Cook v. Pierce ( 1862 )

The Court,

Houston, J.

charged the jury: That if the promissory note in question was an accommodation note, which, according to commercial usage it imported to be by virtue of the words “ credit the drawer,” written across the face of it, and that it was made by Anthony for his own benefit and accommodation, payable to the order of Pierce, and that the latter endorsed it to enable the former to get it discounted for that purpose, and that the plaintiff with that view discounted it for him; that was to say, took the note and advanced money to him upon it, the transaction between them was equivalant to, and' in effect was, a loan of that amount of money by Cook to Anthony: and, if in thus discounting it for him, he reserved and retained in consideration thereof, a higher discount or premium than the legal rate of interest established by the statute, or more than interest at the rate of six per centum per annum, for ninety-three days upon the sum of two hundred dollars, the amonnt for which the note was taken by him, the transaction was in contemplation of law, tainted with usury, and the contract was so vitiated by it, that the plaintiff would not be entitled to recover in the action upon it. For when a promissory note is made for the benefit and accommodation of the maker solely, and is endorsed with this view by the payee, or person to whose order it is made payable, it binds no one up to that stage of it, because no action would as yet lie or could be maintained upon it by any one for the want of a sufficient consideration in law to sustain it, until it had been discounted or accepted by another party; as it was then, and not till then, that it first exists as a complete contract in contemplation of law for the actual loan of money, as had been frequently ruled and recognized in the judicial decisions of this country. And when the note is so made, endorsed and negotiated, or discounted by a third party for the accommodation of the maker, it is, as we have before remarked, substantially and in effect, a contract for the loan of money, by such third person to the maker of the note : and if such contract be usurious in its character, it is, in our judgment, forbidden by both the words and the policy of our statute against usury, and is consequently illegal and void, and no action can be maintained upon it for the recovery of the money.

And this was so, notwithstanding the statute did not in terms provide or declare that a loan or contract made contrary to the provisions of it, should be void. For a contract prohibited and made unlawful by statute is a void contract, although the statute does not expressly provide that it shall be so; because a forfeiture or penalty imposed, as in this case, by the statute, implies a prohibition against such a contract, although there were no prohibitory words to that effect to be found in it.