145 N.Y.S. 579 | N.Y. App. Div. | 1914
Lead Opinion
The action is upon a mortgage containing a covenant to pay the sum of $10,000. This mortgage was given as collateral to another mortgage which has been foreclosed and the present action is not for foreclosure, but to enforce defendant’s liability upon her covenant to pay. Two defenses are pleaded: First, that the consideration for the instrument sued on was an usurious agreement for the forbearance of a debt, to wit, an agreement to extend a mortgage; and second,
It is unnecessary to review the fact further than to say that the evidence fully justified a finding in defendant’s favor on both defenses. While the evidence of defendant’s husband, who acted as her agent, was in some minor matters confused and perhaps self-contradictory, it was evident that such confusion resulted from lack of memory and not from any intention to deceive, and on all vital points his evidence was sufficiently clear. On the other hand, the evidence given by plaintiff and his attorney who acted in the transaction in his behalf was of such a character that the jury were fully justified in rejecting it altogether.
The appellant’s chief reliance on this appeal is upon what he deems to have been a fatal irregularity in trying the cause at Trial Term, instead of Special Term. Both sides noticed the cause for trial at the Trial Term. When it came on for trial plaintiff moved to dismiss the defense founded upon usury upon the ground that that defense is personal to the borrower and cannot be availed of by a surety. He also moved to dismiss the second defense upon the ground that as a counterclaim it could not be tried at a Trial Term and .that by failing to separately notice it for trial at Special Term the defendant had abandoned it, and that as a defense it was insufficient. All of these motions were denied and exception taken. The trial then proceeded and evidence was received tending to establish both defenses, without any objection from plaintiff, based upon the supposed irregularity involved in trying the issues at Trial Term.
But there is no merit in the contention even if it had been properly presented. The case is in all respects similar to Bennett v. Edison Electric Ill. Co. (164 N. Y. 131), in which, as in this, an equitable plea was interposed asa “ defense and by way of counterclaim.” The claim was, as in this case, that the contract sued upon was not the contract upon which the minds of
The judgment should be affirmed, with costs.
Ingraham, P. J., and Clarke, J., concurred; Laughlin and McLaughlin, JJ., dissented.
Dissenting Opinion
This is an action to recover the sum of $10,000, and it is based on an agreement contained in a mortgage on real estate made by the defendant on the 24th day of September, 1909. The indenture recites that one Franklin Haines and the Haines Realty Corporation were indebted to the plaintiff in the sum of $25,000, as specified in an extension agreement bearing even date therewith, and that the consideration for defendant’s agreement was the making of the extension agreement. It contains the proviso that if either of said debtors should pay
The plaintiff alleges the failure of the primary debtors to pay the indebtedness and the foreclosure of the mortgage, to which the extension agreement related, and the sale of the premises and the entry of a deficiency judgment in that action against said debtors for the sum of $26,727.88, and that no part thereof excepting the sum of $1,721.11 has been paid. Judgment was demanded against the defendant for the sum of $10,000 together with interest thereon and costs. By the answer of the defendant the allegations of the complaint stand admitted. The defendant pleaded as a first defense that the instrument on which the action is based is void for usury exacted for the making of the extension agreement. The defendant pleaded as an equitable defense and counterclaim that when the bond and mortgage on which the deficiency judgment was entered became due an agreement was made by the plaintiff, who then held and owned the same, for the extension thereof upon the guaranty of one Corn, who agreed to guarantee it on being indemnified and held harmless to the extent of $10,000 by said Haines Realty Corporation, which indemnity was to be secured by a mortgage to be executed by the defendant; that the defendant did execute the mortgage upon which this action is based for the purpose of indemnifying Corn to the extent of $10,000; that the instrument upon which the action is based “in no manner, shape or form imposed any personal obligation upon this defendant; ” and that there was no demand or request or agreement or understanding that the defendant should personally guarantee the mortgage or obligate herself to pay any part thereof; that
No application was made by either side to have the equitable counterclaim for the reformation of the mortgage first tried at Special Term. The action was brought to trial and tried before the court and a jury. At the opening of the trial counsel for plaintiff moved for judgment on the pleadings on the ground that inasmuch as the Haines Eealty Corporation, which was the borrower, could not plead usury — a point expressly conceded on the trial — the defendant could not plead it; and also moved for a dismissal of the equitable counterclaim on the ground that the defendant in noticing the cause for trial at jury term, without moving for a separate trial of her counterclaim, waived the same, and further that the facts pleaded were insufficient in law to entitle the defendant to the relief for which she prayed. These motions were denied,
With respect to mistake on the part of the defendant, her answer indicates that she observed the clause in question but mistook the legal effect thereof; but her testimony shows that she did not read the mortgage.
The court instructed the jury that if they should render a verdict for the defendant they should specify whether it was on the ground of usury or mutual mistake. The only verdict rendered by the jury was as follows: “The jury say they find a verdict for the defendant on the ground of mutual mistake.” Without further evidence or proceedings in the action, or application to the court, the judgment was entered by the clerk and is based solely on the verdict of the jury. It thus appears that it has not been determined that the mortgage was fraudulent and void, and it could not well be for it is conceded that the defendant intended to execute a mortgage; and it has been neither canceled for excusable mistake on the part of one of the parties (See Jackson v. Andrews, 59 N. Y. 244; Hayward v. Wemple, No. 1, 152 App. Div. 195; affd., 206 N. Y. 692; Moffett, Hodgkins, etc., Co. v. Rochester, 178 U. S. 373), nor reformed on the ground of mutual mistake, by eliminating the clause imposing personal liability on the defendant. The question is, therefore, pointedly presented by this appeal as to whether an action at law on contract may be successfully defended against on the ground of mutual mistake not even in executing the contract but in inserting the provision on which the liability is predicated, without having the contract either canceled or reformed. I am of opinion that this cannot be done. It is well settled, of course, that fraud in inducing the execution of a contract is available as a defense to an action at law for the enforcement of the contract, but that is upon the ground that the contract is vitiated by the fraud (Bennett v. Edison Electric Ill. Co., 164 N. Y. 131; City of New York v. Matthews, 156 App. Div. 490); but, as I understand the law, it has been held in every well-considered case in this and other jurisdictions, where the point was presented for decision, that if a defendant wishes to avoid liability on a contract duly made and executed in writing by him he must have the con
On the new trial, which I think should be ordered, the proper practice which requires that the equitable counterclaim be first tried at Special Term (Goss v. Goss & Co., 126 App. Div. 748) should be followed.
I, therefore, vote for reversal and for a new trial.
McLaughlin, J., concurred.
Judgment and order affirmed, with costs.