Palmer v. Call. did not adjust it, although a wrench was in the room with which it could be done, and did not notify the defendants, but immediately as the elevator ascended went under it to sweep and was injured. This was negligence on the part of the plaintiff; and one who, by his negligence, has brought injury upon himself, cannot recover damages for it. Motion denied. PALMER V. CALL. (District of Iowa. 1881.) 1. USURYAGENCY.-If an agent, in good faith, makes a loan for another and without the knowledge or authority of his principal, and for the agent's own benefit exacts more than legal interest, the loan is not thereby rendered usurious. 2. SAME-RENEWAL - BONA FIDE ASSIGNEE.- Where an usurious obligation is passed for value to an innocent purchaser without notice of the usury, who afterwards takes a new and substitute security for the debt, there being no taint of usury in the second transaction, the plea of usury to the substituted obligation cannot be sustained. 3. CASE STATED.— A. placed $10,000 in B.'s hands to loan. B. made the loan to the defendant, giving him $8,000, retaining $2,000 as commission, and receiving in his own name defendant's note for $10,000, with semiannual interest notes of $500 each. B. retained custody of the notes, but recognized them as the property of A., who received the interest, but knew nothing of the usury, and gave B. no authority to retain any bonus out of the sum loaned, or take more than legal interest therefor. The plaintiff purchased the notes in good faith at their face value without knowledge of the usury in the original loan, and afterwards, through B. & Co., made a new contract with the defendant by which he advanced him $1,000, surrendered the note and received from him the note now in suit for $11,000. Plaintiff did not know that B. & Co. retained $500 of the $1,000 he advanced as commission for procuring the reloan. The defense of usury being set up in suit to foreclose the mortgage given to secure the note, held — (1) That as neither A. nor the plaintiff had any knowledge of the usury, and derived no benefit from it, the plea of usury must be overruled. (2) That A. was to be regarded as the lender of the money, although B. failed to disclose his principal and took the notes in his own name. (3) That plaintiff could still recover though B. be regarded as the lender since the substitution of the new security purged the loan of the taint of usury in his hands as an innocent assignee. (4) That the statutes of Iowa relative to uŝury have not modified the foregoing rules of law. Palmer v. Call. In equity. This is a suit to foreclose a mortgage. The only defense is usury. The note secured by the mortgage was for the sum of $11,000, executed by the defendant to the complainant at Emmetsburgh, Iowa, on the first day of November, 1875, payable with interest at ten per cent. semi-annually, on the eighteenth day of November, 1880, with a stipulation that if default should be made in the payment of interest, the whole should, at the election of the holder, become due, etc. It appears that Mrs. Maggie P. Davison, of Cook county, Illinois, placed in the hands of one A. C. Burnham, also living in that state, the sum of $10,000, authorizing him to loan the same for her on real estate security. Said Burnham was a member of the firm of Burnham, Ormsby & Co., bankers, of Emmetsburgh, Iowa. Asa C. Call, the defendant, had applied to that firm to obtain a loan for him. Shortly after the application was made, Call met A. C. Burnham in Iowa, and they entered upon a negotiation for the loan. The result was that Call gave his note to Burnham for $10,000, with semi-annual interest notes of $500 each, and received through the house of Burnham, Ormsby & Co. the sum of $8,000, that firm retaining $2,000 as commissions out of the $10,000. The money loaned belonged to Mrs. Davison, but that fact was not disclosed to Mr. Call, and the notes were taken in the name of A. C. Burnham. The notes remained in the custody of A. C. Burnham, subject to the control of Mrs. Davison, and were recognized by Burnham as her property. She received the interest, and was wholly ignorant of the fact that Mr. Call received any less sum than $10,000. She gave no authority to Burnham to loan the money at a greater rate of interest than ten per cent. per annum, or to take any bonus out of the sum loaned. She received no benefit from the usury, and had no knowledge whatever of it. The plaintiff, Henry H. Palmer, a capitalist residing in New Jersey, purchased the said $10,000 note, with five coupon notes attached, from A. C. Burnham, who indorsed it to him. Palmer v. Call. in September, 1873, paying for the same the full face value of $10,000 in cash. The interest had been paid at maturity up to the time of the purchase, and the plaintiff had no notice of the usury in the original loan on which the notes were given. The plaintiff did all the business in connection with the notes and mortgage through the house of Burnham, Ormsby & Co. He never saw the defendant, nor did any business with him in person. The plaintiff placed the notes in the hands of Burnham, Ormsby & Co. for collection of interest and reloan to Mr. Call. The interest notes were paid at maturity to the plaintiff until November, 1875, when one of the coupon notes for $500 being due, the defendant, at the instance and request of Burnham, Ormsby & Co., entered into a new contract for the extension of the loan, by which he gave the plaintiff the said note for $11,000. The plaintiff advanced and paid the sum of $1,000 in cash, and surrendered the $10,000 note to the defendant. It seems that Burnham, Ormsby & Co. applied $500 of the cash payment to the payment of the coupon note then due, and, without knowledge of the plaintiff, retained $500 as a bonus for effecting the new loan. The plaintiff did not authorize the retention of the $500 bonus by Burnham, Ormsby & Co., received no benefit from it, and, in fact, had no notice of it when he received the $11,000 note and mortgage. O'Connel & Springer and Crawford & Soper, for plaintiff. George E. Clark, Hubbard & Clarke and Wright, Gatch & Wright, for defendant. - Love, District Judge. It is well settled that to make a loan usurious there must be an intent on the part of the lender to take more than the legal rate of interest. Tyler on Usury, 103; Condit v. Baldwin, 21 N. Y. 219; Loyd v. Scott, 4 Pet. 205; U. S. Bank v. Waggener, 9 Pet. 309; Jones v. Berryhill, 25 Iowa, 289. Doubtless, in general, the intent of an agent acting within Palmer v. Call. the scope of his authority may be imputed to the principal. But it is settled beyond question that if any agent in good faith makes a loan for another, and without the knowledge or authority of his principal, and for the agent's own benefit exacts more than legal interest, the loan is not thereby rendered usurious. In such case the law does not impute the knowledge and the intent of the agent to the principal. This doctrine is supported by numerous authorities both in England and this country. Tyler on Usury, 156-172; Dagnel v. Wigley, 11 East, 43; Solartee v. Melville, 7 Barn. & Cress. 427; Coster v. Dilworth, 8 Cow. 299; Condit v. Baldwin, 21 N. Y. 219; Smith v. Marvin, 27 N. Y. 137; Bell v. Day, 32 N. Y. 165; Baxter v. Buck, 10 Vt. 548; Muir v. Newark Ins. Co. 16 N. J. Eq. 537; Canover v. Van Mater, 18 N. J. Eq. 486; Rogers v. Buckingham, 33 Conn. 81; Hopkins v. Baker, 2 P. H. (Va.) 110; Gokey v. Knapp, 44 Iowa, 32; Myllis v. Ault, 45 Iowa, 46; the result summed up in 17 Alb. Law Jour. 116; Barret v. Snowden, 5 Wend. 181. I have the greatest confidence in the correctness and stability of this rule, from the fact that it rests upon solid foundations of reason and justice. The lender employs an agent to loan his money. He gives the agent no authority to violate the law. He has no knowledge of the fact that usurious interest is extorted. He has no intent to receive, and does not receive more than the law allows. He derives no benefit from the illegal transaction. But the agent and borrower, without the knowledge, consent or authority of the lender, enters into an illegal contract for the payment of excessive interest. The borrower and agent are guilty parties. They knowingly violate the law. They are particeps criminis, though it may be in unequal degrees. They knowingly put the lender's money in jeopardy without the least pecuniary advantage to him. It is the lender who is prejudiced and injured by such a transaction. Would it not be most unjust to inflict the pecuniary loss upon the lender, who is without fault and free from any illegal intention, in favor of a party who has knowingly and Palmer v. Call. willfully participated in the violation of the law? Would it be consistent with sound morality so to do? What right has the borrower to assume or to believe that the lender's agent is authorized by his principal to violate the law by the taking of usurious interest? The lender's agent is either a special or a general agent. If he is specially empowered to negotiate the particular loan and no other, it is the legal duty of the borrower to look to the special authority, and the principal is not bound beyond the special authority. If he is a general loan agent, the limitation is that he must keep within the usual and ordinary scope of the business committed to him. The borrower must determine the extent of the authority by considering what is the usual and ordinary course of that business. Is it within the usual and ordinary course for an agent to take excessive interest in violation of the law? Such a practice is extraordinary. It is without the usual course of business. The natural and proper inference for the borrower to draw from the fact of the agent's proposing to take illegal interest would be that in so doing he would be acting without the authority of his principal. It may be said that the principal is responsible for the frauds of his agent in the course of the business committed to him, even though the principal should be ignorant of the fraudulent acts or should expressly prohibit them. Very true; but in this case there are two innocent parties the principal and the party defrauded. One of the two must needs suffer from the fraudulent acts of the agent; and it is the dictate of reason and justice that where one or the other of these innocent parties must suffer, the loss should fall upon him who put it in the power of the agent to commit the fraud, rather than him who had no lot nor part in choosing the agent, or placing him in a position to do the mischief. But in the case of usury contracted for through an agent the borrower is not innocent. He participates knowingly in the violation of the law. He has no merit to plead in his defense; while the lender, in the absence of authority given by him, or knowledge of the violation of the law, is |