Case ID: ny-st-rep_42/html/0485-01.html
Source: Caselaw Access Project
Author: {"author": "Mayham, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Albert H. Sweny, Resp’t, v. John N. Peaslee et al., App’lts.
    
      (Supreme Court, General Term, Third Department,
    
    
      Filed December 28, 1891.)
    
    1. Mortgage—Guaranty—Consideration—Forbearance.
    An extension of the time of payment of a prior mortgage, the foreclosure of which is threatened by the holder, is a good consideration for a guaranty of said mortgage by the owner of the fee.
    
      2. Same—Usury—Additional security.
    Where a mortgage is valid in its inception, the subsequent giving of additional security for its payment is not usury.
    8. Usury—Transfer of a loan.
    The transfer of a demand from one creditor to another is not a loan within the usury laws.
    
      4. Same—Burden of proof. .
    The defense of usury is an affirmative one, and must be clearly proved; it cannot arise from surmise or inference.
    Appeal from judgment of foreclosure and sale.
    
      Oady <& Hoysradt, for app’lts; Marcus T. Hun, for resp’t.
   Mayham, J.

This is an appeal from a judgment entered upon the report of a referee for the foreclosure of two mortgages, one given by Horace W. Peaslee and wife to John J. and Sylvester Yan Yalkenburgh, collateral to a bond made by Horace J. Peas-lee for $30,000, ten thousand of which was payable to John J. Yan Yalkenburgh and twenty thousand of which was payable to Sylvester Yan Yalkenburgh. The interest of Sylvester Yan Yalkenburgh in this bond and mortgage was transferred to Albert H. Sweny and that of John J. Yan Yalkenburgh was transferred to James Mix who owned the same at the time of the commencement of this action. The other mortgage was given by John N. Peaslee and wife to Albert H. Sweny and James Mix as collateral to the bond of the mortgagors dated February 16, 1886, in and by which the obligors agreed to pay the sum of $30,000 in the following manner. “The sum of $10,000 and interest thereon to be paid to James.Mix, and the sum of $20,000 and interest thereon to be paid to Albert H. Sweny in accordance with the -provisions of a mortgage given by Horace W. Peaslee and wife to John J. and Sylvester Yan Yalkenburgh, recorded in the Columbia county clerk’s office in book No. 25 of mortgages on page 561 as extended. ”

The case shows that prior to the date of the last mentioned mortgage .the execution of the last will of Sylvester Yan Yalkenburgh, deceased, had transferred the $20,000 interest of his testator in the Horace W. Peaslee mortgage to Emma J. Housman, who duly transferred the same to Albert H. Sweny, this plaintiff, and .that the executor of John J. Yan Yalkenburgh transferred his interest in Horace W. Peaslee’s mortgage to James Mix, and the entire interest in the Horace W. Peaslee bond and mortgage became vested in this plaintiff and James Mix.

On the 13th of January, 1885, Horace W. Peaslee, the mortgagor, executed and delivered to the defendant, John N. Peaslee, a deed of certain lands at Malden Bridge, with all dams, mills, water privileges and buildings thereon, together with the fixtures, machinery, tools and materials thereon. This conveyance was as to the part of the land covered by the Yan Yalkenburgh mortgage of $30,000 subject to the same, but it embraced lands not covered by that mortgage, and in explicit terms conveyed property not in express terms embraced in the mortgage. Prior to the sale by Emma Housman of this mortgage to this plaintiff she had transferred the same, as collateral to a loan of $15,000, to the Kinderhook National Bank, and the loan for which this mortgage was transferred being past due, the bank threatened a foreclosure. While the interest of John FT.- Beaslee under his deed was thus imperilled, he called on the plaintiff and James Mix, and the interview resulted in the opening of negotiations with Emma Housman, which resulted in an assignment of her $20,000 interest in the Horace W. Beaslee mortgage to this plaintiff for $15,000, and the $10,000 interest held by the executor of John J. Yan Yalkenburgh to James Mix.

The evidence discloses and the referee finds in substance that during the negotiations for the foreclosure of Mrs. Housman’s interest in the mortgage for $15,000, plaintiff was to hold it as a lien and mortgage for $20,000, its face value, and the interest should be paid him on that sum. The assignment from Housman to plaintiff bears date February 19, 1886. On the 16th of February, 1886, the plaintiff and defendant, John FI. Beaslee, entered into a written agreement in which the Horace W. Beaslee mortgage is described, and it is noticed that the plaintiff is the owner thereof to the amount of $20,000, and that there is due and payable that amount thereon with interest from the 16th day of February, 1886, and to the collection of which there is no defense. This agreement provides for the extension of the time of the Horace W. Beaslee mortgage upon conditions specified in the contract until the 1st day of May, 1892. On the same day John FT. Beaslee and wife executed their bond to Albert H. Sweny and James Mix conditioned for the payment of $30,000, $10,000 and interest to Mix, and $20,000 and interest to Sweny in accordance with the provisions of a mortgage given by Horace W. Beaslee and wife to John J. Yan Yalkenburgh and Sylvester Yan Yalkenburgh, and as collateral thereto gave their mortgage covering the property embraced in the deed from Horace W. Beaslee to John N. Beaslee to which we have referred.

Sufficient facts have been stated to raise the question involved in this appeal, viz.: Whether the last described mortgage was collateral to the Horace W. Beaslee mortgage and in consideration of the agreement for an extension of the time of payment thereon, or whether it was given in consideration of, and as security for, the $15,000 paid by Albert FT. Sweny, the plaintiff, and the $10,000 as an original loan to the defendant John FT. Beaslee, and used by him in extinguishing the Horace W. Beaslee mortgage.

If this was a purchase of the original Horace W. Beaslee mortgage for less than its face value, it was a valid transaction, and the purchaser was guilty of neither an illegal or immoral act in enforcing the original security for its face value and interest

If, on the contrary, it was a loan of $25,000 to. the defendant John FT. Beaslee, taking back an ■ agreement for the payment of $30,000 and interest, it would in that case be an usurious agreement and void, and no recovery could be had upon it.

The referee finds that no loan was made by Albert H. Sweny "to John FT. Beaslee, He further finds that John FT. Beaslee accepted the position of guarantor of the mortgage given by-Horace W. Peaslee in the hands of the plaintiff, and that the mortgage given by him and his wife is collateral to the indebtedness created by the Horace W. Peaslee bond and mortgage, and that that was never satisfied or extinguished.

These findings and conclusions of the referee are, we think, fully sustained by the evidence in this case. John N. Peaslee, being the owner of the fee of this land charged with the mortgage given by Horace W., had a direct interest in procuring an extension of the payment of this outstanding mortgage, and that extension having been granted at his instance and for his benefit at the time of the purchase of the mortgage by the plaintiff furnished a sufficient consideration for his assumption of the payment of the bond and mortgage by him. In Paul v. Stevens, 57 Hun, 173; 32 St. Rep., 851, Daniels, J., says : “It has been repeatedly held that the forbearance or extension of the time for the payment of a debt is a good consideration for the making and delivery of an obligation of this description ” (in that case a promissory note). Nor can such an agreement be declared usurious. The original obligation created by this bond and mortgage to pay this $20,000 being valid, the giving of additional security after the creation of the debt for its payment is not usury, and the bond and mortgage given by John N. Peaslee and -wife as such additional security is valid and not usurious.

In Crane v. Price, 35 N. Y., 498, it was held that a mortgage given to the plaintiff by the defendant for demands which the defendant was liable to pay, and taking a mortgage of the defendant for the amount of the demands so purchased was a valid transaction, and that when the demands were purchased by the plaintiff at the request of the defendant, the court say: “ It is a misnomer to speak of the transfer of a demand by one creditor to another as a loan of money to the debtor within the intent of the usury laws.” If there was no loan and no corrupt agreement for forbearance there can be no usury; and the grantee of the mortgagor who assumes the payment of the mortgage valid in its inception, cannot predicate usury upon the original mortgage, or upon a valid agreement between him and the assignor for an extension of the time of payment. Nichols v. Fearson, 7 Peters, 103, 109; Sullivan Savings Ins. Co. v. Copeland, 71 Iowa, 67. In More v. Howland, 4 Den., 264, it was held that the bona fide sale of one’s credit by way of guaranty, or by making a note for another’s accommodation, though for a compensation exceeding seven percent, is not usurious if the transaction be unconnected with a loan between the parties.”

Nor do we think that the arrangement between John N. Peas-lee and the plaintiff made a new contract of the old Horace W. Peaslee mortgage so as to let into that agreement any taint of usury. The case of Houseman v. Bodine, 122 N. Y., 158; 33 St. Rep.) 332, cited by the learned counsel for the appellant, does not go to that extent. The defense of usury, involving a crime, cannot be established by surmise and conjecture, or by inference entirely uncertain. Baldwin v. Doying, 114 N. Y., 452, 457; 23 St. Rep., 759; Stillman v. Northrup, 109 N. Y., 478; 16 St. Rep., 417.

The defense of usury being an affirmative proposition to be established by the defendant, he assumes the burden of establishing it by affirmative proof, as all the presumptions are in favor of the legality of the contract, and if upon the whole case the evidence is as consistent with the absence as with the presence of usury the party alleging the usury must fail. Morrison v. Verdinal, 53 Hun, 63, 66; 24 St. Rep., 194; Booth v. Swezey, 8 N. Y., 276; Smith v. Marvin, 27 N. Y, 137. Even when the instrument admits of two constructions, one of which would render it operative and the other void, the former would be adopted. Marvin v. Feeter, 8 Wend., 533.

Having reached a conclusion adverse to the contention of the appellant on the question of usury, it becomes unnecessary to discuss the other questions raised by the appellant on this appeal.

On the whole case we see no error committed by the referee for which the j udgment should be reversed.

Judgment affirmed, with costs.

Learned, P. J., and Kellogg, J., concur.