Case Name: Schroeppel and another v. Corning
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1851-12
Citations: 6 N.Y. 107
Docket Number: 
Parties: Schroeppel and another v. Corning.
Judges: 
Reporter: New York Reports
Volume: 6
Pages: 105–120

Head Matter:
Schroeppel and another v. Corning.
TJswry. — Trover.—Statute of Limitations.
Where a borrower assigns to the lender, certain bonds and mortgages, in consideration of a loan of money, at a usurious rate of interest, the title does not pass, and an action of trover will lie to recover the same.
Where a lender upon usury receives securities. from the borrower, the latter has an immediate right of action, in trover, and the statute runs in favor of the lender, from that time.
So, also, the statute runs against an action to recover the excess realized on such securities, from the time they were received.
Schroeppel v. Corning, 10 Barb. 576, affirmed.
* Appeal from the general term of the Su- |- * -^g preme Court, in the fifth district, where ajudg- L ment of nonsuit had been affirmed. (Reported below, 10 Barb. 576.)
This wa s an action of assumpsit to recover an excess of money alleged to have been received by the defendant, beyond the principal and legal interest, upon a loan of money claimed to have been made to the plaintiff, Schroeppel. The other plaintiff, Soule, was joined as the general assignee of Schroeppel, for the benefit of his ■ creditors.
In 1837, the defendant had money which he said he could or would loan, and also' some real estate in Syracuse, which he desired to part with, and he inquired of Schroeppel’s agent, whether he did not think the latter would take it; expressing a willingness to take security for the whole, and give a long credit.
A negotiation was subsequently opened between the parties, which resulted in a contract, dated the 26th June 1837, whereby Corning agreed to loan Schroeppel a sum of $7500, for the term of ten years, and to sell him the property in Syracuse for $16,400; and Schroeppel agreed to assume all payments due on the lots, amounting to $5156.94, and to secure the balance to Corning by good and approved bonds and mortgages.
The agreement was consummated on the 10th July 1837. The defendant advanced to Schroeppel the sum of $7500 in -cash, and conveyed to him the property at the valuation fixed. Schroeppel assumed the incumbrances; gave his own bond and mortgage for $5063, payable in ten' years; and assigned to Corning the several bonds and mortgages of other persons, amounting in the aggregate to $13,546.06. These amounts were intended to balance each other, and were made to do so.
The real estate conveyed by Corning was proved to have been worth much less than the price named; it was claimed to have been worth not more than $8800. Schroeppel’s bond was prosecuted, on a default in the payment of interest, and a judgment perfected thereon in 1838, upon which the interest was paid annually, until 1847, when the whole amount, $5565.62, was paid.
Among the bonds and mortgages assigned to Corning was one against one Anderson for $10,202, of which only $7946.09 was assigned, Schroeppel retaining the residue. This mortgage was foreclosed in 1838, in the name of Corning; the amount of it collected under the decree; the amount of Scroeppel’s interest paid to him, and the residue to Corning. The payments to the defendant under that decree, within six years before the commencement of this action, amounted, in the aggregate, principal and interest, to $8092.07.
The plaintiff, Schroeppel, in 1844, had brought an action of trover for the three bonds and mortgages assigned, in which he recovered a verdict (5 Den. 236); but a new trial was granted, on the ground that the cause of action was barred by the statute of limitations; which was affirmed by this court, upon a technical point, (1 N. Y. 132.)
On the trial of the cause, in October 1849, the court nonsuited the plaintiff, and the judgment perfected thereon having been affirmed at general term, the plaintiff took this appeal.
Comstock, for the appellants.
Sessions, for the respondent.

Opinion:
Gardiner, J.
— The agreement of the 26th June 1837, between Corning and Schroeppel, did not amount to a loan, but a contract for a loan. There must be a loan of money to constitute usury; there was, therefore, no loan until the 10th of July 1837, when the money was advanced, and the land conveyed, and, of course, no usury, and no excess, by way of premium for the use of money, over and above the legal rate of interest. To call this transaction an executed contract, is merely to say that a loan, in pursuance of a previous agreement, is executed, in such a sense, that the borrower cannot avoid the contract; this would be, in effect, to repeal the statute against usury.
II. The action is barred by the statute of limitations. The plaintiff contends, that the contract consummated on the 10th of July 1837, was entire; that the sale of the land, and the other provisions of the agreement, were but a cover to conceal a loan of money, at a rate of interest prohibited by statute. The excess, whether in money or in land, and securities considered as money, by the understanding of the parties, was, so far as it was derived from the bonds and mortgages assigned, received, when the loan was made. They were received as cash, inpayment for the real estate, which was also advanced as cash ; and the excess of price over the cash value of the land, is the usury claimed in this action.
* 1091 *'l-'lie plaintiff is not at liberty to consider this J as a money transaction throughout, in order to make out a usurious loan, and then to call the bonds and mortgages chosesin action, with a view to avoid the statute of limitations, claiming that nothing was received, within the meaning of the statute, by the usurer, until the mortgagors paid money upon the securities.
Suppose, A. should advance to B. $1000, at seven per cent-.,and make it a condition of theloan,that the latter should sell to the lender abond'and mortgage, well secured, at a discount of fifty per cent.; the transaction would be usurious. The excess of interest would be equivalent to the discount stipulated, and it would be received, when the mortgage was transferred by the borrower to the lender; the excess would then be paid. In this case, Corning charged, it is claimed, $7500 more than the land was worth, which he imposed upon Sohroeppel; the latter was to pay in bonds and mortgages, which were unquestionably good; and the effect of the arrangement was the same, as if the excess in value of the land had been, at the time, deducted from the bonds and mortgages assigned.
As this was more than six years prior to the commencement of the suit, the statute of limitations is a perfect defence to the action.
In the opinion, a majority of the court concurred.