92 Misc. 214

International Motor Company, Appellant, v. John Palmer, Respondent.

(Supreme Court, Appellate Term, First Department,

November, 1915.)

Usury — loan contract — what constitutes — when judgment in favor of defendant reversed.

A stipulation in a loan contract that in ease o£ nonpayment at maturity the borrower shall pay the cost of collection, including a reasonable attorney’s fee, does not constitute usury in the absence of proof of a corrupt intent.

The court having erroneously charged the rule respecting the right of a creditor to apply payments in the absence of instructions from the debtor and that certain of the notes were void for usury, a judgment entered on a verdict in favor of defendant will be reversed and a new trial ordered.

*215Appeal by plaintiff from a judgment of the Municipal Court of the city of New York, borough of Manhattan, third district, entered in favor of the defendant upon the verdict of a jury.

• Cook and Elgar (Walter Cook, Jr., of counsel), for appellant.

Alex. Sidney Rosenthal, for respondent.

Shearn, J.

Defendant delivered to plaintiff a series of twenty of his promissory notes in payment for an automobile, each for $125, and in connection with the transaction delivered three other.notes, one for $55 and two for $50. The action is one to recover a balance of $75 on one of the $125 notes, a balance of $13 on another, a balance of $25 on another, and the principal of the three smaller notes, together with an attorney’s fee of $50 on each of the smaller notes. The defense was that the three notes, upon which a balance was claimed, had been paid in full, and that the three smaller notes were unenforcible for usury. The court sustained the defense of usury and submitted the issue of payment to the jury. Plaintiff introduced testimony of an assistant to the treasurer of the plaintiff corporation, who was thoroughly familiar with the account and had had entire charge of it from its beginning. Defendant, who is unable to read or write, testified very positively that the notes were paid, but he was unable to produce the notes or any receipts for the alleged payments or to specify when the payments were made or the amounts of these various payments. He had no books or data with which to refresh his recollection, and his affairs were evidently conducted in a very unbusinesslike manner. A mere oath that an account is paid does not under such *216circumstances meet the requirement for sustaining the burden of proof with a preponderance of evidence. The verdict is readily accounted for by the great amount of irrelevant testimony which was introduced over the objection of the plaintiff, much of it being calculated to prejudice the plaintiff. The court erroneously charged the rule respecting the rights of a creditor to apply payments in the absence of instructions from the debtor. It was also erroneous to hold that the three smaller notes were void for usury. A stipulation in a loan contract that in case of nonpayment at maturity the borrower shall pay the cost of collecting the debt by legal process, including a reasonable attorney’s fee, does not in the absence of proof of a corrupt intent constitute usury. The debtor was free to discharge the debt by payment of principal and legal interest at maturity. Pomeroy v. Ainsworth, 22 Barb. 118; Sumner v. People, 29 N. Y. 337.

Bijur and Page, JJ., concur.

Judgment reversed and new trial ordered, with thirty dollars costs to appellant to abide event.

International Motor Co. v. Palmer
92 Misc. 214

Case Details

Name
International Motor Co. v. Palmer
Decision Date
Nov 1, 1915
Citations

92 Misc. 214

Jurisdiction
New York

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