Houghton v. Burden,
228 U.S. 161 (1913)

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U.S. Supreme Court

Houghton v. Burden, 228 U.S. 161 (1913)

Houghton v. Burden

No. 1

Argued January 7, 1913

Decided April, 7, 1913

228 U.S. 161


Where a secured creditor voluntarily comes into the Bankruptcy Court and asserts a claim to property in the trustees' possession, the proceeding is one in equity and the decree is reviewable by the circuit court of appeals both as to law and fact; § 566, Rev.Stat., is inapplicable, and the whole case is open under § 128, Judicial Code, and an appeal lies to this Court under § 241, Judicial Code.

A contract for loaning money secured by accounts payable to the borrower, who is to act as agent for the lender in their collection, providing that the lender shall, in pursuance of a provision in a bond of indemnity given by third parties, examine the accounts and books of the borrower monthly and receive a compensation therefor equivalent to a specified percent of the accounts remaining due, held in this case to have been made in good faith and not for the purpose of avoiding the usury laws, and not to be a usurious and void contract under the laws of the New York.

On an inquiry whether the contract is one forbidden by law, evidence dehors the agreement is admissible to show that, though legal on its face, the agreement is in fact illegal.

Usury may be interposed as a defense even though it contradicts the agreement.

Where the law of the state makes usury a crime, the burden is strongly on him who would avoid a debt on that ground, and where, as in this case, the borrower is supported by one witness who is in his employ and the lender is supported by one disinterested witness, the burden is not sustained.

The facts, which involve the jurisdiction of the circuit court of appeals to review facts in certain cases coming from the Bankruptcy Court and the construction of usury laws of New York, are stated in the opinion.

Page 228 U. S. 164

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