ERROR to the Circuit Court of the district of Columbia, and county of Washington. The plaintiff in error instituted a suit on a promissory note, dated at Georgetown, October 22d, 1821, for the sum of $101, payable to the order of S. & J. Fearson, the defendants, and by them indorsed. The evidence in the case showed, that on the 26th of October 1821, the defendants came into the store of the plaintiff with the note, and told the plaintiff they had obtained the note from the maker for goods they had sold him at their store, and asked the plaintiff what he would give for it; the plaintiff said he would give $97 for it, which the defendants agreed to take; and thereupon, the plaintiff received the note, which was indorsed by the defendants, before it was brought to the store, and $97 were paid to the defendants for it. When the note became due, and being unpaid by the maker, the defendants promised to pay it.
Upon this evidence, the counsel for the defendants prayed the court to instruct the jury: 'That if they believe from the said evidence, that the plaintiff received the note upon which this suit is brought, of defendants, with their indorsement upon it, and without an understanding that the defendants were not to be responsible on said indorsement, and that the plaintiff paid or agreed to pay therefor only the sum of $97, the transaction is usurious, and the plaintiff is not entitled to recover;' which the court gave as prayed. To which the plaintiff, by his counsel, excepted, and then prayed the court to instruct the jury: 'If they should believe, from the evidence aforesaid, that the defendants, having the note in question, and wishing to part with it, in order to avoid suing the maker, and not having occasion or desire for a loan of money, offered to sell it to the plaintiff, and that the plaintiff, having some accounts with the maker, against which he expected to be able to set off the said note, and not with any other design, agreed to buy it, and did buy it, for $97; and that no loan for usurious interest, nor any loan, nor any evasion of the laws against usury was in the comtemplation of either of the said parties, then plaintiff is entitled to recover;' which the court refused.
The plaintiff's counsel prayed the court to instruct the jury: 'If they believe, from the evidence aforesaid, that this note was sold, and not received by plaintiff, by way of discount or loan, plaintiff is entitled to recover;' which also was refused.
The plaintiff excepted to the instructions of the court given to the jury on the prayers of the defendants; and also to the refusal of the court to give the instruction asked by them. The jury having found for the defendants, this writ of error was prosecuted to reverse the judgment of the court on the same.
The case was argued by Key, for the plaintiff in error; and by Coxe, for the defendants.
Key, for the plaintiff in error, contended, that the question of usury was one depending entirely on the transaction out of which it was said to arise. If a loan was the object of the dealing between the parties, it might be usury; but if it was only the sale of a note already made, it was not so. Why should not a person who has claims upon him purchase a note, to set it off against such demands? Why should not the holder of a note sell it for what he may consider it worth? The reason that such a sale of a note is said to be usurious is, that the indorser who disposes of it is liable; and yet the sale of a bill of exchange, the payment of which is guarantied by the seller, is valid. He cited, Scott v. Lloyd, 4 Pet. 205; 1 Stark. 385; 2 Barn. & Ald. 588; 2 Munf. 36; 8 Cow. 369; 3 Bos. & Pul. 154; 1 Call 66, 70; 1 Dall. 217; 2 Str. 1243.
Coxe, for the defendants in error, argued, that the sale of the note by the defendants, they being indorsers upon it, was a borrowing of money on usury. While it is admitted, that promissory notes may be sold for less sums than their nominal amount, and with larger deductions than the regular discount; yet, in no such cases, does the seller continue liable for the repayment of the money, by indorsing the note. The indorsement of the note made it a direct contract between the plaintiff and the defendant, for the loan of money, on a usurious consideration. There was nothing, therefore, to leave to the jury; the fact was admitted, and the law was properly applied to it by the court. He cited, 13 Johns. 52; 15 Ibid. 44; 2 Johns. Cas. 60; 15 Mass. 96; 2 Conn. 175.
JOHNSON, Justice, delivered the opinion of the court.