Court Opinion

ID: 5550760
Source: CourtListenerOpinion
Date Created: 2022-01-10 21:35:16.449075+00
Date Added: 2024-06-11T08:34:52.787174
License: Public Domain

The Assistant "Vice-Chancellor.
The objection to the securities in question, on the ground of usury, as it was taken at the hearing, is not sufficiently alleged in the answer. It is there stated, that certain bonds or evidences of debt, were issued by the complainants, as the consideration of the mortgages, and that the same were not issued or delivered to P. H. Perry, until" the 14th day of July, 1838. whereas the bond and mortgages reserved interest from June 26, 1838, and the interest commenced accruing thereon at that date; wherefore, the answer insists, that the bond and mortgages were and are void for usury.
The evidence does not sustain this allegation at all. It is however, proved that the loan was paid to P. H. Perry, in the complainants check dated July 14, 1838, and delivered to him on that day; and it is claimed that this renders the securities usurious.
Whether it does or not, is not for me to determine on these pleadings. The testimony does not apply to the issue. (Vroom v. Ditmars, 4 Paige, 526 ; New Orleans Gas Light and Banking Company v. Dudley, 8 ibid. 452.)
The remaining objections are founded upon the charter of the complainants, and the acts amending the same.
And first, it is insisted that when these mortgages were executed, the complainants had no power whatever to loan on bond and mortgage, and that such power ceased at the end of fifteen years from the passage of the act of incorporation.
It is not necessary for me to recapitulate the provisions of the charter and the subsequent acts. I find that this subject was considered by the "Vice-Chancellor of the eighth circuit in Carroll v. The Farmers Loan and Trust Company, on a motion to dissolve the injunction, decided August 17, 1844. In his opinion delivered on that occasion, he held that the corporation created by the act of February 28, 1822, incorporating the company, is perpetual. That although by the last section, the act itself was to expire at the end of fifteen years after its passage, yet the power of insuring lives and granting annuities was excepted, and *347was coeval with the duration of the corporation.. And that the act of April 17, 1822, enabling the company to receive property in trust, and to execute trusts, conferred new powers upon the company, which were not limited to any period of time, and continued after the termination of the fifteen years mentioned in the original act.
I fully concur in these conclusions, and I need not go over the ground which has been so ably occupied by the Vice-Chancellor of the eighth.
Therefore when the mortgages in question were executed, the Farmers Loan and Trust Company, were authorized by law to effect insurances upon a life or lives, to grant annuities on lives or dependent on any life, and to perform and execute trusts, in the same manner, and to the same extent, as any trustee might lawfully do.
For either of these purposes, I think they were authorized to loan money on bond and mortgage.
I have heretofore held that a corporation created for a limited and specific purpose, as this company was, has power to make all contracts which are necessary and usual in the course of the business it transacts, as means to enable it to effect such purpose, unless expressly prohibited by law, or the provisions of its charter. (Barry v. Merchants Exchange Company, 1 Sandford’s C. R. 280.) In order to insure lives, or grant annuities, with safety to the parties interested, it is indispensable for a company to have a sufficient fund to meet the accruing losses which are inevitable in the one case, and to pay the annual sums stipulated in the other. The principal part of such fund must necessarily be invested, not merely for the advantage of the company itself,, and its enhanced ability to meet its engagements, by reason of the increase from the interest or dividends; but also for the security of the persons holding its engagements. There is no better or more unexceptionable investment,-than that made upon bond and mortgage. There is no statute forbidding this company thus to invest its legitimate means, and it may be added that unless the company can put out its annuity and life insurance fund in this mode, it cannot invest the fund at all. The same objection may be made to loaning it on stocks, or personal *348security, or investing it in any other mode, as is urged against loaning it on mortgage.
Under the power of the company to execute trusts, there is no doubt of its power to loan on mortgage. Indeed with the exception of government stocks, (by-which 1 mean stocks of this state or the United Stales,) there is no other security upon which a trustee can make loans in the proper discharge of his duty, according to the principles of equity as established for more than a century before this corporation was created.
The investment of trust funds on bond and mortgage, is distinctly recognized in the act of April 17, 1822, and is alluded to in the act of April 30, 1836. Probably no express provision was made in regard to it, because the settled law required the company as trustees, to invest in stocks or on real estate security.
By the act last cited, the company was limited in the amount of its trusts, to five millions of dollars; which shows that the legislature expected it to deal very largely in this capacity as trustee; and the omission to point out any special class of investments, is conclusive that it was intended to place the company on the same footing in this respect, as individual trustees, having the same capacity and the same liabilities.
It was said at the hearing, that it was incumbent on the complainants, to prove that this loan was made out of trust funds, to sustain the mortgages, even if they wereempowered to loan in this mode. I think this would be placing the burthen of proof where it does not belong. The corporation having invested this money, it is to be presumed that it arose from some one of its lawful pursuits, until the contrary is shown.
Second. The defendants insist that the mortgages are illegal, because they made the principal sum payable in less than a year after the loan was made, and required the interest to be paid in less than four months.
1. In regard to the principal sum. There is no pretence that the securities were intentionally ante-dated. They were undoubtedly prepared on the day they bear date, and were delivered as soon as the mortgagor could perfect them. By their terms, the principal is payable in one year from the date thereof, and *349construing the statute by its very letter, they are not “ made payable in a shorter time than one year.”
But I agree that the restriction in the statute, was intended for something more substantial than this construction would yield. It means that the loans on real estate shall not be called for, until the end of a year after they are made.
In giving it this effect, I think it follows that the statute does not restrict either one party or the other, from showing that the date inserted in the security, is not the real time of the transaction. The defendant proves that these securities, bearing date June 26, 1838, were delivered, and the loan was made, on the 14th day of J uly in the same year. Having shown that to be the true date, can he insist in the face of the statute, that it became payable before July 14, 1839? If he proves that 11 the date thereof,” referred to in the bond, was really and truly a different day from that expressed in it, does he not thereby extend the year limited for payment, to the true date as thus established ?
Suppose in this case, there were no statutory restriction as to foreclosing at the end of the year, and on the 27th of June, 1839, a bill had been filed to foreclose these mortgages; and the defendants had set up in a plea that this loan was made on the 14th of July, 1838? Would it not have established that the debt was not due ? I think it would, and that the statute regulating the time of payment is to be deemed a part of the contract, as if it were expressed in the bond and mortgages. Judge Co wen said this, of another provision in the same charter. (Edwards v. Farmers Loan Co., 21 Wend. 483.)
In the mode in which loans on real estate are usually made, the mortgage is almost invariably dated and signed one or more days before the loan is completed. If the defendants are right in this point, the complainants must make all their mortgages payable thus, “in one year from the time of effecting this loan.” The result of which will be, that without proof, the mortgage will be deemed payable in one year from its date; and with proof of the actual date of the loan, it will be precisely, as it is in the case before me, by the connection of the statute with the condition, due in one year from the date thus proved.
*350Without determining what would be the consequence of the point, if it were held that these securities were made payable in contravention of the third section of the charter; I think that in respect of that provision, the words “ date hereof ” in the condition, ought to be construed to mean, what date properly imports, the delivery of the securities. There is much good sense in the observation of Sutherland, Justice, in Tompkins v. Corwin, (9 Cowen, 255,) that “ where the justice and merits of the case are affected by the particular time when the bond or deed becomes a valid and subsisting instrument, there the time of the delivery becomes material, and may be set forth or proved by either party.”
2. The interest is made payable yearly, as the same should accrue on the first day of November, in each and every year. This it is said, makes the interest payable November 1,1838, and thus is contrary to the third section of the charter, which requires the loans to be made payable in not less than a year, “ and the interest payable annually.” To make the interest fall due on the first of November, 1838, the word “yearly,” must be rejected as surplusage, because if payable yearly, no part of it could become due in four or five months. And we have as much right to reject the words “ first day of November,” as to reject the other limitation fixing the payment of interest. As the condition stands, it is capable of a construction which gives effect to all its words, and by which the first payment of interest'would fall due on the first of November, 1839, and yearly thereafter. On the familiar principle, that where an instrument will bear two constructions, one of which will render it operative and the other void, the former should be adopted, I am bound to give to the mortgages the construction which I have just stated, rather than to enforce one which may render it illegal. On neither ground urged against the mortgages, on account of their terms of payment, is the defence established.
The mortgage to Towles, assigned to C. B. Perry, appears to be prior to the complainant’s mortgage on the lands in Aurelius, and the decree will declare its priority, if he desire to keep it on foot.
I find no evidence that Philo H. Perry and wife, were served *351with the notice prescribed in the 133d rule of the court, and they are therefore entitled to their costs.
With these provisions, the complainants may take the usual decree for a reference and sale.