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A denial of the allegation of presentment and nonpayment of note is sufficient. 102 If the indorser of a promissory note, after it falls due, promises to pay the same, with a knowledge that the holder has failed to make demand of payment and give notice of nonpayment, the promise dispenses with the necessity of demand and notice.103

3525. Denial of notice of dishonor.
Form No. 816.

[TITLE.]

The defendant answers to the complaint:

That notice of dishonor of the note [or bill of exchange] mentioned in the complaint was not given to him.

§ 3526. Notice of protest. The denial in a verified answer of the indorsers, in action on a promissory note, that notice of protest was received by them, is not sufficient denial that notice was given.104

§ 3527. Alteration of the instrument.

[TITLE.]

Form No. 817.

The defendant answers to the complaint:

That after the making [or acceptance] and issue of said note [or bill], and before this action, the same was materially altered, without the consent of the defendant, by adding the signature of A. B. as a joint maker thereof [or by cutting off the signature of A. B. as a joint maker thereof, or by adding the words "payable at or otherwise, as the

case may be].

§ 3528. Alteration.

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An answer to a suit on promissory note by the assignee, which sets up as one defense: 1. That the note was made payable to order, and was afterwards fraudulently altered by inserting the word "bearer" in lieu of the word "order;" 2. That the defendant paid the note before assignment to plaintiff after maturity, etc.—it was held not fatally defective. 105 Where an answer contains an allegation

102 Dickerson v. Kimbal, 1 Code R. 49.

103 Curtis v. Sprague, 51 Cal. 239; Bryant v. Wilcox, 49 id. 47. 104 As to form of notice, service, etc., see Cal. Civil Code, § 3142 et seq.; Edgerton v. Smith, 3 Duer, 614; Arnold v. Rock River Valley Union R. R. Co., 5 id. 207; compare Burrall v. DeGroot, id. 379,

105 Sherman v. Rollberg, 11 Cal. 38.

of alteration of an instrument, it must state that such alteration was made with the knowledge or consent or by the authority of the plaintiff.106

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The defendant answers to the complaint:

I. That the note mentioned therein was given to the plaintiff in pursuance of a mutual agreement between the plaintiff and defendant that the plaintiff should lend the defendant money at the rate of [ten] per centum per annum.

II. That the defendant received from the plaintiff dollars only as a consideration for the said note, the plaintiff retaining dollars as interest thereon.107

§ 3530. Foreign usury laws. To set up the defense that a foreign contract is void by foreign usury laws, defendant should first state what those laws were at the time of the transaction, and then set out the facts which rendered the securities void according to those laws.108 A general allegation of usury is not enough; the answer should state what the usurious agreement was, and between whom it was made, and the amount of the usury, 109 as well as the amount of the loan.110 The rate

should be stated with definiteness.1 111

106 Humphreys v. Crane, 5 Cal. 173. For form of answer for mistake in amount of note, see Seeley v. Engell, 13 N. Y. 542. In an action upon a promissory note, or other written obligation, the defendant, under an answer containing merely a general denial, may prove that the instrument has been materially altered since its execution. Schwarz v. Oppold, 74 N. Y. 307; and to same effect, see Trust Co. v. Siefke, 144 id. 355; Boomer v. Koon, 6 Hun, 645. 107 In California there are no usury laws. This defense is not available, therefore, in such state.

108 Curtis v. Masten, 11 Paige, 15. Where the statute of another state is relied upon as a defense it must be pleaded by setting out in terms so much thereof as may be applicable, and an averment that a contract is by the laws of another state illegal and void is insufficient. Bank of Commerce v. Fuqua, 11 Mont. 285; Dunham v. Holloway, 3 Okl. 244; see § 330, ante.

109 Manning v. Tyler, 21 N. Y. 567; Griggs v. Howe, 31 Barb. 500; see, also, Woodall v. Kelly, 85 Ala. 368; 7 Am. St. Rep. 57.

110 Smalley v. Doughty, 6 Bosw. 66.

111 Dagal v. Simmons, 23 N. Y. 491.

§ 3531. How alleged. It is not necessary to allege in terms that the transaction was "usurious" 66 or corrupt," if facts which amount to usury are stated with sufficient certainty.112 An answer pleading usury in the discount by the plaintiff should show that the note never had any valid existence as a contract or promise to pay at the time it was discounted by the plaintiff.113 An allegation that one received goods "without paying any consideration therefor" is not sustained by proof that the advances made by him were at a usurious rate of interest.114 Usury is a defense which can not be made available on the trial of a cause unless it is specially pleaded.115 Usury can no longer be proved under a denial of making the contract. Evidence of it in the transfer of a note, if not alleged in the pleadings, is inadmissible, even as a circumstance to show that the holder did not take the note in good faith.116

§ 3532. Usury as a defense. To a complaint on a note, the answer of an indorser alleged usury, and demanded judgment that his name be canceled and discharged from the note; it was held that the answer was not to be deemed as setting up a counterclaim, so that failure to reply admitted its allegations. When the facts alleged may possibly constitute a counterclaim, but are such as always constitute a flat bar at law to the action, they should be deemed to be set up as a defense merely, unless the answer expressly states that they are set up by way of counterclaim. To preclude a plaintiff from recovery, on the idea that he has admitted the allegations of such an answer to be true by omitting to reply to it, when the same allegations viewed merely as a defense would be put at issue by the Code, would operate as a surprise in all actions in which the defense of usury is interposed.117

112 Miller v. Schuyler, 20 N. Y. 522. For a form of answer of usury, in the transfer of an accommodation note, see Catlin v. Gunter, 11 id. 368; approved in Manning v. Tyler, 21 id. 567.

113 Burrall v. Bowen, 21 How. Pr. 378.

114 Williams v. Birch, 6 Bosw. 299.

115 Morford v. Davis, 28 N. Y. 481. For a sufficient statement of such defense, see Butterworth v. Pecare, 8 Bosw. 671.

116 Scott v. Johnson, 5 Bosw. 213.

117 Burrall v. De Groot, 5 Duer, 379; and see Gildersleeve v. Mahony, 5 id. 383, 385.

§ 3533. That the note was for goods sold by means of deceit. Form No. 819.

[TITLE.]

The defendant answers to the complaint:

I. [Allege sale as in case of an action for damages for deceit.] II. That said note was given to the plaintiff without any other consideration than said sale].

That immediately on discovering said fraud, the defendant rescinded said [contract], and tendered to the plaintiff all that he had received under said contract, upon condition of his returning said note, which the plaintiff refused to do.

3534. Deceit. It is no defense to a note given by one partner to the other for his interest in land held jointly by both that the payee of the note had deceived his partner, the maker, in the division of partnership stock, and was indebted therefor in an amount equal to or greater than the sum due on the note.118 When such a defense was set up in the answer, in an action on the note, it was held that all of the answer, except that portion admitting the execution of the note and denying the indebtedness, was properly stricken out.119 The defense of false and fraudulent representation as to value is not available, unless the seller knew or had reason to believe that the representations were untrue.1

§ 3535. Illegal interest in note.

120

[TITLE.]

Form No. 820.

The defendant answers to the complaint:
As to the sum of

of ..

.... dollars, parcel of said sum

.. dollars, in said complaint demanded, the said

defendant admits that he owes the said sum of dollars to the said plaintiff; but as to the sum of dollars, the residue of the said sum of ..

dollars,

the said defendant says that the said promissory note in the complaint mentioned was given by the said defendant to the said plaintiff for the loan of

... dollars for

years, and no more; and that the said sum of

....

dollars was included in said note, as interest on the said sum

118 Case v. Maxey, 6 Cal. 276.

119 Id.

120 Davidson v. Jordan, 47 Cal. 351.

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The defendant answers to the complaint, and alleges:

I. That at the time the note in the complaint set forth was made, he was indebted to one E. F., by book account, in the sum of .. dollars.

II. That the plaintiff at the time falsely and fraudulently represented to the defendant that he was the owner and assignee of said account and indebtedness, and thereby, and without any consideration whatever, induced the defendant to make said note to him in satisfaction and discharge of said account.

III. That the said representations were false, and that the plaintiff never was the owner or assignee of said account, nor had he any beneficial interest in the same.

IV. That the defendant was misled by said false representations [or, that the belief of the defendant in the truth of said representations induced him to make said note].

123

§ 3537. Fraud. In an action on a negotiable note, by the payee against the maker, a plea which amounts to an averment of fraud on the part of both parties and a third person, with a view to defraud the creditors of the latter, is bad, as it tenders an issue foreign to the case. 122 In such case the court will refuse to enforce payment, but will leave the parties as they are, no matter which party first exposes the fraud.1 Where the defense set up is that defendant executed said note as the consideration for a deed from plaintiff for certain land, under false and fraudulent representations that plaintiff had an interest therein, the defendant, if he would avoid payment, must offer to surrender the deed to be canceled, so that both parties could have been remitted to their original rights.124 Where fraud is set up as a defense, the answer must aver that the defendant has done all in his power to restore the plaintiff to his former condition, or the fact can not be proved.125

121 This form is applicable under a statute which forfeits only the usurious interest. From Nash's Ohio Pl. & Pr. 311.

122 Moore v. Thompson, 6 Mo. 353.

123 Ager v. Duncan, 50 Cal. 325.

124 Tissot v. Throckmorton, 6 Cal. 471.

125 Devendorf v. Beardsley, 23 Barb. 656.

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