Newport National Bank v. Tweed

9 Del. 225

• Court: Superior Court of Delaware
• Decided: July 5, 1870
• Status: Published

Opinion

Harrington.

The jury could not consider that the taking of the note and the advancing of the money upon it by Mr. Flinn, was the act of the Bank, for even Elliott with all his readiness to swear to all he understood to be material and necessary to defeat the action, had not proved that it had been delivered by him to Mr. Flinn in the presence of any other person than themselves, whilst Mr. Watson, the cashier, had testified that the first time he ever saw it, and the first knowledge he had that there was such a note in existence, was not until nearly a year afterward, or some fifteen to twenty days before its maturity ; and as the Bank, and not Mr. Flinn, was suing as the bona fide owner and holder of it for the full value on the face of if", after it had been indorsed and negotiated, Tweed the payee and indorser, as the indorser of it without any knowledge or notice of the corruption and usury since then for the first time alleged against it, in its inception a year before that time, it could constitute no legal defence, if all that had been alleged against it were true, to the' present action. 2 Greenl. Ev. sec. 171.

The Court,

Gilpin, C. J.,

charged the jury, that Elliott, the maker of the note, was a competent witness in the case, and if the jury were satisfied from all the evidence in it, that before the note in question was made he applied to Franklin Q. Flinn to borrow six hundred dollars for a year, and to know on what terms he could obtain it from him upon his note with John Tweed as the indorser of it, and that Flinn told him he could have it at twelve per cent, and directed him to draw the note for six hundred dollars with the interest for one year added to it, (and which, of course, imported lawful interest, or interest at the rate of six per cent.) payable to the order of Tweed, and to sign it himself as maker, and get Tweed to indorse it as the payee of it, and then take it to him for that purpose ; and were also satisfied from the evidence that that was done, and that the promissory note in question and now before them, was then prepared and signed by Elliott the maker, and indorsed by Tweed the payee, pursuant to such direction, and that the words “ credit the drawer ” were then written across its face and signed by the latter, and that Elliott himself afterward took it to Flinn and delivered it to him and received for it five hundred and sixty-four dollars from him, either by his check, or by his direction to the cashier to enter that amount to Eliott’s credit in the Bank, then it was direct and complete and conclusive proof that Flinn knew when he so took it, that it was an accommodation note for the sole and exclusive benefit of Elliott, the maker of it, and that no consideration had passed from him to Tweed for it, and that it was a direct loan by him of that amount of money to Elliott for one year from the date of the note, on the security of it, and it would at the same time also be conclusive proof that it was a loan of that amount of money at an unlawful and usurious fate of interest ; and it is, therefore, void under our statute, as was distinctly and expressly ruled by this court in the case of Cook v. Pierce, 2 Houst. 499. It was not a purchase of the note by Flinn, if such were the facts of the case, but a loan direct of that amount of money to Elliott on the security of the note and the indorsement, of it hy Tweed ; and in no case where there is a lending of money in which the person lending it, either directly or indirectly, takes or contracts for the loan or use of it at a higher rate of interest than six per cent,per annum,can the wit of man devise a plan to cover and conceal it, that the (Jourt would not unkennel and expose the usury of it,and enforce the statute against it. In regard to the question of liability as between subsequent indorsers of it, if there had been any, or as between Elinn and the Bank, the court is not called on to say any thing, or to express any opinion, as that question is not involved in this case.

The main defence, however, had been that if such were the facts in the case, still the Bank which took it and gave full value for it, and is the plaintiff in the action and is the party now suing upon it, is entitled to recover because it had not been proved, as is alleged, that the bank itself, or its directors had any knowledge or notice whatever of the usurious character and terms of the contract between Elinn and Elliott in pursuance of which the note was made and given by the one and accepted and received by the other, and which did not appear on the note itself, when it came into the possession of the Bank,and knew nothing of its existence even, until nearly a year afterward. But how can that be, and how does that allegation accord with the fact, that Elinn himself was the President ofithe Bank, received it at the Bank, and deposited it himself in the Bank a. short time before its maturity, and drew the money out of the Bank upon it ? It never was before the directors, never was discounted by them, and so far as the evidence goes, none of them up to that time had ever seen it, or knew any thing about it. Nevertheless, we find it in the possession of the Bank and the Bank, claiming to be the lawful owner and holder of it, and is now in court suing upon it. According to the testimony of the cashier it was placed there by the President of the Bank, and he by his request paid him the money on it. Such corporations can only act by and through the agency of their officers, and in all transactions of an officer and agent of a corporation, such as the President was of this Bank, done with the approbation of, or by the authority of his principal, notice to the agent is notice to the principal, and the knowledge of the agent is the knowledge of the principal, for no principle of law is better settled.