Court Opinion

ID: 3591038
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:39:40.190146+00
Date Added: 2024-06-11T13:39:43.854520
License: Public Domain

It was shown in this case, that Mrs. McCraney, then Mrs. Baker, applied to the appellant's intestate, both then residing and being in this State, for a loan of money. That he consented to the loan. That she wanted the money, or a part of it, for immediate use, and did use it here. That the repayment was secured by her bond, conditioned for such repayment with interest. The jury have found, that the loan was upon an agreement by her to pay more than interest at seven per cent for annum, for the use of the money, and that such excess was in fact paid.
If this were all of the transaction, no question could have been made that this was in every legal sense a New York contract, wholly governed by our laws and usurious, and the bond therefore void.
What then is supposed to change its character?
1st. Payment of the bond was secured by a mortgage upon land in Wisconsin, which mortgage contained a covenant for such payment.
Nothing is, I apprehend, better settled than, that the mere fact that collateral security for the payment of a debt contracted here, and payable here, is real property situated *Page 313 
in another State, does not change the place, by the laws of which, the validity of the contract is to be tested. And the circumstance, that the mortgage contained a personal covenant for the payment cannot have that effect. That covenant, on the contrary, has reference to the bond, it is merely a cumulative personal undertaking, and is a covenant to pay according to the tenor and effect of the bond, the very money, and upon the very loan made here, secured here, and to be paid here. Indeed, the personal obligation to pay may sometimes of itself make a mortgage usurious; where a mere pledge, with the privilege of redeeming or not, at the option of the borrower, would not be.
2d. The contract is said to be withdrawn from the operation of our usury laws, because as claimed, it was made with reference to the laws of Wisconsin, where it is lawful to reserve interest at the rate of twelve per cent per annum.
No doubt it is possible for parties in this State to make a contract of loan or advance with such reference to a foreign law, that the latter will govern its construction and legal effect. But that rule does not import, that parties, by a mere mental operation, can import the law of another State into this for the purpose of altering the character of a loan made here, and to be here returned without any undertaking or duty to use the money anywhere else, or any understanding that in respect to the use or repayment of the money the loan shall differ from any other.
The pretext, that this loan was made with reference to the law of Wisconsin, rests on the fact that Mrs. Baker had money due to her there at twelve per cent interest, which the borrower there desired to retain, and to which she had consented. And that as she was to receive twelve per cent for her money lent in Wisconsin, she was willing, and agreed to pay twelve per cent for money borrowed in New York to relieve her then present wants.
There is no pretence that she borrowed money to be taken to Wisconsin for investment at a rate lawful there, and an undertaking to pay over what she received there, or a part of it *Page 314 
as compensation or profit to the lender. Possibly some such arrangement might be made either in the nature of a partnership in the adventure, or an agency to put out money in Wisconsin for the profit of the party making the advance, which would not be unlawful here.
But when the loan is here made, and here to be repaid, and the use of the money loaned is unrestricted, the reason why the borrower is willing to pay more than lawful interest is wholly irrelevant and immaterial.
Suppose a party desiring money for the payment of his rent or family expenses, should agree to pay therefor twelve per cent per annum, should give as a reason for his willingness to do so, that all his capital was now employed in a profitable trade or manufactory in Louisiana, and yielding him a profit of twenty per cent per annum, and he therefore preferred to borrow and pay fifteen or twenty per cent here for the time being, rather than withdraw any of such capital. This would have no effect upon the validity of the loan. The reason assigned in this case, that Mrs. Baker's money was yielding her twelve per cent per annum in Wisconsin, where loans at that rate were lawful, has no greater or other effect.
I do not deem it necessary to refer to authority on what is so plain. This court held in Williams v. Fitzhugh
(37 N.Y., 444), that the contract of loan and the notes given therefor, were governed by our laws, notwithstanding the payment was secured by a mortgage upon lands situated in Ohio, and notwithstanding, also, the borrower lived in Ohio. That holding is a decision of the present case on that point.
These facts were not in dispute, and the court properly held that if the transaction was such as testified to and as the jury found, then the mortgage for $1,000 was void.
I think it clear, that the sale of the land mortgaged to Huntington, subject to the mortgage, and leaving in his hands the amount thereof, out of the purchase money, did not alter the relations of the parties to the mortgage, so as to give the defendant any personal claim upon the mortgagor. Let it be conceded for the present, that after such sale the *Page 315 
mortgagee could have enforced his mortgage by a sale of the land, and that Huntington could not have defended successfully. This would be not because the mortgage was not usurious and void as between the parties thereto, but because he was not at liberty to use that as defence, having retained in his hands the amount. But when afterward the defendant's testator negotiated with the mortgagor and her husband for a further loan, and took a new mortgage, he renewed the personal obligation to pay the usurious debt already held by him unreleased, and incorporated it wholly into the new mortgage. The latter became thereby, the personal obligation of the parties to pay the usurious debt in mere renewal of the former mortgage.
I have considered the other points submitted by the appellant, and am satisfied that they suggest no sufficient ground for reversal. The judgment should therefore be affirmed.
All the judges concurring for affirmance except GROVER and LOTT, JJ.
Judgment affirmed.