Smith v. Marvin.

ford v. American Life and Trust Company (4 Comst., 463), to sustain this position. But all that was said in that case, was, that the payment of an usurious loan is not voluntary, if obtained by the lender out of collateral securities in his hands without the concurrence of the borrower; whereas in this the defendants voluntarily placed the wool and sheep skins in the hands of Seymour & Wood after the contract for the advances was made, and the latter sold such wool and skins with the concurrence of the former, and in a course of dealings with the defendants, most of which has never been objected to; and it was also with the concurrence of the defendants that the avails of the wool and sheep skins were applied by Seymour & Wood and their successors in the business, to the payment of the advances in dispute, as well as others. The payment of such advances, therefore, was voluntary, and the defendants were not entitled to recover them back or have the same deducted from the account of Seymour & Wood, or their successors, who brought this suit. .

The point has not been made, that the defendants should have been credited by the referee with the alleged usurious interest upon the advances, independent of the advances themselves; and the claim of the defendants was, that they were improperly charged with the advances, not the interest thereon separate from the same.

For these reasons, I am of the opinion the judgment of the Supreme Court in the action should be affirmed with costs.

SELDEN, J. Where a transaction purports, upon its face, to be a loan of goods or money, and such loan constitutes the entire contract, if a greater sum than seven per cent per annum is reserved as a compensation for the credit given, no extrinsic proof is necessary to establish the usury. Such a transaction is usurious, per se. But where the agreement for a loan or advance of money or goods is only part of an entire contract, embracing other matters, it is in all cases a question of fact whether usury was intended. It is never, in such cases, a necessary inference, that the premium was reserved

Smith v. Marvin.

solely for the forbearance. Even although expressed in terms to be for forbearance, yet, as the extra premium may have constituted part of the inducement to the making of the contract as a whole, an usurious intent is not to be inferred without proof.

The English cases, in which it has been held that agreements by the purchasers of lands or goods upon a credit to pay more than legal interest for the purchase-money, were valid, and the cases in our own courts holding a similar doctrine in respect to charges by commission merchants, of an extra premium for their advances, rest not upon any peculiar doctrine applicable to such cases, but upon the general principle here stated.

In all these cases, it is incumbent upon the party alleging the usury to prove the usurious intent. The affirmative proof given by the plaintiffs in the case of Trotter & Douglass v. Curtis (19 John., 160), that the two and a half per cent premium charged by them upon their advances was a customary charge, was necessary there, because there was no agreement in that case by the defendants to pay this commission, except such as was to be implied from this proof. But in the case of Suydam v. Westfall (4 Hill, 211), where it was expressly agreed that the plaintiffs should be entitled to two and a half per cent commision on their advance, proof on the part of the plaintiffs of the reasonableness or customary nature of this charge was wholly unnecessary, although such proof was actually given.

In the present case the stipulation for a charge of five per cent upon advances to be made by the plaintiffs, was part of a written agreement, embracing a variety of conditions other than that relating to such charge, among which were these, viz.: that the plaintiffs should have the selling of the whole of the defendants' wool and skins; that no drafts should be drawn upon them, except as specified in the agreement; and that when the defendants' drafts should fall due, the plaintiffs, if not put in funds should be at liberty to sell the property in their hands at the market price.

SMITH.-VOL. XIII, 19

Smith v. Marvin.

On the part of the plaintiffs, it was agreed that they would do the business for a commission of five per cent, including all charges except disbursements; and that they would make certain advances. Now, it is impossible to infer from the face of this contract that the plaintiffs would have agreed to accept the five per cent commission upon sales excluding all charges for storage or other services, without the stipulation for a charge of five per cent upon their advances; and if this stipulation constituted or may have constituted any portion of the consideration upon which they agreed to other portions of the contract, then, of course, the agreement could not be usurious per se.

That the commission for advances is five per cent in this case, instead of two and a half, as in the cases of Trotter and Douglass v. Curtis, and Suydam v. Westfall, can make no difference. The amount of the commission is of no importance except as it may bear upon the question of fact whether there was an usurious intent; and as no evidence of such an intent, aside from the contract itself, was offered on the part of the defendants, the question of the reasonableness or unreasonableness of the commission, or its accordance with custom, did not arise. It follows, from these views, that the court below was right in allowing the items objected to. This conclusion renders it unnecessary to consider the question whether the defendants were precluded by their acquiescence in the accounts remitted to them by the plaintiff, from setting up the usury. I may, however, say, that I see no reason to differ with the conclusion of the court below on that subject. The judgment should be affirmed.

DENIO, Ch. J., did not sit in the case; all the other judges concurring, Judgment affirmed.

Sands v. Kimbark.

SANDS, Receiver, v. KIMBARK et al., Executors.

Chapter 412 of 1862, providing for the settlement by a reference of controversies between the receiver of an insolvent mutual insurance company and its members or stockholders, is constitutional.

Such controversies respecting the adjustment and administration of a quasi trust fund, in which a multitude of persons are concerned as contributors and distributees, have, by the customary law of this State, antecedent to the constitutional provision for preserving trial by jury, been regarded as of equitable and summary cognizance, and are not among the cases in which the trial by jury has been heretofore used so as to be fastened among rights to remain inviolate.

To authorize an assessment, and a reference to enforce the same, there must be evidence of losses sustained by the company other than a mere statement thereof in an affidavit of the receiver-such as proof of judgments recovered against the corporation; the presentment and allowance of claims; or other evidence which would conclude the corporation if it continued in business.

APPEAL from the Supreme Court. This was a proceeding under the act of April 21, 1862, entitled "An act to facilitate the closing up of insolvent and dissolved mutual insurance companies," to recover the amount of a premium note made by David Kimbark, which had been assessed for losses to its full amount. The receiver, upon notice, procured the appointment of a referee, for the purpose and in the manner provided in the statute. The referee heard the proofs and allegations of the parties upon written pleadings, the defendants objecting in due time and manner, that the act under which the referee was appointed, was unconstitutional. This objection was overruled and the defendants excepted. The referee found certain facts and conclusions of law, among the latter, that the act under which the reference and trial were had, was constitutional, and to this the defendants excepted. There were some other exceptions, which are sufficiently noticed in the opinions. The referee filed his report and a judgment was entered upon it, in the Supreme Court, which, upon appeal by the defend

Sands v. Kimbark.

ants to the court at general term, was affirmed, and thereupon the defendants appealed to this court.

Horace Packer and Ward Hunt, for the appellants.

Henry R. Mygatt, for the respondent.

MARVIN, J. The defendants claim that they were entitled to a trial by jury, and that the order of reference and the trial were in conflict with the Constitution, in which it is declared. that "the trial by jury, in all cases in which it has been heretofore used, shall remain inviolate forever." (Art. 1, § 2.) The act of 1862 (Sess. Laws, 743), authorized the reference and trial. Is it in conflict with the Constitution?

The Constitution of 1777 contained the like provision, thus: "That trial by jury, in all cases in which it has heretofore. been used in the Colony of New York, shall be established and remain inviolate forever." (§ 41.) The provision in our present Constution is copied from the Constitution of 1821 (art. 7, § 2).

The corporation represented by the plaintiff as receiver, was insolvent, and the defendants' testator was a member of such corporation. In equity, the stock and other property of a private corporation are deemed a trust-fund for the payment of its debts, and the creditors have a lien upon it, or a right of priority of payment, in preference to its stockholders; and courts of equity, prior to our Constitution, entertained jurisdiction in such cases and enforced the trust. (2 Story Eq., § 1252.) The trust is implied, and arises from what are called equitable liens, being liens which exist in equity, and of which courts of equity alone take cognizance. (2 Story Eq., § 1215.) Upon the dissolution of such corporation, the creditors may pursue the property and enforce their claims, unless it has passed into the hands of bona fide purchasers; for the property is deemed to be held in trust, first, for the payment of the debts of the corporation; and second, for the benefit of the stock. holders, in proportion to their respective interests. (Tiff. & Bull., Law of Trusts and Trustees, 110; 8 Pet., 286.)