90 A.D.2d 131 | N.Y. App. Div. | 1982
OPINION OF THE COURT
On February 21, 1980, defendant executed a six-month promissory note in the sum of $5,000 in exchange for a personal loan. The note stipulated that the principal was due and payable August 21, 1980, and further provided that it was “payable at 14% interest per annum ($350)”. Defendant defaulted when the note became due. Plaintiff then moved for summary judgment in lieu of complaint (CPLR 3213). Subsequently, defendant cross-moved for summary judgment on the ground that the note was void because the stipulated interest rate violated the State’s usury law (General Obligations Law, §§ 5-501, 5-511, subd 1). There is no dispute that a 14% annual interest rate exceeded the legal rate at the time the note was executed (Banking Law, § 14-a; 3 NYCRR 4.1). However, based
It does not follow, however, that the foregoing facts conclusively established defendant’s usury defense, so as to require that defendant’s cross motion for summary judgment be granted. In her affidavit, plaintiff further averred that she was induced to enter into the transaction out of sympathy for defendant’s description of his urgent financial plight and the personal problems of his son, that she was totally inexperienced in business matters and relied upon defendant’s friendship and his superior expertise as a real estate broker and teacher of real estate, and, specifically, that when defendant suggested a 14% rate, she asked him whether it was legal and he intentionally misrepresented that it was. Unquestionably, New York’s usury laws are harsh in requiring a total forfeiture of a usurious loan in order “to protect desparately poor people from the consequences of their own desparation” (Schneider v Phelps, 41 NY2d 238, 243). However, if plaintiff’s
The judgment should be reversed, on the law, without costs, the plaintiff’s motion and defendant’s cross motion for summary judgment denied, and the matter remitted for trial in accordance herewith.
Mahoney, P. J., Mikoll and Yesawich, Jr., JJ., concur.
Judgment reversed, on the law, without costs, plaintiff’s motion and defendant’s cross motion for summary judgment denied, and matter remitted for trial in accordance herewith.