Case ID: misc_25/html/0635-01.html
Source: Caselaw Access Project
Author: {"author": "Hiscock, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Hiram B. Danziger, as Executor, Etc., Plaintiff, v. Oscar Deline, Individually, and as Executor, Etc., of Sarah M. Deline, Deceased, Alice A. Deline et al., Defendants.
    (Supreme Court, Onondaga Special Term,
    December, 1898.)
    1. Evidence — Code Civ. Pro., § 82,9 — A party canno't testify to usury taken by a deceased mortgagee.
    Upon the foreclosure, after the death of the mortgagee, by the executor of his assignee of a mortgage given by a husband and wife to secure the original mortgagee as indorser of certain notes, the wife, who was a maker of the notes, a mortgagor, and who took part in the transaction by which, as alleged, the mortgagee exacted usury at the inception of the notes, is incompetent to testify to, the usury, as she is a party and is interested in the event.
    
      
      2. Remainder — Not defeated by the exercise of power of sale and mortgage by an executor — Innocent mortgagee not liable for an executor’s disposition of the proceeds of his mortgage.
    A testatrix devised a life estate in lands to her husband with remainder to her infant child and also appointed her husband executor with full power “ to buy, sell and convey and lease and mortgage real estate at his will and pleasure without bail.”
    Held, that the power of sale was to be exercised for the benefit of the infant and that he took a remainder wbich was not subject to be defeated by such exercise.
    That a mortgage, given by the executor to retire another mortgage held by another mortgagee on the premises belonging in remainder to the infant, was valid.
    That, even if the mortgage was executed in violation of the power, the mortgagee would not be responsible for the proceeds unless he knew or or was put on inquiry as to the violation.
    This action is brought to foreclose a mortgage given by the above-named two defendants in effect to secure one Rosenthal as indorser of two notes aggregating $3,500. Said notes are now held by plaintiff. The defenses are urged against the mortgage: 1. That it was usurious and void. 2. That it was executed by Oscar Deline in violation of a trust.
    Wilson & Cobb, for plaintiff.
    C. H. Lewis, for defendants.
   Hiscock, J.

The lands covered by this mortgage belonged to a former wife of Oscar Deline. At her death she left a will whereby, in effect, she devised a life estate to her said husband with remainder to the defendant Willis Deline, who is an infant about fourteen years old. . She also by said will appointed her husband Executor * * * with full power and authority to buy, sell and convey and lease and mortgage real estate at his will and pleasure without bail.”

Prior to the execution of the mortgage in question said Oscar Deline had executed various mortgages, both individually and as executor, upon all or part of the premises so left by Ms wife and involved in this action. It is impossible to determine for what pun-pose the proceeds of all the debts secured by said mortgages had been used or that said mortgages stood as security for his individual debts.

The original mortgagor in the present mortgage, Rosenthal, had been more or less connected as mortgagee and otherwise with those mortgages. So far as any accurate inference is permissible in this case it is that the present mortgage was given for the purpose of retiring in part one of those former mortgages. If that inference is not drawn none other can be as to the use or application of any proceeds of the mortgage now under consideration.

Upon the trial defendants sought to give evidence by Alice Deline, the wife, that when she and her husband executed this mortgage, $1,000 was paid to the deceased mortgagee Rosenthal for bonus or usury. It is undisputed that the notes and collateral were transferred to plaintiff’s testator before maturity of the former.

Upon these principal facts I am led to a judgment in favor of plaintiff through the following conclusions:

Alice Deline was not a competent witness to the alleged usurious transaction with Rosenthal. • She was a party to that transaction and is interested in the event of the suit within the prohibitions of the Code. Even if she should be considered as having withdrawn her defense upon the trial, as suggested, then she would still be interested. The judgment asked against her here is for deficiency after sale of the premises. If the mortgage is void for usury, so that there can be no sale, she escapes the possibility of judgment. Moreover, she is a party maker to the notes covered by this mortgage. A judgment in this action that said mortgage and notes were void for usury would be an adjudication which would bar any prosecution of the notes against her. Even if her evidence should stand, I should be unwilling to hold that a bonus of $1,000 was paid upon a loan of $2,500 for three months, which is the only basis upon which usury could be found.

Passing to the other defense of violation of trust by Oscar Deline as against the infant, I believe that a proper construction of his wife’s will is that the power of sale given to him was to be exercised for the benefit of the infant; not that the infant took a remainder subject to defeat by the exercise of the power.

If, therefore, this mortgage was given in violation of the purpose of that power it would be void if Rosenthal knew it, or knew of facts which should have put him upon an inquiry that would have disclosed it. I am unable, upon the proofs, to find either of these conditions. The mortgagee was not responsible in the first instance for the correct application of the proceeds of the mortgage as between Deline trustee and the infant, and there is no legal evidence that he knew or should have known that the proceeds were to be misapplied, if that was done. As stated before, the present mortgage seems to have been given for the purpose of retiring in whole or part another mortgage held by another mortgagee on the premises belonging in remainder to the infant.

A provision, if desired, may be inserted in the findings and judgment that the same shall not be a bar to any proceedings for an accounting between defendants and the estate of said Rosenthal of their transactions.

Ordered accordingly.