Lowry v. Chautauque County Bank , 1 Cl. Ch. 67 ( 1839 )

The Vice Chancellor.

Motion to dissolve the injunction heretofore issued in this cause. The motion was made both on behalf of the Chautauque County Bank and the New-York State Bank, but the Court refused to hear the motion on behalf of the New-York State Bank, inasmuch as a previous motion to dissolve the injunction had been made by that bank, and denied with costs. This motion was therefore heard and argued on behalf of the Chautauque County Bank alone.

On the former motion made by the New-York State Bank, the answer- of the Chautauque County Bank was not heard, and therefore the whole merits of the case did not appear on that motion. Now the answer of the Chautauque County Bank discloses a different state of facts from that presented by the bill. The injunction was doubtless originally allowed upon the averments in the bill, that there was usury in the four notes of $ 5,000 each, mentioned in the pleadings. From the answer of the Chautauque County Bank, it appears that those four notes were taken in pursuance of an agreement made between the Chautauque County Bank and the Lumberman’s Bank, for the amicable adjustment of many vexed questions between those institutions, and the particular funds of each. The complainants, it is true, were not parties to that agreement,performa; but the provisions contained therein, embrace their relations with both institutions, and the notes are executed in pursuance of such provisions; which leaves the irresistible inference that the complainants were aware of such provisions, and executed the notes in compliance with its terms.

The whole of the controversy between the Chautauque County Bank and the complainants, Lowry and Irwin, must be deemed to have been settled by the agreement between the two banks, of 10th Feb. 1837, and the subsequent compliance by the complainants, with its terms. This was a merger of all former subjects of dispute, and the.court cannot look beyond this, except for the purpose of obtaining a history of the transaction, and learning from such history the legal effect of such previous transactions, and its bearing upon the final adjustment.

The subject matter of a usurious contract, is a loan or forbearance. The usury consists in the taking.or reserving more-than seven per cent, per annum, upon such loan or for such forbearance, in pursuance of a corrupt agreement so to do. .The question of intention is therefore an element in the commission of usury. The circumstances of this case, as presented in the answer of the Chautauque County Bank, would appear to repudiate the idea of an intentional reservation or taking of more than seven per cent. It was the adjustment of a complicated controversy into which there entered none of the considerations which usually accompany a loan. Indeed, the Chautauque County Bank was rather forced than desirous of taking the notes in controversy.. Their claims against the Lumberman’s Bank were rendered unavailable to them immediately, by the attachment; and to put them in a shape where they might be eventually reached without further "litigation, they consented to the arrangement. The Lumberman’s Bank and the complainants doubtless had their advantage, also, in the arrangement; and the whole transaction must be considered as a settlement of previous difficulties or subject matters of dispute and litigation, rather than as a loan of money.

Under such circumstanc.es, it is not material to inquire what was the value of the notes of the Lumberman’s Bank at the time of the transaction, though from the answer, it would seem that they were for some time, of equal value, or nearly equal value, with other bank notes.

Under the view of the transaction taken by the court, the injunction as to the Chautauque County Bank, must be dissolved. Costs to abide the event of the suit.