| New York Court of Chancery | Jul 15, 1831
The question is upon the demurrer: is it rightfully taken ?
The general doctrine on the subject is this: where a suit in equity is brought upon a mortgage or other instrument tainted with usury, the defendant may set up the usury, and if he can prove the facts, may avoid the instrument, according to the letter of the statute. But where a party goes into a court of equity, seeking relief from the operation and effect of an usurious instrument, he must offer to do what equity and good conscience require at his hands, that is, to pay the sum actually due; and if he omit to make such offer the defendant may demur : 1 Fonb. 25. Ld. Hardwicke says, in the case of Henkle v. The Royal Exchange Assurance Company, 1 Ves. sen. 317, that whoever brings a bill in the case of usury, must submit to pay principal and interest due, on which the courts lay hold and will relieve; and he lays down the same principle in exparte Skip, 2 Ves. 489. Ld. Thurlow lays it down as a universal rule, Scott v.
Unless, therefore, there is something peculiar in this case, to take it out of the general principle, the demurrer must be allowed. Some things have been urged which deserve attention. And in the first place, it was argued that not only usury, but fraud is charged as against the second mortgage, and that if the complainants were to offer to pay the amount supposed to be duer it would be a w'aiver of the fraud ; that in truth they are unable to admit any thing due. I apprehend this to be a mistake. The complainant is not obliged to tender any precise amount. It appears that a part of the money secured by the mortgage for the benefit of Bonnell, was actually paid, and properly appropriated to discharge the interest on the first mortgage. Thus far, undoubtedly, the mortgage is good. If, then, the complainants had offered to pay that amount, together with so much more as might appear to be bona fide due after the question of fraud should have been investigated, I should say they had done what was equitable, and that both defences would have been open to them.
But it is said the demurrer is too broad ; it should have been only to the discovery, and not to the relief. I apprehend the law
The only difficulty in my mind, on this part of the case, arose from a view of the subject which was not taken in the argument. It is this:—Here was a mortgage upon a trust estate. The bill filed was against the trustee, but not against the cestui que trusts, who were infants and a feme covert, and who are now the complainants before the court, [f they had been brought in as parties defendants, they might have set up this defence in their answer, and stood in a very different posture before the court. They might then have rested upon the letter of the statute. But I am not satisfied that their situation was such as to require them to be made parties to the original bill. And coming in as they now do, as complainants, and setting up the defence of usury, I am willing to apply to them the general rule which applies to all other persons coming in a similar way, and asking for similar relief.
I am of opinion that the demurrer is well taken, and must be allowed.
Another question has been raised in this case, on a motion to
The propriety of continuing the order, after the answer put in on the part of some of the defendants, is now to be determined. So far as the last mortgage is concerned, I think there can be no doubt as to the propriety of continuing the order. The whole transaction is a very extraordinary one, and calculated to awaken strong suspicion ; and this court can never permit the property to be sold to satisfy that mortgage, without an investigation of the facts connected with it. Some of the most important charges remain unanswered. The defendants who have answered, being merely the personal representatives of Bonnell, have no knowledge of them, and therefore can neither admit nor deny them. One charge is, that a large part of the money received by Ford
I have had some doubt as to the propriety of continuing the order as to the first mortgage. There is much force in the argument, that if Ford has abused his trust, Bonnell should not be answerable, or his estate suffer. But if Bonnell has voluntarily lent himself to any fraudulent schemes of Ford; if he has aided to embarrass the property, and connived at a misappropriation of the very funds that should have been directed to the payment, in part, of his own mortgage, his situation is changed, and he has no reason to complain if he is put to some inconvenience. Seeing the intimate connection that must have subsisted between Ford and Bonnell; seeing that the equity of the bill is not fully answered, even as it regards this first mortgage; and seeing also that Ford, the trustee, has not answered the bill, I deem it advisable to continue the order generally, for the present. Independently of this, the property is an entire property, and cannot be sold in parcels. If a sale takes place, the whole must be sold, and the rights of those ultimately interested in the property may be materially injured.
This course is taken, in the confidence that no unnecessary delay will take place in the prosecution of the suit. The whole case will be at all times under the control of the court, and it will endeavour to shape its course in such way as most effectually to protect and preserve the interests of all parties concerned.