94 N.J. Eq. 744 | N.J. | 1923
The opinion of the court was delivered by
Complainant loaned to defendant $2,000, for which defendant gave him its several,' promissory notes aggregating $2,500, and at the same time executed and delivered to complainant a chattel mortgage conditioned that it should be void on the payment of’ $2,500, in installments on certain fixed periods. It is admitted that this mortgage was usurious, and the question presented is whether it is an obligation to which the statute entitled “An act relating to usury” (P. L. 1902 p. 450; Comp. Stat. p. 5706) applies. The mortgage encumbered certain chattels, which were sold free of complainant’s mortgage, by an order of the court of chancery in
The statute reads: “No corporation shall hereafter plead or set up the defence of usury to any action brought to recover damages or enforce a remedy on any obligation executed by said corporation.” Mr. Justice Eeed, in speaking of this statute for this court, in Lembeck v. Jarvis, 70 N. J. Eq. 757, said: “It is obvious, however, that the statute was passed to protect those that had made loans of money and had taken the paper or bonds of a corporation. As to such creditors it was doubtless intended toi abolish the defence of usury in toto."
But the vice-chancellor, in the instant case, rested his conclusions on the opinion of Mr. Justice Garrison, speaking for the supreme court, in Mazarine v. Hudson County R. E. B. Co., 80 N. J. Law 35, in which he said that in view of the uniform legislative policy of the state in the matter of usury, the words “obligation executed” by a corporation refers to corporate obligations in the sense of bonds, mortgages, debentures, and the like, that go on the market and into the hands of the public, and refused to make “obligation executed” apply to an agreement to pay a usurious commission to a broker in a suit based on a contract to pay for procuring a loan, holding that the promise to pay was a usurious contract, and that, in that suit, the statute did not apply.
The case last cited has never been reviewed by this court, but whether it correctly expresses the character of the only
Mr. Justice Kalisch, speaking for this court in that case, said: “The fact that the remedy by action on the promissory note was barred by statute did not have the legal effect to extinguish the obligation created either by the note or the covenant in the chattel mortgage. The debt could only be discharged by payment,” and by analogy this complainant will not be deprived of his remedy to enforce his chattel mortgage, although his remedy to recover at law on the notes might be barred by the statute until the mortgage debt has been paid. Wagoner v. Watts, 44 N. J. Law 126; Borst v. Corey, 15 N.Y. 505.
The order appealed from will be reversed.
For affirmance—Hone.
For reversal—The Chief-Justice, Trenchard, Parker, Bergen, Minturn, Kalis ch, Black, Katzenbacii, White, Heppenheimee, Ackerson, Van Buskirk—12.