New-Orleans Gas Light & Banking Co. v. Dudley

| New York Court of Chancery | Aug 4, 1840

The Chancellor.

It is contended, on the part of the respondents, that the third section of the act of May 2d, 1839, to regulate the trial by jury and the taking of testimony in chancery, leaves the power of the court to grant issues the same as it was previous to the act of April, 1838, on this subject. And that the words, “ according to the practice of the court of chancery previous to the passage of the act thereby repealed,” at the end of the first clause of that section, apply to the whole of that clause ; and not merely to the taking of testimony before an examiner or commissioner. Such a construction, however, would render the second section of the act of 1839 a nullity. For by the practice of the court, previous to the act of 1838, the court was not authorized to grant an issue, except in a few specified cases, until after the testimony was taken in the cause. At least, it was not the practice of the court to grant an issue, in ordinary cases, unless there was conflicting evidence, so as to create a doubt in the mind of the chancellor upon some matter of fact. The act of 1838 made it the imperative duty of the court to direct an issue, upon the application of either party, in every case in which an issue of fact suitable for the trial of a jury could be framed. And, in all other cases, the testimony of witnesses who resided within a hundred miles of the place where the court was held, was directed to be taken in open court, at the hearing. The object of the amendatory act of 1839 was to preserve the principle of the act of the previous year, except so far as it rendered the awarding of an issue, or the taking of the testimony viva voce at the hearing, compulsory upon the court. But leaving it discretionary in the court, where an issue which was suitable to be tried by a jury could be framed, either to award such issue before the testimony in the cause was taken, or to direct the testimony to be taken in open court at the hearing of the cause, (contrary to what was the usual practice of the court previous to the act of 1838,) or to direct it to be taken before an examiner, or commissioner, according to the practice before that time. The court, therefore, is authorized to grant an issue, previous to the hearing or taking of testimony, in cases proper to be tried by a jury ; if, in the opinion of the chancellor, the proceedings in the suit will be expedited, or the costs diminished, or a jury trial will be most conducive to the ends of justice.

In the present case, the answer of Mrs. Dudley presents a single question of fact, upon the determination of which, one way or the other, the complainants’ right, to a satisfaction of their debt out of the mortgaged premises, alone depends. For if the allegations in her answer are true, this was a clear and palpable case of usury. Even if an issue is refused in this stage of the suit, it may still be necessary or proper for the court to award an issue at the hearing, in case there should be such a conflict of testimony, on this point, as to render it doubtful whether the sale of the Staten Island property was or was not a mere device to obtain an advantage beyond seven per cent per annum for the making of the loan. (Marshall v. Thompson, 2 Munf. R. 412. Bullock v. Gordon, 4 Idem, 450. Douglass v. McChesney, 2 Rand. Rep. 109.) The act of May, 1839, does not deprive the court of the common law right to award an issue at the hearing, if it has not previously been directed, where the fact is rendered doubtful by conflicting testimony. If therefore the application to the vice chancellor, for an issue, had been made by Mrs. Dudley, I should think this was a very proper case to have awarded such issue, as to the single point of usury set up as a defence in her answer. And as she has no interest in the other matters, put in issue between the complainants and Stoney, if the defence of usury was not properly set up in the answer of the-latter so as to entitle him to avail himself of that defence, the issue might have been awarded between Mrs. Dudley and the complainants only; leaving the matters in issue between the other parties to be proved before the examiner, in the usual wmy. Or the proof as to those matters might have been directed to be taken at the hearing, after such issue should have been tried.

Where two or more defendants set up the same matter of fact as a defence, by their answers, or put in issue the same allegations in the complainant’s bill, if a replication is filed to the answers of all such defendants, the issue should be awarded as to all or neither; for the purpose of preventing unnecessary expense. It is for this reason that the 67th rule of the court requires that all of the defendants who are entitled to take testimony in the cause, and who do not join in the application for an issue, should have notice of such application. But where the defendants have not a common interest, or the defences set up by them are separate and distinct in their characters, it may frequently be proper to grant an issue as to the defence set up by one defendant, although an issue might not be proper as to the others. If the defendant Stoney, therefore, was not entitled to an issue, for the reason that the defence of usury was not set up in his answer in such a manner as to authorize him to avail himself of that defence by proof in the cause, Mrs. Dudley cannot appeal from the decision of the vice chancellor denying the issue as to her, upon Stoney’s application. In other words, if the appeal is not well taken as to Stoney, it must of course be dismissed as to Mrs. Dudley ; but without prejudice to her right to make an application to the vice chancellor for an issue, to try the allegation of usury set up in her answer, as to her own rights.

Upon an examination of the answer of the defendant Stoney, I think the defence of usury is not set up with sufficient certainty to entitle him to an issue upon that point, or to authorize him to give evidence of usury at the hearing. The principles of pleading in this court are substantially the same as at law, so far as relates to matters of substance. Anti a defendant who attempts to set up a defence of usury in this court must, in his plea or answer, as in a plea of usury in a suit at law, set up the corrupt agreement distinctly, stating in substance the terms of the usurious agreement; and he must prove it as alleged. (Vroom v. Ditmas, 4 Paige’s Rep. 526.) Here the answer of Stoney, instead of setting forth the substance of the usurious agreement, as is correctly done in the answer of Mrs. Dudley, merely contains a general charge that the cause of the execution of the bond and mortgage was a corrupt and usurious agreement, by which the lenders bargained and agreed to receive, secure, or in some way obtain a greater interest than seven per cent, either by a pretended sale of property at more than its value, or in some other way. Such a plea of usury would certainly be considered bad, both in form and substance, if pleaded as a defence to a suit upon this bond in a court of law ; and it is equally so when thus defectively set up in an answer in this court. And upon the other matters in issue upon this defendant’s answer, I think the vice chancellor was right in not sending the case to be tried by a jury.

The appeal, so far as relates to Mrs. Dudley, must therefore be dismissed ; with liberty to her to apply to the vice chancellor, in her own name, for an issue to try the question of usury set up in her answer. And the order appealed from, as to the defendant Stoney, is affirmed with costs.

Order accordingly.