decided: February 24, 1950.
LEVY ET AL.
Before AUGUSTUS N. HAND, CLARK and FRANK, Circuit Judges.
FRANK, Circuit Judge.
The district judge correctly held that the notes given in 1931 and 1937 were usurious and therefore void.*fn2 London v. Toney, 263 N.Y. 439, 189 N.E. 485, 91 A.L.R. 1100; Ganz v. Lancaster, 169 N.Y. 357, 62 N.E. 413, 58 L.R.A. 151.
Appellant argues that, even if the 1931 note was void, it was an executory contract of accord or a new contract, and that, whichever it was, it extinguished the earlier obligation. Winsted Bank v. Webb, 39 N.Y. 325, 330-331, 100 Am.Dec. 435, contains some language which suggests that, perhaps, where parties intend a new note to replace absolutely an old one, the old note may be extinguished beyond the possibility of revival even if it be proved that the new note is usurious and thus void. But the view more strongly and more recently taken by the New York courts is that proof of usury in the new obligation revives the old. Patterson v. Birdsall, 64 N.Y. 294, 297-298, 21 Am.Rep. 609; Matter of Accounting of Consalus, 95 N.Y. 340. Accordingly, the usurious character of the 1931 note did not preclude enforcement of the earlier, valid notes.
Nor can we agree with appellant's contention that, if we hold that the new notes were void for usury, then we must hold that the six-year statute of limitations had run on the original debt. For appellant made substantial payments up to April 28, 1941. These payments, although literally made on the new notes, were paid on account of the interest or principal of the debt evidenced by the notes. In re Gordon, 2 Cir., 90 F.2d 583, 585; Matter of Accounting of Consalus, 95 N.Y. 340, 344-345. The statute of limitations, which would, then, have run from April 28, 1941, was tolled while appellant served in the armed forces, from 1942 to 1946. 50 U.S.C.A.Appendix, § 525; N.Y. Military Law, Consol.Law, c. 36, § 308. Accordingly, the debt was still actionable when the claim was filed in the bankruptcy proceedings.