Pritchett v. Mitchell.

10 Johns. 185, in which the same learned jurist, as chief justice, had delivered the opinion of the court, the heirs of a mortgagor attempted, unsuccessfully, on the ground of usury in the mortgage, to sustain an action of ejectment against the bona fide assignee for value of the mortgage, who was also grantee of the purchaser at a sale under a power therein. But subsequent to the two last-mentioned cases, in Jackson v. Dominick, 14 Johus. 435, opinion by VAN NESS, J., the purchaser from the mortgagor, suing in ejectment the mortgagee who had bought in the property at a sale under a statute foreclosure, was permitted to set up usury in the mortgage. The Court of Appeals, Bullard v. Raynor, 30 N. Y. 197, have held that the statement of an account containing an usurious item between debtor and creditor, with the application of the debtor's funds in the hands of the creditor to the payment of the item, estopped the assignee of the debtor from setting off the item against the creditor as usurious. Compare Berden v. Sedgwick, 40 Barb. 359. It would seem from the decision in Berdan v. Sedgwick, just cited, that an omission on the part of the debtor to assert usury when sued on the bond alone, and the recovery of judgment thereon, does not estop his vendee of the mortgaged property, who did not take subject to the mortgage, from interposing it as a defense to a foreclosure suit. The mortgagor had, however, in this case attempted to set up usury in an action against him alone on the mortgage, in which action judgment for him had been reversed, and the suit discontinued. According to the same authority, the giving of a bond and mortgage in escrow, by the mortgagor, as security in case the usurious one is set aside, is no estoppel on such purchaser.

After recovery of a judgment and payment of it, the money cannot be recovered back in equity on the ground of usury in the original transaction. Bartholomew v. Yaw, 9 Paige, 165; reversing Clarke's Chan. 16; and see Campbell v. Morrison, 7 Paige, 158; Williams v. Lockwood, Clarke's Chan. 172. Nor can the defendant after such recovery, and giving a new security, avail himself of the usury. Cromwell v. Delapiaine, 5 N. Y. Leg. Obs. 226. So part payment and giving a new check in part has been held to estop the drawer sued on the new one. Smalley v. Doughty, 6 Bosw. 66.

In Real Estate Co. v. Seagreave, 49 How. Pr. 489, decided in the New York Superior Court, at Special Term, it was decided that a covenant by the mortgagee, with an affidavit by the mortgagor that the mortgage was a valid security, estopped them, and all under them, from setting up usury against a purchaser in good faith. But in Payne v. Burnham, 4 N. Y. Sup. 678, an affidavit by the mortgagor was held not to estop him, though it was relied upon by the assignee. Of course a certificate of the validity of the security is no estoppel as between the parties to the mortgage. Van Sickle v. Palmer, 2 N. Y. Sup. 612.

In La Farge v. Herter, 9 N. Y. 241, the court refused to hear plaintiff reply that a bond and mortgage, pleaded in the answer as accepted by him in satisfaction of the cause of action sued on, were usurious, plaintiff being the usurer. So where a surety, sued as such, pleads a discharge by reason of an extension of time given by plaintiff to the principal debtor, plaintiff will not be heard to show that the agreement for the extension was usurious. Billington v. Wagoner, 33 N. Y. 31; Draper v. Trescott, 29 Barb. 401.

The defendant (payee and indorser of a promissory note), in Mason v. Anthony, 3 Keyes, 609, was held to have been estopped, by his representations that the note in suit was not usurious, from setting up the defense of usury. In Truscott v. Davis, 4 Barb. 495, however, it was held that representations by an ac

Pritchett v. Mitchell.

commodation indorser, that the note sued on was business paper, did not estop him from pleading usury.

It has already been stated that a grantee or assignee of a borrower is not within the provisions of 1R S. 772, § 8, allowing the borrower relief in equity against a usurious instrument or contract, without repaying the sum loaned. And see Bissell v. Kellogg, 60 Barb. 617; Gerwig v. Shetterly, 64 id. 620; affirmed. 56 N. Y. 214. And this exclusion from the benefits of that statute was made. in a case where the assignee was the borrower himself, who sued, however, in the character of purchaser at a bankruptcy sale. Schermerhorn v. Talman, 14 N. Y. 93.

Under the decision in Beecher v. Ackerman, 1 Robt. 30; 8. C., 1 Abb. Pr. (N. S.) 141, however, the complaint need not contain an offer to pay the sum equitably due, or should not be dismissed for omitting it, but such payment may be provided for in the decree. And see Morgan v. Schermerhorn, 1 Paige, 544.

A surety, who becomes such at the time of the principal contract (as well as personal representatives, or heirs or devisees of the property mortgaged), would seem to be able to have relief against usury in the contract at law or in equity. Post v. Bank of Utica, 7 Hill, 391; Livingston v. Harris, 11 Wend. 329, 336; though the principal debtor do not elect to avail himself of it. Morse v. Hovey, 9 Paige, 197; Bullock v. Boyd, Hoff. Ch. 294. But in equity proceedings the surety must allege, or make payment of the sum actually loaned. Allerton v Belden, 49 N. Y. 373; reversing 3 Laus. 492; following on this point the remarks of BRONSON, J., in Vilas v. Jones, 1 N. Y. 274, and overruling Post v. Bank of Utica, above; Morse v. Hovey, above; and Perrine v. Striker, 7 Paige, 598; and so must accommodation indorsers. Allerton v. Belden, above; though to the contrary had been Hungerford's Bank v. Dodge, 30 Barb. 626. It seems, however, that an accommodation acceptor need not offer nor make repayment in order to obtain relief in equity. Taylor v. Grant, 3 Jones & S.

353.

If an accommodation indorser voluntarily takes up the usurious note after protest, the maker can successfully defend an action upon it brought against him by the indorser. Hooper v. De Long, 5 Jones & S. 127; and see Jewell v. Wright, 30 N. Y. 259.

Accommodation indorsers of a note made and payable in the State of New York, and negotiated in Canada at a rate of interest valid there, though usurious in New York, were allowed in Cloyes v. Hooker, 6 N. Y. Sup. 448, to defend, on the ground of usury in the negotiation of the note by the makers, an action on the note brought in New York.

Such a defense was not recognized as sufficient in an action on a note dated and payable and valid in Massachusetts, although the action was brought in New York. Agricultural National Bank v. Sheffield, 4 Hun, 421.

In an action by a remote indorsee against the first indorser, the latter cannot set up as a defense that the note was discounted at an usurious rate by his immediate indorsee. Morford v. Davis, 28 N. Y. 481.

A guarantor of a pre-existing usurious debt, whose bond recited the payment to the debtor of the whole principal sum claimed in an action against him, was not allowed to avail himself of the usury. Mann v. Eckford's Executors, 15 Wend. 502. Nor in an action upon a guaranty to indemnify the makers of a note due at the time the guaranty was made, was the guarantor heard to inter pose usury in the note. Churchill v. Hunt. 3 Den. 321."

See note to Cramer v. Lepper, 20 Am. Rep. 756.- REP.

CASES

IN THE

SUPREME COURT

OHIO.*

WEST, plaintiff in error, v. THE CITIZENS' INSURANCE COMPANY.

(27 Ohio St. 1.)

Fire insurance - condition against assigning policy — assignment to partner.

Policies of insurance, like other contracts, are to receive a reasonable construction, so as not to defeat the intention of the parties.

A policy of insurance, issued to a mercantile partnership on a stock of goods owned by the firm, and with which they are carrying on business, which contains no provisions limiting or restricting alienation of the property, is not avoided by a sale by one partner to his copartners, who continue the partnership business, of his interest in the stock of goods.t

*The cases in 27 and 28 Ohio St. were decided by the Supreme Court Commission-a court appointed to clear up an arrearage of business, and of concurrent authority and jurisdiction with the Supreme Court. The Commission adopted the following rule of the Supreme Court, under which the syllabus of each case was prepared by the judge writing the opinion, and as these syllabi have the sanction of the court, it has been thought advisable to retain them: "RULE VI A syllabus of the points decided by the court in each case shall be stated in writing, by the judge assigned to deliver the opinion of the court, which shall be confined to the points of law arising from the facts of the case that have been determined by the court And the syllabus shall be submitted to the judges concurring therein for revisal before publication thereof; and it shall be inserted in the book of reports without alteration, unless by consent of the judges concurring therein."

See, to the same effect, Dermani v. Home Mut. Ins. Co. (26 La. Ann. 69), 21 Am. Rep. 544; Cowan v. Iowa State Ins. Co. (40 Iowa St. 551), 20 id. 583.

West v The Citizens' Insurance Company.

When the policy contains a provision that the assignment of the same, or any interest therein, without the assent of the company indorsed thereon, avoids it, such a sale, and the assignment by the retiring partner to his copartners, who continue the business, of his interest in the policy, does not avoid it. In case of loss after such sale and transfer, the remaining partners, being the real parties in interest, should sue ou the policy, and in such action they are not limited in the amount of recovery, to their interest in the partnership goods before such sale and transfer but can recover for the whole loss.

A

CTION by George H. West and two others, formerly comprising (with Henry F. West) the firm of "H. F. West & Co.," on a policy of insurance against fire, issued to said firm by the defendant. The defendant demurred to the petition. The opinion states the case

Hoadly, Johnson & Co., for plaintiffs in error.

Matthews, Ramsey & Matthews, for defendant in error. The single question presented by the record is, whether the assignment by one of the partners, to his copartners, or his interest in the policy and property insured, before loss, defeats the recovery of the plaintiff

The affirmation of this proposition is sustained by May on Insurance, § 280; Dreher v. Etna Insurance Co., 18 Mo. 128; Flanders on Insurance, 428. And see Hoffman v. Etna Insurance Co., 32 N. Y. 405, where the history of the law on this question in the State of New York is given. Tillou v. Kingston Mutual Insurance Co., Barb. 570; 5 N. Y. 405; Murdock v. The Chenango County Mutual Insurance Co., 2 Comst. 210; Wilson v. The Genesee Mutual Insurance Co., 16 Barb. 511; Hobbs & Henly v. Memphis Insurance Co., 1 Sneed, 444; Howard & Ryckman v. The Albany Insurance Co., 3 Denio, 301; Tate v. Mutual Fire Insurance Co., 13 Gray, 79; Wood v. Rutland and Addison Mutual Insurance Co., 31 Vt. 552; Barnes v. Union Mutual Fire Insurance Co., 51 Me. 110; Hoxsie v. Providence Mutual Fire Insurance Co., 6 R. I. 517; Finley v. Lycoming Co. Mutual Insurance Co., 30 Penn. St. 313; Buckley v. Garrett, 47 id. 280; Baltimore Fire Insurance Co. v. McGowan, 16 Md. 47; Dix v. Mercantile Insurance Co., 22 Ill. 272; Keeler v. Niagara Fire Insurance Co., 16 Wis. 523; Hartford Fire Insurance Co. v. Ross, 23 Ind. 181; Dreher v. Etna Insurance Co., 18 Mo. 128.

West v. The Citizens' Insurance Company.

JOHNSON, J. The question in this case arises on a demurrer of the defendant to the petition, alleging that said petition did not state facts sufficient to constitute a cause of action.

The plaintiffs sue as individuals, and not in the partnership name, and claim to recover on a policy of insurance against fire, on a stock of goods in Indianapolis, for one year, from April 17, 1869, to April 17, 1870.

The original policy was issued April 17, 1866, for one year, and was renewed each year thereafter, the last renewal being on 17th of April, 1869. It was issued to the firm of II. F. West & Co., composed of the plaintiffs and one Henry F. West, who on the 1st of December, 1869, retired from the firm, and assigned all his interest in said policy and stock of goods to his copartners, the plaintiffs, who continued the business.

The stock of goods was consumed by fire, December 17, 1869. Hence this action.

By the terms of the policy, the defendant contracted "to make good to the insured, their executors, administrators, or assigns, all such immediate loss or damage as shall happen by fire to the said property."

Upon the foregoing facts, but one question is presented. That is. Did the assignment by Henry F. West of his interest in the policy and stock of goods avoid the policy or prevent a recovery thereon the assent of the company to such transfer not having been given thereto?

This question must be determined by giving a construction to the terms and conditions of the policy. In form and language, it is an agreement between two parties, the insurer and the insured, though executed only by the insurer.

The only clause relating to such a transfer is in the words following: "And it is further agreed * *that if this policy, or any interest therein, shall be assigned, unless, in either case, the assent thereto of said company be indorsed hereon, these presents shall thenceforth be null and void."

It will be observed that this policy (which is part of the record) is a contract with a partnership, and not with the individuals composing it; that, as such partners, they owned the stock of goods, and were doing business therewith in the usual way.

It is also important to note that the policy contains no provisions relating to alienation of the property, or prescribing any mode of