Opinion
September Term, 1863
John K. Porter, for the appellant.
Edward Fitch, for the respondents.
Usury is a defense which can not be made available on the trial of a cause, unless it be pleaded; and the answer of Davis not showing that the contract of transfer and indorsement of the note by him to Noxon was usurious, the evidence tending to prove that fact was properly rejected. ( Gould v. Horner, 12 Barb. 601; Watson v. Bailey, 2 Duer, 509.)
The contract of indorsement, made by Davis, had no connection whatever with the usurious contract between Westervelt and Davis, and is not affected by it. The indorsement constituted a new contract between Davis and Noxon, upon sufficient consideration, and was valid and binding upon the defendant, although the note was void. ( McKnight v. Wheeler, 6 Hill, 492; Churchill v. Hunt, 3 Denio, 321.) Indeed, the fact of the transfer of the note by the defendant to Noxon, as a valid instrument, is of itself sufficient to estop him from alleging, as against Noxon, or any one claiming under him, that the note was void. ( Delaware Bank v. Jarvis, 20 N.Y. 226.)
The judgment of the Supreme Court should be affirmed.
The defense in this case to the note upon which the action was brought is, that the note is void for usury. The usury set up in the answer is the usury between Davis and the payee, who sold it for the benefit of the maker. The note was usurious as between Davis and the parties to the note, and was so found by the referee. The defendant Davis seeks to avail himself of his own act in taking usury, as a defense for himself as indorser. The decision in Delaware Bank v. Jarvis, ( 20 N.Y. Rep. 226,) is in point in this case, so far as to hold that the defendant can not set up this defense against the party to whom he passed the note. That case decides that the transferor of a chose in action impliedly warrants its legal soundness and validity; and that if there are any exceptions, they do not exist where the invalidity of the security sold arises out of the vendor's own dealing with or relation to it. The judge says: "On the sale of the note the defendant became chargeable on an implied undertaking that he held it by a right and title which would enable the purchaser to enforce it against the parties to it."
Such an indorsement, as between the plaintiffs and Davis, was a new and independent contract, and it was not competent for him to say that his indorsement is invalid; ( McKnight v. Wheeler, 6 Hill, 492;) nor could he in any event set up his own illegal act in taking usury to defeat a recovery against him upon the same instrument. ( La Farge v. Herter et al. 5 Seld. 241.)
It may be that under a proper answer the defendant might have set up usury as between himself and the plaintiffs, in the transaction upon which he transferred the note to them. He has, however, stated no such defense in the answer, and he can not now rely on that to defeat the plaintiffs' recovery.
The judgment should be affirmed.
All the Judges concurring,
Judgment affirmed.