EARL P. MASON, Rеspondent, v. WILLIAM G. LORD and HANNAH DOUGHERTY, Appellants.
Court of Appeals of the State of New York
June 14, 1869
40 N.Y. 476
As no other exceptions were taken to the plaintiff‘s right to recover, the judgment should be affirmed.
All concur.
All the judges concurred in the opinion of DANIELS, J., except as to the proposition therein stated, to the effect that a joint note of individual partners is a partnership debt. This was disapproved by a majority of the court.
Judgment affirmed.
An assignment of a lease, which assignment was absolute on its face, but in fact given as security for a usurious loan, may, in the hands of a purchaser of such lease from the usurious assignee, with notice that the original assignment was security for a loan, although without notice of its usurious character, be avoided for usury, by a judgment creditor of the original lessee.
And one holding a sheriff‘s deed given upon a sale of the interest of the lessee, under judgment аnd execution against him, may maintain ejectment against such purchaser in possession of the premises under his purchase from the usurious assignee of the lease.
This is so where the judgment was previously perfected, although the purchase of the lease was effected by payment to the usurious assignee, a reassignment by him to the lessee, and assignment from the latter direct.
L. holding a lease of certain real property, assigned it (16th February, 1855) to H. by an assignment absolute on its face, but in fact, as security for a usurious loаn from the latter. Subsequently (11th January, 1856), M. & J. recovered a judgment against L., upon which execution was issued (5th February, 1858), the lease bid in by M. and a sheriff‘s deed of it and of L.‘s interest in the premises thereunder at the time of the entry
A finding by a judge of a material fact wholly without evidence to sustain it, is an error of law, and upon exception thereto, reviewable in this court. GROVER, J.
So, it seems, is the refusal to find a material fact proved by uncontroverted evidence. GROVER, J.
(Argued April 3d, 1869. Decided June 14th, 1869.)
APPEAL from a judgment of the General Term in the first district, affirming judgment for the plaintiff ordered by a judge upon a trial without a jury.
The action was ejectment for the recovery of certain leasehold property in Henry street. The plaintiff claims as purchaser under an execution issued on a judgment in the Superiоr Court of the city of New York, in favor of the plaintiff and one Jackson, against the defendant, Lord. This judgment was originally for the sum of $1,421.07, entered on the 11th day of January, 1856, and docketed in the office of the county clerk on the 12th February, 1856. On the 10th of March, 1856, the inquest on which this judgment was obtained was set aside, the court at the same time ordering that the judgment should stand as security. On the 6th of October, 1857, final judgment was rendered in that action in favor of the plaintiff therein, against Lord, for $1,302.74. The property was sold to the plaintiff under an execution issued on this judgmеnt, and the sheriff‘s deed is dated November 29, 1859.
The court found the facts substantially as above detailed, except that he found, in addition: 1st, The transaction
The defendant excepted to each of these three findings of fact. The defendant, Hannah Dougherty, was the sole devisee of Michael, and defendant, Lord, was in possession under her at the commencement of the action.
The judge found, as conclusion of law, that the assignment from Lord to Herrick, although absolute upon its face, was nevertheless a mortgage; that it was given upon a usurious contract and consideration, and was usurious and void.
That by the re-assignment of such lease to Lord, the mortgage became merged in the legal title in Lord, and the judgment, having from the time of the docketing thereof been a lien upon the said premises, was thenceforward the only lien thereupon.
That, irrespective of such merger, Mr. Dougherty having taken the assignment thereof, with full knowledge that Herrick had only a mortgage interest, and of the usurious transaction and agreement under which it was held, and that the entire transaction was void for usury, had no greater or other rights and equities than Herrick himself possessed in respect thereof.
That the agreement, upon which the said Dougherty advanced the said sum of $5,000 to said Lord, was also usurious and void, because the furniture aforesaid was given to said Dougherty as an inducement to him to make such advance, and was a contrivance and arrangement whereby more than seven per cent per annum was taken and reserved on said advance.
That the plaintiff, as purchaser under the aforesaid judg-
That the said mortgage is null and void, even in the hands of Dougherty as against the plaintiff, on account of the usury aforesaid.
That the plaintiff is entitled to have the possession of the premises delivered up to him, discharged from the lien of the said mortgagе, and to have judgment against the defendants for the value of the use and occupation of the premises, from the 3d of December, 1859, until the present time, at the rate of $500 a year, amounting to the sum of $1,527.40, together with the costs of this action.
J. L. Jernegan, for the appellants, upon the point that the finding of the judge that the transaction between Lord and Dougherty was a loan and usurious, was wholly unsupported by evidence, and therefore error; he cited Pratt v. Foot (5 Seld., 463); Davis v. Spence (24 N.Y., 386); Dry Dock Bank v. Life Ins. & Tr. Co. (3 Comst., 359).
The sale by Lord to Dougherty can in no wise be invalidated by the previous usurious assignmеnt to Herrick. And the assignment to Herrick was not a nullity, but passed the title and might be affirmed by Lord. (Dix v. Van Wyck, 2 Hill, 522; French v. Shotwell, 5 Johns. Ch. R., 555; Sands v. Church, 2 Seld., 347; Hartley v. Harrison, 24 N.Y., 170.)
Even if the transaction by Dougherty could be regarded as a purchase of the equitable mortgage of Herrick, the taint of usury was cured by the payment by an innocent party of a new consideration under a new instrument direct from Lord the mortgagor, there having been a reassignment by Herrick‘s executor to him. (Powell v. Waters, 8 Cow., 681; Jackson v. Henry, 10 Johns., 185; Kent v. Walton, 7 Wend., 256; Aldrich v. Reynolds, 1 Barb. Ch. R., 43; Smedberg v. Simpson, 2 Sandf., 85.)
The judgment of Mason and Jackson being a general lien on Lord‘s real estate, is subject to every equity against Lord‘s property at the time the lien of judgment attached. (Burgh et al., v. Francis et al., 1 Eq. Cas. Abr., 320; Finch v. Earl of Winchester, 1 P. Wm.‘s, 282; Burn v. Burn, 2 Ves. Jr., 576; Hurst v. Hurst, 2 Wash. C. C., 69; Jackson ex dem. Tuthill v. Dubois, 4 Johns., 216; Delare v. Keenan, 3 Desaus, 74; In matter of Howe, 1 Paige, 125; Kiersted v. Avery, 4 Paige, 9, 15; Buchan v. Sumner, 2 Barb. Ch. R., 165, 207; Wilkes v. Harper, 2 id., 338, 354.) And at the time the lien of the judgment attached, 9th April, 1857, when Herrick‘s executrix reassigned to Lord, Dougherty was equitable owner of the lease by virtue of a resulting trust, having advanced the money. (
Where Lord, though undertaking to act as agent for Dougherty, took the conveyance in his own name, he will be considered as holding in trust for his principal. (Sweet v. Jacocks, 6 Paige, 355, 364; Taylor v. Salmon, 4 Mylne and Craig, 134, 139; Lees v. Nuttall, 1 Russ and Mylne, 53, affirmed on appeal; Pillsbury v. Pillsbury, 17 Maine, 107; Jenkins v. Eldridge, 3 Story‘s Rep., 181, 289, 290; Carter v. Palmer, 11 Bligh, 397, 418, 419; Boyd v. McLean, 1 John. Ch., 582; Van Epps v. Van Epps, 9 Paige, 237; Torry v. Bank of Orleans, id., 649; Dobson v. Racy, 3 Sandf. Ch., 60, 62; De Caters v. Le Ray De Chaumont, 3 Paige, 178;
That the lien of the judgment does not attach until the legal title vested in Lord. (See Ells v. Tousley, supra; Jackson v. Chapin, 5 Cow., 485.)
Stephen P. Nash, for the respondent, beside other points not discussed in the opinion, insisted that the fact that the assignment by Lord to Herrick, before the docketing of the judgment, was absolute in form, did not prevent the judgment attaching as a legal lien upon the premises, if the assignment was in truth by way of mortgage; and cited Runyan v. Mersereau (11 Johns., 534); Kortright v. Cady (21 N.Y. R., 343, 347, 364); Merrill v. Bartholick (36 N.Y. R., 44); Whittick v. Kane (1 Paige, 262); Grimstone v. Carter (3 Paige, 421); Williams v. Thorn (11 Paige, 459); Chautauqua Co. Bank v. Risley (19 N.Y. R., 369). Thе mortgage to Herrick was void for usury, as against the parties having judgment liens upon the same property. (Thompson v. Van Vechten, 27 N.Y., 568; Schroeppel v. Corning, 5 Den., 226; Dix v. Van Wyck, 2 Hill, 522; Post v. Dart, 8 Paige, 639; Williams v. Tilt, 36 N.Y., 319.) No trust resulted to Dougherty upon the reassignment of the lease to Lord, as the former finally consented that Lord should take the title; and therefore the case is precisely the same as if that had been the original arrangement. (Norton v. Stone, 8 Paige, 222; Commercial Bank v. Warren, 15 N.Y., 579.)
Opinion of the Court
GROVER, J. If the fact found by the judge, that Michael Dougherty loaned the $5,000 to the defendant, Lord, with which the latter redeemed the mortgage given by him upon the property in question to Herrick, from the executrix of the latter, is to be assumed as true by this court, there can be no question of the plaintiff‘s right of recovery, irrespective of the further fact found that such loan was usurious. The appellant‘s counsel excepted to the finding of the above facts.
DANIELS, J. The judge before whom this case was tried without a jury, found as a fact, that Michael Dougherty, who devised the leasehold estate in controversy to his widow, Hannah Dougherty, who is one of the defendants in this action, was informed before hе advanced his money or took the assignment of the lease, that Elias H. Herrick, to whom the judgment debtor, the other defendant, had assigned it, held it by way of security for the payment of a debt owed him by such debtor. This conclusion was fully warranted by the evidence given, both by the defendant Lord, who was the judgment debtor, and the testator himself, and no exception was taken to it by the defendants. After having
The judge also found, as a fact, that the lease was assigned by the judgment debtor to Herrick for the purpose of securing a usurious loan of money made by him to the judgment debtor. And no exception was taken to that conclusion. For the purpose of disposing of the present appeal that must be therefore assumed as a fact, without reference to the condition of the evidence on which it was predicated. For this court can оnly review questions of law in cases presented in the form of the present one, and an exception is required to raise such a question. Assuming then that the assignment was made to Herrick to secure the payment of an usurious loan of money made by him to the assignor and judgment debtor, it was by the terms of the statute and the construction placed upon them by the courts, void as to the latter, and to all persons deriving title to the leasehold estate under him. If Herrick, or his executrix, had continued to hold the assignment until the plaintiff had perfected his title to the leasehold estate under his judgment and execution, it would have found no legal obstacle to the recovery of the possession of the premises, if he, or his executrix, had, in the meantime, gone into the occupancy of the property. For being void
The judge found as a fact that Dougherty had notice that the assignment had been made to Herrick, as security for a usurious loan of money. And that finding was excepted to by the defendants. But it cannot be very material whether the judge was right or wrong in his view of the evidence upon this subject; for it was not necessary that Dougherty should have had notice of the usurious nature of the transaction, in order to render the security as invalid in his hands as it was in those of Herrick and his executrix. It was sufficient for that purрose, that he showed that the assignment had been made to Herrick, simply as a mortgage, for with that understanding, it would have continued to be a mortgage in his hands, if it had been assigned directly to him, and he would have then been incapable of enforcing the collection of the usurious debt by means of it. Conceding, therefore, in the defendants’ favor, all that they claim should have been awarded by way of rectifying the assignments, and still they would remain unable to make a successful defence to the plaintiffs’ action for the recovеry of the premises in dispute.
When his judgment was recovered, it became a lien upon
No reason existed for supposing that Michael Dougherty believed that he was to acquire a complete legal title to the property by an assignment of the lease from Herrick‘s executrix, for in his own evidence, he stated that he understood that Lord owned it. And if that was his understanding, it was clear that he must have known that the executrix held it only as a security, and could therefore assign it in no other manner to him.
By the assignments that were made, Dougherty acquired the same rights in the property which he would have had if the business had been done precisely as he directed it. For the intention with which Lord took his assignment from Herrick‘s executrix, prevented the security from becoming merged in the legal estate. (James v. Morey, 2 Cowen, 246.) And the intervening lien of the plaintiffs’ judgment had the same effect.
But if that had not been the case, the court had no power to relieve Dougherty, either in the action which he brought, or in the defence made in the present case, for he accepted the assignment taken from Lord, with knowledge that his directions had been departed from in the preceding portion of the transaction. It is true that this was done under the conviction produced by Lord‘s misrepresentation, that there were no judgments against him. And that would have been sufficient, when the truth was first discovered, to have entitled Dougherty to a rescission of the transaction, if the proper action had been instituted by him for that purpose. But an action to change the nature of the assignment, by giving them the effect of one from Herrick‘s executrix, directly to him, even if that could have been done, would have afforded him no benefit, as long as the security was void for usury in
All the judges were for affirmance, on the grounds stated in the opinion of GROVER and DANIELS, J. J.
Judgment affirmed.
NOTE.—As to what parties may raise the defence of usury and who cannot, see further Ohio & Mississippi R. R. Co. v. Kasson (37 N.Y., 218); Williams v. Birch (2 Trans. Appeals, 133); Bullard v. Raynor (30 N.Y., 197); Billington v. Wagoner (33 id., 31); De Wolf v. Johnson (10 Wheat., 367); Livingston v. Harris (11 Wend., 329); Man v. Eckford‘s Ex‘rs. (15 Wend., 502); Watson‘s Ex‘rs v. McLaren (19 Wend., 563); Jackson v. Henry (10 J. R., 185); Cole v. Savage (1 Paige, 583); Shufelt v. Shufelt (9 id., 137); House v. Hovey (9 id., 197); Lloyd v. Scott (4 Pet., 205); Hungerford‘s Bank v. Dodge (30 Barb., 626); Lynde v. Staats (1 N. Y. Leg. O., 89); Keyes v. Moultrie (3 Bosw., 1); Draper v. Prescott (29 Barb., 401); Berdan v. Sedgwick (40 Barb., 359); Rexford et al. v. Widger et al. (2 Comst., 131); Chamberlain v. Dempsey; Elwell v. Chamberlain (4 Bosw., 320.)
As to buying lands subject to a usurious mortgage, see Brooks v. Avery (4 Comst., 225); Chamberlain v. Dempsey (14 Abb. R., 241); Field v. Chapman (14 id., 133); Hart v. Kennedy (14 id., 432); Morris v. Floyd (5 Barb., 130); Pearsall v. Kingsland (3 Edw., 195); Schermerhorn v. Talman (4 Kern., 93); Post v. The President, &c., of The Bank of Utica (7 Hill, 391); Sands v. Church (2 Seld., 347); Wells v. Chapman (4 Sandf. Ch. R., 312.)—REP.