Court Opinion

ID: 5227036
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:47:13.969652+00
Date Added: 2024-06-11T08:27:27.975424
License: Public Domain

Jenks, P. J. (dissenting):
This action is for foreclosure of a mortgage upon premises of the defendant. The plaintiff appellant was dismissed at the close of her case, and judgment upon the merits was entered against her on the ground that the bond and mortgage were usurious. The obligation was to secure payment to the plaintiff on demand of the sum of $7,467 with interest from a specified date, or so much thereof as should, at the time of the demand have been advanced by the plaintiff. At the time of the execution of the obligation the defendant was building upon the premises and was pressed for payment for labor and materials, with threats of legal actions and of the filing of mechanics’ *826liens. It was agreed that the plaintiff should advance from time to túne such money as would satisfy these claimants, with the understanding that she might retain any discount obtained from them upon cash payments. The learned Special Term decided that -if the plaintiff had taken assignments of the claims and the defendant had agreed to satisfy them by a bond and mortgage for the face of the claims, the transaction would have been prima facie lawful, but as the evidence showed that the plaintiff extinguished the various claims, and that the discounts received by the .plaintiff upon such extinguishment were not advanced by the plaintiff to the defendant, the receipt of. these discounts by the plaintiff to her own benefit constituted usury that voided the bond and mortgage.
It is not pretended that the obligation called for a usurious rate of interest, so that the question is whether the separate agreement as to the said discount was “a corrupt agreement whereby more than lawful interest is to be paid.” (Clarke v. Sheehan, 47 N. Y. 188.) It was not enough to show that the lender was “ moved by considerations of collateral benefits to himself which may indirectly result from the transaction,” but they are “ a burden imposed upon the borrower, and to which he submits as the means of obtaining the loan, and which are intended as a compensation to the lender beyond the legal rate of interest, for the use of the money.” (The court, per Rapallo, J., in Clarke v. Sheehan, supra.) There is no proof that indicates that the agreement as to these discounts was merely a device or scheme to conceal the exaction of usurious interest, ■ for it is conceded that the urgent need of the defendant was relief from these very claims which were settled by the plaintiff. Doubtless the plaintiff indirectly profited by the transaction, but I think that it was not established- that there was any burden imposed upon the defendant. She was hable upon the claims, they were discharged, and she but refunds the face value of the claims against her, with interest. In the American and English Encyclopaedia of Law (Vol. 29 [2d ed.], p. 482) the principle is expressed, “Where the lender, as part of the consideration of the loan, assumes a debt of the borrower to a third person, the fact that the lender compromises the debt assumed
*827for less than its face value and thereby secures more than legal interest will not render the transaction usurious.” It was incumbent on the defendant to establish her defense of usury c c by clear and satisfactory evidence,” and to establish the facts that constituted it “with reasonable certainty,” and that there was a usurious agreement between the respective parties. (White v. Benjamin, 138 N. Y. 623.) “A corrupt and usurious agreement will not be presumed from a fact, which is equally consistent with a lawful purpose.” (Valentine v. Conner, 40 N. Y. 253.) The evidence shows that a representative of the plaintiff talked with the defendant as to the possibility of his obtaining discounts from the claimants when he paid cash to satisfy their claims, and that he also informed the defendant when he had done so, and that she expressed her satisfaction. The evidence further shows that the said representative, at the request of the defendant, went to the premises once and sometimes twice a week to push the work, and that he rendered personal services in seeing these various claimants and securing a settlement of their claims. I think that the proof was not sufficiently clear to establish that the agreement for the discounts was merely a device to take usury. (See Thurston v. Cornell, 38 N. Y. 281.)
I think the judgment should be reversed and a new trial be granted, costs to abide the final award of costs.
Thomas, J., concurred.
Judgment affirmed, with costs.