Opinion
February, 1911.
Adolph Freyer, for appellants.
May Jacobson (David May, of counsel), for respondents.
Plaintiffs are holders of two notes made by the Coleman Stable Company, a corporation, and indorsed by John S. Coleman, Daniel J. Coleman and Edward Coleman for the accommodation of the maker. The maker was apparently not served; the indorsers when sued pleaded usury and other defenses. Section 274 of the General Business Law is a re-enactment of chapter 172 of the Laws of 1850 and provides that no corporation shall hereafter interpose the defense of usury in any action. In the case of Stewart v. Bramhall, 74 N.Y. 85, it was held that "Since the act of 1850, contracts of corporations have not been within the usury laws, and the act as construed includes collateral contracts of individuals as sureties, guarantors or indorsers for a corporation." This construction of the statute is now the settled law of this State; the defendants, however, urge that it does not include an accommodation indorser. They cite as authority the case of National Bank v. Lewis, 75 N.Y. 516, but that case is not in the slightest degree in point. It holds only that the defense of usury is not personal to the maker alone of a note but may be availed of by a guarantor in all cases where it could be pleaded by the original debtor. It is not inconsistent with and in no way supersedes the decision of Stewart v. Bramhall, supra, that an accommodation indorser of a note made by a corporation and negotiated for its benefit cannot defend the same on the ground of usury.
The defendants also urge that this point was not properly raised at the trial. There is no doubt that the plaintiffs' attorney laid very little stress on this point at the trial; and, while he objected to the introduction of this evidence, he failed to object on this specific ground. He did, however, at the end of the defendants' case move on this ground to strike it out; and this motion should have been granted. After this motion was denied, it would have been idle to request a direction of a verdict on this same ground. Since the judgment must be reversed and a new trial granted, it is unnecessary to consider any of the other alleged errors.
Judgment reversed and new trial ordered, with costs to appellants to abide the event.
HENDRICK and DELANY, JJ., concur.
Judgment reversed.