HALLGARTEN and others vs. ECKERT and others.

In an action upon a promissory note made by E. & W. to the order of A. & Co., and by them indorsed and sold to the plaintiffs, the answer alleged that the note was made without consideration, to enable the payees to procure the same to be discounted for their benefit by H., but that the same was misapplied by a sale thereof to the plaintiffs at a usurious rate. On the trial, the question, "What was the discount?" was objected to, and the evidence excluded. Held, that if the objection was cured by the subsequent statement of the witness that the amount to be taken from the note, he thought, was 24 per cent. per annum, then the usurious rate was established. That if it was not cured by reason of the indefinite character of that testimony, then the exception remained intact, and was fatal to the validity of a judgment in favor of the plaintiffs.

Held, also, that taking either view of the case, a judgment for the plaintiffs

could not be maintained; it being an essential element of the defence that a greater sum than that allowed by law was agreed to be paid and received, and the question excluded being designed to elicit the proof.

That there was no necessity for requesting the judge to submit any question to the jury. That assuming the proof to have been that 24 per cent. per annum was paid for the discount, then the defence was made out; and if there was no proof, then the exception was well taken, and was controlling.

A

PPEAL by the defendants, Eckert & Winter, from a judgment entered on the verdict of a jury. The action was brought on a promissory note, made by the defendants, Eckert & Winter, to the order of Altenbrand Brothers, and by them indorsed and sold to plaintiffs. The defendants, Eckert & Winter, were alone served with process, although the Altenbrands were nominal parties. The answer alleged that the note was made without consideration, to enable the payees to procure the same to be discounted for their benefit, by Joseph Hillenbrand, but that the same was misapplied by sale to the plaintiffs at a usurious rate, the plaintiffs deducting and receiving $300 for the period of such note. The cause was tried at a Special Circuit in January, 1873. The defendant Winter having testified to the origin of the note, and the terms on which it was given, the defendants rested, when the court ruled that these facts did not constitute a defence. The defendants excepted. Henry

Hallgarten v. Eckert.

Altenbrand, one of the payees, then corroborated the testimony as to the origin of the note, and testified that he sold it to the plaintiffs at the rate of 24 per cent. per annum. No other testimony was given.

The court ordered a verdict for the plaintiffs, upon the ground that the defendants had not established the usury as alleged in the answer. The defendants excepted. The jury rendered a verdict in favor of the plaintiffs for $5,047. The other exception was to the exclusion of the question, "What was the discount," asked of the witness Altenbrand.

The legal interest for the whole period would have been $137.08. At the rate of 24 per cent. the amount was $479.64.

Jacob A. Gross, for the appellants.

John K. Porter, for the respondents.

By the Court, BRADY, J. The defendants, Eckert & Winter, made their note to the order of the defendants, Altenbrand Brothers, for the accommodation of the latter, and it was passed to the plaintiffs in the course of business. The plaintiffs are brokers and bankers, and Altenbrand Brothers were in the habit of procuring from them discounts of regular business paper, delivering large amounts thereof at a time, and receiving advances upon or discounts of it, as the case might be. The defendant Altenbrand, who was examined as a witness, said: "They would, as quick as the paper was disposed of or discounted, send me a statement at a certain rate." The plaintiffs claimed to be the owners of the note in suit, and from the course of business adopted between them and Altenbrand Brothers, had evidently acquired it by discount, not by advance, although it would make no difference, unexplained, if at all, whether it was obtained by advancing money upon a usurious agreement or discounting it upon a similar understanding. The

Hallgarten v. Eckert.

If

plaintiffs thus asserting the ownership of the paper, and it being without consideration between the original parties, it became important to the defence of usury interposed, to show at what rate the discount was made; and hence the question, "What was the discount," which was objected to, and excluded, and exception taken. the objection be held to be cured by the subsequent statement of the witness that the amount to be taken from the note, he thought, was 24 per cent. per annum, then the usurious rate was established. If it was not cured by reason of the indefinite character of that testimony, then the exception remains intact, and is fatal to the validity of the judgment. It was an essential element of the defence that a greater sum than that allowed by law was agreed to be paid, and was received, and the question excluded was designed to elicit the proof. It seems, therefore, that taking either horn of the dilemma, the plaintiffs cannot maintain this judgment. It does not affect this view that the defendants did not request the presiding judge to submit any question to the jury. There was no necessity to make such a demand; for assuming the proof to be that 24 per cent. per annum was paid for the discount, then the defence was made out; and if there was no proof, then the exception mentioned was well taken, and is controlling. The judgment, for these reasons, must be reversed and a new trial ordered, with costs to abide the event.

New trial ordered.

[FIRST DEPARTMENT, GENERAL TERM at New York, November, 1873. Ingraham and Brady Justices.]

GILMORE and others vs. CROWELL & FISHER.

The general rule is that the contract of a surety is to be construed strictly, and not to be extended beyond the fair scope of its terms. By that rule, the obligation of parties executing an undertaking for the discharge of an attachment is to be ascertained and determined.

Where such an undertaking provided for the payment of the amount of the judgment which might be recovered against the defendants, and the judgment recovered was against some of them only; held, that the failure to recover against all the defendants did not prevent a recovery against the sureties, upon the undertaking.

The object or design of the statute, and the intent of the legislature, being considered, an agreement by the sureties in such an instrument, that they will pay any judgment obtained in the action, against all or any of the defendants, is fairly within the scope of the sureties' undertaking.

plaint.

by the plaintiffs, from a judgment en

tered at a Special Term, dismissing the com

On the 6th of February, 1872, a suit being pending in this court, wherein these plaintiffs were plaintiffs, and Robert Patton, Willard Ginn and John B. Folger were defendants, and an attachment having been issued therein, the present defendants, Crowell & Fisher, for the purpose of procuring a discharge of such attachment, executed an undertaking, entitled in said action, in these words:

"An attachment having been issued in the above action to the sheriff of the city and county of New York, and the above named defendants having appeared in such action, and being about to apply to the officer who issued such attachment, or to the above mentioned court, for an order to discharge the same, we, Elisha Crowell, of No. 27 Lafayette avenue, in said city of Brooklyn, and Augustus G. Fisher, of No. 27 Lafayette avenue, in said city of Brooklyn, do hereby, pursuant to the statute in such case made and provided, undertake, in the sum of seven hundred dollars, that we will, on demand, pay to the above named plaintiff the amount of the judgment which may be

Gilmore v. Crowell,

recovered against the above named defendant in this action, not exceeding the above mentioned sum. Dated New York, February, 1872. ELISHA CROWELL,

A. G. FISHER.”

Thereupon the attachment was discharged, and the attached property was surrendered by the sheriff, under the order of the court.

That action proceeded until the 13th of July, 1872, when the plaintiffs had judgments against Patton and Ginn, two of the three defendants therein, for $526.37. This action was brought upon that undertaking. The judge at the trial dismissed the complaint, on the ground that the plaintiffs recovered against two only of the three defendants, and therefore there had been no breach of the condition of the undertaking.

Thos. H. Rodman, for the appellants.

Starr & Ruggles, for the respondents.

By the Court, BRADY, J. The question presented by this appeal is whether an action can be maintained against sureties upon an undertaking which provides for the payment of the judgment which may be recovered against the defendants, when the judgment recovered is against some of them only. The general rule is that the contract of a surety is to be construed strictly, and not to be extended beyond the fair scope of its terms, (Cheesbrough v. Agate, 26 Barb., 603; Poppenheusen v. Seeley, 3 Keyes, 150;) and by that rule the obligation of the defendants herein must be ascertained and determined.

The undertaking which they executed was, as declared by it, "pursuant to the statute in such case made and provided," and the design of the statute was to enable the defendant or defendants, in an attachment proceeding, to recover the property seized at once, on giving