is suggested, that it appears that Dunn was the real lender3 and therefore his testimony will exclude Wallis.. The amount of this is, that the court will direct a plaintiff to conduct his cause so as to shield himself against the operation of the statute. Dunn was not offered until Nelson was sworn, the plaintiff and his counsel certainly knew the case and w_ere at liberty to conduct it as they thought best. If they did not choose to bring forward the lender, the court, under the provisions of the act, could not refuse the oath of the borrower. The court could not divine who the lender was. The natural presumption was that which occurs in all such cases, when the lender is not produced, that is, that he could not contradict what the borrower was willing to swear to. If the argument meant to say, that the court should have directed the jury to believe Dunn in preference to Nelson; I can only reply, that I have no doubt that such a recommendation would have been considered as an insult to them and dereliction of duty in the presiding judge. Lastly, this is an appeal to the discretion of the court; no rule of law has been violated, the plaintiff, as he had a right to do, was permitted to conduct his cause as he pleased, and if he has, by his own management, laid open to this court the illegality of his cause of action; is it the duty of the court to help him out of the difficulty? Is the aid of this court to be lent to assist usury? Wilkes vs. Rosevelt, 3 Johnson 206. I presume pot. I at leastj will prefer to say to them in the language of Lord Mansfield, in the case of Hoyer & Edwards, Cowper 114, that where the real truth is an usurious loan of money, the wit -of man shall not find a shift to take it out of the statute. 
      
      
         This ground does not appear on the brief, or in the opinion of the court The impression that such a ground was taken, probably originated fra» a question put by one of the court inthe-course of the argument,
     