Morrison v. Voorhies

6 Ky. Op. 627, 1873 Ky. LEXIS 319

• Court: Court of Appeals of Kentucky
• Decided: April 9, 1873
• Status: Published

Opinions

Opinion by

Judge Lindsay:

It is perfectly manifest from the proof that the purchases of the bills of exchange by the Savings Institution from Munday were made merely for the purpose of disguising loans of money, at a greater rate of discount than was allowed by the-8th section of the 53d chapter of the Revised Statutes.

The bill held by E. Hutchinson & Co. was not received in the regular course of business and the title was not passed to them until after it was over due. Besides this, the three directors of the Savings Institution, who were also directors in the banking firm of E. Hutchinson & Co., must be presumed to have known that the bill contained usurious interest, and their knowledge as officers of the one institution must be regarded as carrying actual notice of the illegal consideration of part of the bill to the firm in behalf of which-they acted in making the purchase. E. Hutchinson & Co. therefore occupy a no more favorable attitude than does the Savings Institution from which they purchased.

The interest taken in the way of discount in the various bills sold by Munday to the Savings Institution was about double that authorized to be taken by the 8th section of the 53d chapter of the Revised Statutes. If it had been paid, these appellants, who are bona fide creditors of Munday, might have sued for and recovered it by a suit in equity before it is paid, or insist that E. Hutchinson & Co. shall not be allowed to have judgments upon a void contract for the payment of this illegal interest, until their debts are fully satisfied.

The court below should have appropriated the proceeds arising from the sale of the mortgaged property, first to the payment of the amounts actually loaned to Munday by the Savings Institution to E. Hutchinson & Company. .Then to the payments of the claims of these appellants in the order of their respective priorities, and then such balance as remained, to the payment of the usurious interest due to E. Hutchinson & Company from Munday, Jones & Company.

T. C. Bell, for appellants. John G. Kyle, for appellees. A. J. Jmnes, for Jones. T. C. Bell, for appellant. John G. Kyle, for appellees. A. J. James, for Jones & Co.

The judgment appealed from is reversed and the causes remanded for a judgment consistent with this opinion.

Morrison & Oaks v. W. Voorhies & Co. D. W. Jones & Co. v. J. W. Munday, etc.