Stewart v. . Bramhall , 1878 N.Y. LEXIS 712 ( 1878 )

Rosa v. Butterfield (33 N.Y., 664), is decisive of this case. The note was the valid obligation of The New York and Silver Peak Mining Company, notwithstanding it was received by Burrows under an agreement which would make it usurious if it had been the contract of an individual. Since the act of 1850, contracts of corporations have not been within the usury laws, and the act as construed, includes collateral contracts of individuals as sureties, guarantors or indorsers for a corporation.

The mining company could not therefore have defended the note on the ground of usury, and the defendant who indorsed the note for its accommodation is under the same disability. The arrangement between Burrows and the defendant before the note was made, that the former would discount the note if the defendant would indorse it does not change the legal aspect of the question. The defendant in his answer alleges that he indorsed the note for the accommodation of and at the request of the company. But assuming that he was also influenced by the promise of Burrows to discount the note, if he would indorse it, the consideration for the liability he assumed was the loan to the corporation. The note had its inception when it was delivered by the corporation to Burrows. The corporation was the borrower, and primarily liable on the note, and the defendant was surety merely. As such he must abide by the condition of his principal and has no separate standing in respect to the defense of usury. (Union National Bank v. Wheeler, 60 N.Y., 612.)

The judgment should be affirmed.

All concur, except ALLEN, J., absent.

Judgment affirmed.