Aldrich v. Reynolds

New York Court of Chancery

Aldrich v. Reynolds

1 Barb. Ch. 43, 1845 N.Y. LEXIS 453

CourtNew York Court of Chancery

DecidedAugust 16, 1845

StatusPublished

Cited by5 cases

This text of 1 Barb. Ch. 43 (Aldrich v. Reynolds) is published on Counsel Stack Legal Research, covering New York Court of Chancery primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Aldrich v. Reynolds, 1 Barb. Ch. 43, 1845 N.Y. LEXIS 453 (N.Y. 1845).

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Opinion

The Chancellor.

If the statement in the answer is true,

and it must be taken to be so upon this application, this mortgage is not usurious, although the money secured by it includes the usurious premium which was originally embraced in the note to Ells. To render a contract usurious, both parties to the contract must be cognizant of the facts which constitute the usury. And if a bona fide holder of a negotiable note, which was tainted with usury in the hands of the original payee, receives from the maker a new security for the debt, and gives up the note, without any knowledge of the usury, the security which he takes in lieu of it is not usurious. (Cuthbert v. Haley, 8 T. R. 390.) It is true the defendant could not have recovered against the maker of the note, in this case, upon the original contract ; which was void even in the hands of a bona fide holder. But he had a perfect right to tecover the amount of the note against Ells or the other endorser. And it was entirely immaterial whether the defendant paid the money to the bank, himself, and then discharged the endorsers by giving up the note to the complainant upon the receipt of the new security,' or lent the money to the complainant to take up his note, at the bank, as is [45]*45stated in the answer of the defendant. For, in either event, the original liability of the endorsers would be discharged, and the defendant must rely upon his bond and mortgage alone for the recovery of his debt.

The bond and mortgage, given to a stranger to the original contract, not being subject to the charge of usury on account of the extra premium which was inserted in the note given to Ells, and all the other charges of usury stated in the complainant’s bill being fully met by a positive denial in the answer of the defendant, the motion to dissolve the injunction must be granted. And the costs of this application are to abide the event of the suit.

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The Chancellor.

If the statement in the answer is true,

and it must be taken to be so upon this application, this mortgage is not usurious, although the money secured by it includes the usurious premium which was originally embraced in the note to Ells. To render a contract usurious, both parties to the contract must be cognizant of the facts which constitute the usury. And if a bona fide holder of a negotiable note, which was tainted with usury in the hands of the original payee, receives from the maker a new security for the debt, and gives up the note, without any knowledge of the usury, the security which he takes in lieu of it is not usurious. (Cuthbert v. Haley, 8 T. R. 390.) It is true the defendant could not have recovered against the maker of the note, in this case, upon the original contract ; which was void even in the hands of a bona fide holder. But he had a perfect right to tecover the amount of the note against Ells or the other endorser. And it was entirely immaterial whether the defendant paid the money to the bank, himself, and then discharged the endorsers by giving up the note to the complainant upon the receipt of the new security,' or lent the money to the complainant to take up his note, at the bank, as is [45]*45stated in the answer of the defendant. For, in either event, the original liability of the endorsers would be discharged, and the defendant must rely upon his bond and mortgage alone for the recovery of his debt.

The bond and mortgage, given to a stranger to the original contract, not being subject to the charge of usury on account of the extra premium which was inserted in the note given to Ells, and all the other charges of usury stated in the complainant’s bill being fully met by a positive denial in the answer of the defendant, the motion to dissolve the injunction must be granted. And the costs of this application are to abide the event of the suit.

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Bluebook (online)

1 Barb. Ch. 43, 1845 N.Y. LEXIS 453, Counsel Stack Legal Research, https://law.counselstack.com/opinion/aldrich-v-reynolds-nychanct-1845.

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