Jennings v. Kosmak , 43 N.Y.S. 1134 ( 1897 )

O’Dwyeb, J.

This action was brought to recover the sum of .four hundred and eighty ($480) dollars on a promissory note dated the 20th day of May, 1893, and payable.in two months thereafter, made by Louisa Bauer to the order of herself and indorsed by the defendant.

The answer alleged that the note in suit was given in renewal of a note indorsed by the defendant for Louisa Bauer .in the year 1890. - ' :

Two defenses were interposed: • The first, that the plaintiff in.' this action, without, notice to the defendant, had extended the time for the payment of the note in suit and had accepted three notes. " ¡ '

That those notes were taken by the plaintiff without the knowledge or consent of the defendant, and that the defendant, being an accommodation indorser, was released from his obligation to pay the note by this act of the plaintiff.

The second defense alleged the making of the note in 1890, and that the plaintiff accepted this note as collateral security for the sum of $336, reserving interest at the rate of 30 per cent, per annum, and that as the defendant was an accommodation indorser, this act constituted usury and he was not liable.

The learned trial justice, properly took from the jury all consideration of the first defense.

It clearly appears that the plaintiff had not agreed to extend the payment of the note in such a manner as-to relieve the defendant. ' .

Plaintiff was willing to extend the time of payment and accept other notes upon condition, however, that the defendant indorsed them and not otherwise, and defendant failing to indorse the new notes, there was no extension of the original obligation.

In support of the second defense, the witness Bauer testified that in May, 1893, she had two notes, one for the sum of $480 indorsed by the defendant herein and the other for the sum of $560 indorsed by Mr. Andy Horn.

That for both of these notes she received from the plaintiff the sum of nine hundred dollars ($900).

At folio 59 of the case she testifies: “ I did not at any time, either'before or after the conversation I had with Jennings, at which these two notes with Horn’s indorsement and Kosmalt’s indorsements, were discounted or purchased by- Jennings, receive any more money than the . sum of nine hundred dollars.” .

It is a well-established rule of law that the defense of usury must be pleaded with distinctness and particularity, 'and that the burden of proving the defense as pleaded is upon the defendant.

It is stated in the answer that the note was made in 1890; and that the plaintiff took it as a security for a loan of $360 and agreed at that time to charge and.receive 30 per cent, per annum interest.

All the authorities are agreed in stating that usury must be strictly proved as pleaded, and a most careful examination of the whole record does not disclose a single mention of any transaction between plaintiff and Bauer in 1890.

. It does not appear that plaintiff ever paid $336 for this note or that he ever agreed to take 30 per cent, interest.

After counsel for the plaintiff had summed up the case to the jury the court inquired of the defendant “ Where is the evidence of usury on the giving of the notes in 1890?” and thereupon defendant’s counsel asked leave to amend the answer by making it conform to the proof, and this motion was granted.

Notwithstanding the lateness of this application, if there was • evidence sufficient to support a finding by the jury of usury, we would hold that the references of counsel to the rates of interest charged in the other states and the characterization by the court in the presence of the jury of the defense of usury as an unconscionable one sufficient error to reverse the judgment and order a new trial.

With the pleadings amended to suit the proof there is no evidence of usury in the case, and no different verdict could have stood.

What is the testimony?

That the plaintiff paid Bauer the sum of $900 for two notes, one of them, the note in suit, for the sum of $480, and another note, about which we "know nothing, for the sum of $560.

Admitting that Bauer’s statement was true, that the plaintiff only paid $900 for the notes, there is no evidence before the court to show how much was paid for the note of $480, the one in suit.

For aught that appears, the note for- the sum of $560 was business paper which could have been sold for any amount of money and the full sum of $480 paid for the note in suit.

From any evidence to the contrary, Bauer had a perfect right to dispose of the $560 note for any sum that she pleased.

There is nothing in Bauer’s testimony on which We can base an opinion that less than the full amount was paid for the note in suit.

It has been many times decided that the burden of proving usury is on the party alleging it. . \ .

It was not necessary for the plaintiff to establish-affirmatively that he did not take usury, but it was necessary for the defendant to establish by a fair preponderance of evidence that the sale of the $480 note was usurious, and the' burden thus imposed he has failed to- sustain.

All the cases hold that if upon the whole case the evidence is as consistent with the -absence as with the presence of usury, the party alleging it has failed in his proof (Stillman v. Northrup, 109 N. Y. 473), and this is such a case.

The judgment and order appealed from should be affirmed, with costs.

• Van "Wyck, Ch. J., concurs.