Statement of the Case. then, that a canse of action is stated in the complaint against the defendant personally, it can hardly be said that the allegations struck out by the order of the learned judge can in no aspect of the case be immaterial or irrelevant. We think the order should be reversed, with costs. SEDGWICK and VAN VORST, JJ., concurred. CHARLES E. STRONG, AS RECEIVER, &c., PLAINTIFF AND RESPONDENT, v. THE NEW YORK LAUNDRY MANUFACTURING COMPANY, EVERETT CLAPP AND ANDREW GILL, DEFENDANTS AND APPELLANTS. The defense to the note in suit, was that the corporation defendant made, and the defendant Andrew Gill indorsed the same, without any consideration, for the accommodation of the defendant, Everett Clapp, who indorsed and delivered the same to the plaintiff upon a usurious agreement that plaintiff should reserve a greater sum than legal interest, &c., &c., and therefore defendants allege and plead usury, as a defense to the same. The maker being a corporation, a question arises upon the construction of the statute of 1850 (Laws of 1850, ch. 172, p. 334), which provides that "No corporation shall hereafter interpose the defense of usury in any action.” Held, by the general term, that the decision in Hungerford Bank v. The court held that the contract of the indorsers was independent of that of the maker, and the indorsers, as defendants, could avail themselves of the plea of usury. Opinion of the Court, by SPEIR, J. In the case at bar, the general term held that the indorsers could in like manner avail themselves of the defense of usury. Held also, that the purpose of the act was to prevent the avoidance by a corporation of its own contract, for the reason that it was made in contravention of the laws against usury. The reversal of this judgment in favor of all the appellants, decides that a corporation might avail itself of a plea of usury against a note made by it for the accommodation of an indorser who indorsed and delivered it to the plaintiff for a usurious consideration. Before VAN VORST and SPEIR, JJ. Decided April 4, 1874. Appeal from a jugdment entered in favor of the plaintiffs. Sewell & Pierce, attorneys for appellants. Robert Sewell, of counsel. John L. Cadwalader, for respondent. BY THE COURT.-SPEIR, J.-The action is brought against the defendants as makers and indorsers of a promissory note for three thousand dollars, purchased by the Atlantic National Bank, and which, on its failure, came into the hands of the plaintiff as receiver. The note was made by the New York Laundry Manufactory Company, a New York corporation, and indorsed by the other defendants in blank, and was purchased by the bank in good faith, believing the same was business paper. The answer admits the allegations of the complaint, and sets up, first, that the note was an accommodation note, made by the corporation and indorsed by the defendant Gill, for the accommodation of the other de Opinion of the Court, by SPEIR, J. fendant Clapp, and that the bank had notice of these facts; and second, that the defendant Clapp delivered and transferred the note and indorsement to the bank at a usurious rate. The action was tried before Mr. Justice SEDGWICK, without a jury, whose findings appear in the case. The defendants except to the conclusions of law that they are liable on the facts found. The judge, upon the facts, decided that the plaintiff is entitled to judgment against all the defendants for the amount of the note. The defendants appeal from the judgment. The first defense in the answer, that the paper was only accommodation paper, would only be available to the corporation, and the defendant Gill. But the court has found that the purchase was made in good faith, and without notice. The second defense is usury, and is the only question to be considered. The statute against usury provides that no person or corporation shall take any greater sum for the loan of money that at the rate of seven per centum per annum (§ 2). It also provides (§ 5), that all contracts whatsoever (except respondentia and bottomry bonds), whereupon and whereby there shall be taken or secured a greater rate of interest, shall be void (1 Edm. Rev. Stat. 725, 726.) It is well settled that an accommodation note is not a valid instrument, until it is negotiated, and does not acquire validity until delivered to a bona fide holder for a valuable consideration. If the note be delivered or transferred for an illegal consideration, as if it be discounted at a usurious rate of interest, the note is absolutely void. The statute of 1850 (Laws of 1850, ch. 172, p. 334), is invoked by the plaintiff to save the note from the consequences of the above legal propositions. The `statute provides, "No corporation shall hereafter interpose the defense of usury, in any action." Opinion of the Court, by SPEIr, J. It is claimed by the plaintiff, that by the operation of this statute, the defendants are prohibited from assailing the title and control of this note in the plaintiff, on the ground that there was usury in the transaction, by which a title and control were acquired by the plaintiff. In short, that the defendants are prevented from setting up usury as a defense under the act. The language of the statute has been very liberally construed in passing under review of the many judicial decisions since its enactment. The courts have been gradually enlarging the meaning of the one word "defense," which seems to be the key of legal construction of this simple sentence of the statute. This was done to carry out the policy the legislature had in view, and to avoid the practical absurdities arising chiefly from the different positions of a corporation as party plaintiff, or defendant. These several adjudications, however, had direct reference to the individual cases decided, depending on the facts presented in each case for adjudication. As the questions of law arising on the facts in this case, do not appear to have received judicial examination, it may be useful briefly to review the decisions heretofore had on the subject. In the first and leading cases so thoroughly and ably examined by the many learned and distinguished judges then presiding (Curtis v. Leavitt, 15 N. Y. 151), the precise point decided was, that the prohibition from setting up usury, was retrospective. In the case of Southern Life & Trust Co. v. Packer, (17 Id. 51), PRATT, J., it was decided that the prohibition from interposing the defense of usury is not only retrospective, but applies to foreign corporations litigating in the courts in this State. The case of Butterworth v. O'Brien (23 Id. 275, DAVIES and JAMES, J.J.), decides that the prohibition deprives the corporation of the right to recover back money paid by them in excess of legal interest. Opinion of the Court, by SPEIR, J. In Rosa v. Butterfield (33 Id. 665), DAVIS, J., the corporation gave its note, containing a stipulation to pay interest at the rate of twelve per cent. per annum semi-annually. The indorsement on the note guaranteed the payment and collection of the note at all times, and unconditionally to the amount of the principal, and interest at the rate of seven per cent. only. In an action by the holder of the paper, it was decided that the defense of usury was unavailing to the corporation on the loan of money, and also to the guarantors of the note. The case of Belmont Branch Bank v. Hoge (35 Id. 65), PORTER, J., decides that the provisions of the act of 1850 operate pro tanto as a repeal of the statute prohibiting usury, so far as they were applicable to stipulations for a rate of interest exceeding 7 per cent. where a corporation is the borrower. In Merchants' Exchange Bank v. Commercial Warehouse Co. (49 Id. 635), FOLGER, J., the action was brought for the conversion of a quantity of tobacco, the warehouse receipts for which had been pledged with the defendants as security for loans made to one Oakley by the defendants, which the complaint alleged to be usurious. The court decides that the act of 1850, prohibiting corporations interposing the defense of usury, only prevents the avoidance of its own contract on the ground of usury; that it does not apply to a case where the corporation succeeds to the rights of the party who might avail himself of the provisions of the usury laws. In Hungerford Bank v. Potsdam & Watertown R. R. Co. (10 Abb. Pr. 24), the loan was made by the plaintiffs to the defendants on their note, whereby the plaintiffs received more than seven per cent. per annum. The other defendants were accommodation indorsers. The general term of the fifth district held |