This monograph attempts to explore the nature of certain transactions in negotiable paper. In the transactions under consideration the plaintiff admittedly would qualify as a holder in due course under section 62 of the Negotiable Instruments Law, hereafter referred to as the NIL. In Lynchburg National Bank v. Scott, 91 Va. 652 (1895), it was held that the maker's defense of usury between himself and the payee was not good against a subsequent holder in due course. The validity of that holding is not questioned here. It is important to distinguish the defense asserted in the unusual situations discussed herein from that in the Scott case, supra. In both, violation of the statute against usury was the defense; in the former, however, the defendant claimed that the plaintiff, a holder in due course, was a participant, though unwilling, in a usurious transaction and was therefore subject to the civil sanctions provided in the usury statute. Since emphasis will be placed on the case law in Virginia with only brief reference to decisions from other states, the reader, if interested, will find helpful discussions in Annot., 43 L.R.A. (N.S.) 211 (1913) ; Annot., 5 A.L.R. 1447 (1920); 55 Am. Jur., Usury §§26 and 27 (1939); 29 A. & E. Enc. Law 473-78 (2d ed. 1896); 1 Daniel, Negotiable Instruments c. 23 (6th ed. 1919); Weinstein, "When a Bill or Note Represents an Usurious Contract," 5 Tul. L. Rev. 211 (1931).
James H. Barnett Jr.,
Usury in the Purchase of Negotiable Paper,
U. Rich. L. Rev.
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