Braynard v. Hoppock.

sel arrived in safety without an intermediate bottomry, the lender would be repaid. If, as did happen, there was an intermediate bottomry, he had the extra value of the vessel, (as the second bottomry could supersede his own) and in addition, the freight earned from the shippers. If the vessel was lost by reason of the perils insured against, (being the perils which as lender on bottomry he was to assume,) he had the policy of insurance to resort to. If the freight was lost, he had the policy on the freight as a source of indemnity.

Can it be said that the principal money of the lender was here so at risk; so dependent upon the safety of the ship as to make it a case of maritime interest, on the ground of maritime peril ?

In Jennings v. The Insurance Company of Pennsylvania, (4 Binney, 246) there was what might be treated as a bottomry executed by the master to the plaintiff. Then a covenant, by Scribner, the owner, endorsed upon the bond, binding himself as principal therein, for payment of the sum therein mentioned, till such payment is fully and completely made. Two policies of insurance had been effected, one on the vessel, and one on the goods, for the use of the plaintiff, by his agents; and by a third instrument on the same sheet of paper with the bond, the owner engaged to pay the cost of premium and other charges accruing in making the insurance. The court held that the three instruments proved there, was not a bottomry. In Rucher v.

Conyngham, (2 Peters, Ad. Rep. 299,) Judge Peters, in enumerating what is essential to constitute a valid bottomry, says: "The sum loaned must be at risk, and there must not be a personal responsibility; that is, the money must be advanced on the faith of the ship, and at the sole risk of her loss or safety. It cannot be given as a double security, running along with a personal responsibility. The one excludes the other. The risk being solely confined to the ship, is the only justification allowed by the laws of all commercial countries for the maritime interest.".

In Thorndike v. Stone, (11 Pick. 187,) the bond contained

Braynard v. Hoppock.

various conditions and provisions of a special character, and there was a collateral mortgage to secure the fulfilment of the conditions of the bond, not for payment of the advance. The question was whether it was a bottomry bond, or a usurious contract. It was held not to be the latter. "If the ship had been lost immediately after she sailed, it is perfectly clear that the plaintiff would have lost all his usury."

In the case of the Hunter, (Ware's Rep. 251,) it was held, that a bottomry bond was not vitiated by the master drawing bills of exchange upon the owners for the same sum. They were not independent securities, payable at all events, but collateral, and subject to the same contingencies as the bond. Until the vessel arrived in safety, nothing was payable on the bills, more than on the bond. These are all the authorities I have found where the question arose upon securities on vessels, in the nature of bottomry bonds. Some other cases may be noticed.

In Tyson v. Rickard, (3 Harr. & John. 109,) the Court of Appeals of Maryland, lay down the general rule very explicitly, that a stipulation to repay the principal in money, is not necessary to constitute a loan; it is enough if the principal is secured, and not bona fide put at hazard; and it matters not what the nature of the security is, if it is sufficient.

In Pomeroy v. Ainsworth, (22 Barbour, 120,) it was stated as a general rule, that where the principal was bona fide put at hazard, there was no loan; it was not usury to take more than legal interest. In the case, there was an agreement by which the only source for the repayment of the party's advances, was the proceeds of the sales of logs and lumber which the other party was to cut and manufacture. Hall v. Daggett, (6 Cowen, 653,) and Quackenbush v. Leonard, (9 Paige, 346,) are cited, and are cases of the same character, plain cases, (as construed by the court,) of a bargain for reimbursement, exclusively out of the proceeds of the business or adventure.

It seems to me, from this review of the authorities, and

Braynard v. Hoppock.

the principle which pervades and sustains these maritime contracts, that it is not possible to support the present engagement for the payment of marine interest. "It is essential," says Judge Betts, "to the validity of a bottomry transaction, that the money lent should run the hazard of the voyage." (The William and Emmeline, 1 Blatch. and How., 66; the Nelson, 1 Haggard, 169.) How has that hazard, in this instance, been incurred?

It enters into the idea and character of a bottomry, that the owners cannot personally be liable for the demand, so that eventually, it may be recovered of them. It is not a mortgage with a covenant to pay the amount. If this liability is wanting, does it follow that there can be no extent of security for ultimate payment of the debt in all ordinary events, which will deprive the transaction of its character of bottomry, and bring it within the statute of usury? I cannot so understand it. It seems to me that the contract is this: the lender takes his extra interest as the premium or consideration for insuring the vessel, (as to the amount advanced,) against the perils specified. If he secures himself by a policy which the former procures and pays for, his peril is not the one which was paid for, and which alone justifies the marine interest.

Concluding, then, that there was usury in the contract, the next question is, can the moneys sued for be recovered. in the present action?

This question may be thus presented. The borrower, upon a usurious transaction, deposits with the holder various collateral securities. The event having occurred upon which the lender may resort to them, he collects upon them a sum of money not equal to the principal of his advances. Four days after such reception, an action is brought by the borrower to compel payment of such amount.

I understand the cases of Wheaton v. Hibbard, (20 Johnson's Rep. 290,) Dix v. Van Wyck, (2 Hill's Rep. 522,) of Schræppel v. Corning, (5 Denio, 240; 10 Barbour, 576; 3 Selden, 108,) of Seymour v. Marvin, (11 Barbour, 87,) and

Braynard v. Hoppock.

Mumford v. The American Life Insurance and Trust Company, (4 Comstock, 485,) to establish these propositions:

That when a party voluntarily pays a usurious loan, or executes a deed to discharge or secure it, he cannot sustain an action to recover back the money or the property. That collateral securites placed in the hands of the lender on a usurious transaction, may be recovered back in an action which would have been an action of trover under the former system; and that moneys received by the lender upon them, may be recovered in an action which would have been an action of assumpsit.

The collection of the money on collateral securities, is not equivalent, of itself, to a voluntary payment of a usurious loan. Facts may show an acquiescence, recognition and assent, which may make it tantamount.

The third section of the statute respecting the interest of money, (1 R. S. 772,) qualifies the rule that money paid may not be recovered back so far as to allow the excess beyond legal interest to be recovered, and no more. The principal and legal interest may be retained.

The right to reclaim securities deposited as collateral, or to recover the money which may have been collected from them, may be barred like other demands, by the statute of limitation, and that statute will begin to run from the delivery of the securities.

The ground of the plaintiff's claim in this case then, is: that he had an undoubted right to recover these securities. the day before the money was received upon them; that he never assented to the collection of such money, and has never ratified it since; that it was not a voluntary payment on his part, and hence that his action must be sustained. I do not see what escape there is from this conclusion, and think that the judgment must be affirmed. Ordered accordingly.

Burnham v. Wilbur.

GORDON BURNHAM, Plaintiff and Respondent v. Jeremiah WILBUR, Defendant and Appellant.

I. Where a complaint alleges that the plaintiff and four of the defendants being directors of a corporation therein named, for the purpose of enabling said company to raise a sum of money for the prosecuting of its business, by means of the notes of the company, to be indorsed by some of said directors, agreed, by a written and sealed agreement, signed by said five directors, to and with each other, to join and unite with such of said directors as shall become liable on any note so made and indorsed for the accommodation of said company, in paying such liability and to share alike with such directors in any such liability; and also alleges that the plaintiff subsequently, under said agreement, indorsed four several specifled notes for said company which he was compelled to pay, and that the defendants refuse to pay to the plaintiff their aliquot shares of the amount of said notes; and the latter allegations are put at issue by the defendants' answer, and the plaintiff proves that he subsequently indorsed said notes for said company and was compelled to pay them, it is competent for them to show by parol that such notes were not indorsed by the plaintiff under the alleged agreement, but were indorsed under a subsequent contract between the plaintiff and some other directors of said company of the one part, and the said company of the other part.

2. Resolutions passed at meetings of the board of directors of said company, including the plaintiff, held subsequent to the alleged agreement, in connection with other evidence tending to prove the defense, are competent evidence for that purpose.

3. The defendants may show, on the alleged agreement being produced, and that their signatures thereto are genuine, that they never delivered said agreement, but signed it on the express condition and understanding that it was not to be delivered as an executed instrument, until it was signed by all the directors of the said company, and that all of the directors had not signed it.

(Before HOFFMAN, PIERREPONT and ROBERTSON, J. J.)

Heard June 16, decided June 30, 1860.

APPEAL by the defendant, Wilbur, from a judgment against him, rendered on a trial had June 21, 1859, before Mr. Justice HOFFMAN, without jury.

The suit was commenced March 1, 1858, by Gordon Burnham, as plaintiff. John C. Mallory, Nathan T. Carryl, Edmund Coffin, Jeremiah Wilbur and the Clinton County Coal