Court Opinion

ID: 6132209
Source: CourtListenerOpinion
Date Created: 2022-02-04 21:17:38.772163+00
Date Added: 2024-06-11T08:53:42.858485
License: Public Domain

LaNDON, J.
(dissenting):
Silas B. Ferguson in making tbis loan acted as tbe agent for bis brother, and exacted a bonus or allowance of ten per cent as tbe condition of tbe loan. Tbe mortgage was given for $2,700 and only $2,430 of tbe defendant’s money was ever paid to tbe plaintiff thereon. It is true that tbe defendant knew nothing of tbe transaction at tbe time it took place; that bis agent kept tbe $270 for himself, and sent tbe mortgage by mail to tbe defendant who then resided in Otsego county and charged him $2,700 therefor. Tbis was in 1873. A year later, however, the defendant learned that tbe mortgage, as be expresses it in bis testimony, “ was bought at a discount. ” He then learned or would have learned if be bad prosecuted tbe inquiry, that he was bolding a mortgage for $2,700 upon which only $2,430 of bis money bad been loaned, and that bis agent bad exacted $270 usury thereon. It was then open to him either to ratify the act of bis agent or to repudiate it. He chose to ratify it by receiving interest for several years upon tbe whole sum and finally b.y seeking to foreclose for tbe whole sum. To restrain such foreclosure tbis action is brought. We think the judgment should be affirmed. Tbe defendant cannot with full knowledge of all the facts appropriate to himself the fruits of bis agents action, without ratifying ,the instrumentalities by which it was accomplished. No case is presented showing that tbe agent made any separate bargain for a bonus for the benefit of himself Tbe transaction was an express exaction of ten per cent, ostensibly for tbe benefit of tbe lender, without pretense that it was for the benefit of the agent, a transaction which the principal in no way has repudiated. In this respect the case differs from Philips v. Mackellar (92 N. Y., 34); Estevez v. Purdy (66 id., 446); Van Wyck v. Waters (81 ib., 352), and other similar cases in which the lender advanced the entire sum for which the security was given, and the agent in some way appropriated part of it to himself. Here the lender did not advance the face of the mortgage. His agent had his funds and could advance for him as much or as little as his thrift in extortion required, and the result in this case was *375the principal obtained a $2,700 bond and mortgage for $2,430, and he allowed his agent to charge him $250 for his services; thus the> principal took all of the usury, and allowed his agent liberal wages,, not out of it, but because of it. The case seems to be much stronger than Algur v. Gardner (54 N. Y., 360).
It is objected that the plaintiff is not a “ borrower ” within the terms of the statute which allows the borrower to maintain an action to have an usurious security canceled without refunding the amount actually advanced thereon. (1 R. S., 772, § 8; 4 Edm. Stat., 460, § 4.) If we regard simply the form of the transaction, the plaintiff was not the borrower, but if we regard the substance, he was. The courts, in their construction of the word “ borrower,” have held that the man who did not borrow the money did not come within the meaning of the word “ borrower.”
In Vilas v. Jones (1 N. Y., 280), Bronson, J., says : “ There is no solid ground for saying that the word £ borrower5 includes one who did not borrow,” and that view has since prevailed. Conversely, the man who did borrow is included. It seems plain in this case that’the plaintiff was the real borrower, and that the fact should he so found. (Tiedemann v. Ackerman, 16 Hun, 307; S. C., 84 N. Y., 677.)
At the end of a line of fictions the real estate is again vested in him, clouded with this usurious mortgage. The courts have not been inclined to permit any one succeeding to the title of the borrower to come into equity for relief without tendering the amount actually due for the reason that he had a defense at law if sued. This reason is expressly stated in Buckingham v. Corning (91 N. Y., 528) and Allerton v. Belden (49 N. Y., 373). The statute allowing a borrower to ask relief against the usurious contract without tendering the amount due upon it, was among other things intended to protect a mortgagor against a statutory foreclosure. (Livingston v. Harris, 11 Wend., 329.) In such a proceeding he has no remedy at law, and he must come into equity or else lose his land upon an usurious mortgage.
But even if this plaintiff should be held not to be a “ borrower,” the case of Schermerhorn v. Talman (14 N. Y., 93), authorizes the court in this action to grant to the plaintiff relief against this mortgage. This case, like the one cited, was tried upon the merits upon *376the issues framed by the complaint and answer. In that case the court held that the plaintiff was not a “ borrower,” but nevertheless awarded him the relief to which he was entitled. Here, we ñnd that the plaintiff is entitled to relief against the entire mortgage, since he must have that relief here, or forever lose it.
The judgment should be affirmed, with costs.
Judgment reversed, new trial granted, costs to abide event.