Knox v. Williams

24 Neb. 630

• Court: Nebraska Supreme Court
• Decided: July 15, 1888
• Status: Published

Opinion

Maxwell, J.

In July, 1885, the defendant in error executed and delivered to John P. Dorr a promissory note, of which the following is a copy:

“Lincoln, Neb., July 29, 1885.

“January 29, 1886, after date, for value received, I promise to pay to tbe order of John P. Dorr three bundred and forty dollai-s, with interest at the rate of 10 peícent per annum from date until paid: Payable at Dorr Pro’s, office, Lincoln.

“$340. Due Jan. 29, —86. Ms

“Attest: H. H. Bulkeley. George X Williams.

This note was secured by a chattel mortgage on certain personal property of Williams.

In January, 1886, Williams executed a second note to Dorr Brothers, apparently as interest for the excess of 10 per cent on the note first given, as follows:

“Lincoln, Neb., Jan. 27, 1886.

“April 27,1886, for value received, I promise to pay to the order of Dorr Brothers thirty-six and dollars, 'at their office, Lincoln, Neb., with interest at the rate of ten per cent per annum from date until paid. ^

“Due 4 — 29—86. George X Williams.

“Attest: H. H. Bulkeley.” mark

The testimony shows that the original loan for which the note for $340 was given was but $300. "Various payments were' made by Williams on the note prior to August, 1886, the exact amount being a matter of dispute between the parties. In August of that year Williams executed and delivered a new note to Dorr in lieu of those previously given, as follows:

“Lincoln, Nebraska, August 18, 1886.

“September 1, 1886, after date, for value received, I promise to pay to the order of John P. Dorr, three hundred dollars, with interest at the rate of 10 per cent per annum until paid. If any of the said interest is not paid ■when it becomes due, it shall bear interest at the rate of 10 per cent per annum from the time same note becomes due.

“George X Williams.

“Attest: J. A. Marshall.” ™ai'k

This note was secured by a chattel mortgage on certain personal property of Willliams. On the. afternoon of the 4th day of September, 1886, Dorr professes to have transferred the note in question to the Capital National Bank of Lincoln. Sometime afterwards the bank transferred the note to the plaintiff. While the note was in the hands of the plaintiff, the defendant in error made a formal tender of $250 in gold to the plaintiff, which he refused to receive. He thereupon took possession of the property described in the chattel mortgage. The defendant in error then brought an action of replevin, and on the trial of the cause the jury returned a verdict as follows: “ We, the jury duly empaneled and sworn in the above entitled cause, do find: That the first note given by the plaintiff to the defendant, Dorr, for the sum of $340, to secure the loan of $300, was usurious; that plaintiff had paid to defendant Dorr on said note or loan the sum of $174.22; that there is still due on said note or loan the sum of $125.78.

“ 2d. That the second note given by the plaintiff to the defendant, Dorr, dated October 18,1886, for the sum of three hundred dollars, and set up in the pleading, was usurious and void.

“ 3d. That the right of property and right of possession of said property when this action was commenced was in the plaintiff, and we assess his damages in the premises at the sum of two dollars.

“J. R. Cooke,

“Foreman.”

The defendant excepted to the form of the verdict,, and asked to have the jury polled, and thereupon the jury was polled, each juror answering that the verdict was his verdict. A motion for a new trial was overruled, and judgment entered on the verdict, to reverse which the cause was brought into this court by petition in error.

■Two questions are presented by the record. 1st. Was the bank a bona fide purchaser of the note before it became due? 2d. Was the tender of the defendant in error to the plaintiff sufficient to divest the mortgage lien ?

The cashier of the bank in question was examined as a witness, but seems to have been unable to testify to particulars in the case. His testimony taken as a whole throws no light on the transaction. Mr. Dorr testifies in regard to the transaction on his cross-examination, as follows:

Q,. Will you swear you did not make any arrangement with any one to have him take it (the note) from the bank?

A. I will swear I made no arrangement with Knox to have it taken from the bank.

Q,. With anybody else?

A. No, I will not.

Q,. What arrangement with Spencer?

A. I went to Mr. Spencer and told him the note was in the bank, and past due, and I did not want the bank troubled, and I asked him to get somebody to go there -and buy the note.

Q. Did you furnish the money to buy the note?

A. I did not.

Q,. Have you since this date ?

A. I have not.

Q,. You have $301 as the proceeds of that note, without having paid out anything in return?

A. I have.

Q. Have you agreed with Mr. Billingsley to secure Mr. Knox?

A. Why, there was an understanding that if there was any expense in the collection of the note I should pay it.

He afterwards testifies that as he was liable on the note -as endorser, therefore he did not want the bank to pay the -expense of collection.

The rule as stated by this court in Darst v. Backus, 18 Neb., 231, is, that where usury in the original transaction for which negotiable promissory notes were given is proved, a party who claims to have purchased the notes before maturity must assume the burden of proof to show that he is a bon'a fide purchaser for value before maturity and without notice. To the same effect are Savings Bank v. Scott, 10 Neb., 86. Olmstead v. N. E. Mtge. Sec. Co., 11 Id., 492. Cheney v. Cooper, 14 Id., 416. Evans v. De Roe, 15 Id., 631. And every subsequent security given for a loan originally usurious, however remote or often renewed, is subject to the plea and proof of usury; and when the proof of usury is sufficient, the court .will apply all payments of interest upon such usurious loan as-a payment, pro tanto, of the principal. Nelson v. Hurford, 11 Neb., 465.

That there was usury of an aggravated character in the-original transaction is proved beyond a doubt. There is an utter failure of proof to show that the bank was a bonafide purchaser of the note in question before maturity. The plaintiff, therefore, having obtained the note after it became due from one who held subject to the maker’s-equities, is not protected. The note in his hands was subject to the same defenses as if held by the payee.

Usury being shown, all payments upon the note, whether as principal or as interest, are under the statute to-be applied in payment of the principal. The payments-are shown to have greatly exceeded the sum of $50. It-was the duty of the plaintiff in error, therefore, to have-accepted the $250 tendered by the defendant in error. This tender was absolute, and without qualification, and has since been kept good. It therefore divested /the lien of the mortgage. Tompkins v. Batie, 11 Neb., 147. The plaintiff in error had no lien on the property at the time-lie took possession of the same and was not entitled to-possession thereof. The judgment of the district court is-clearly right, and is affirmed.

Judgment aeeibmed.

The other judges concur.