23 N.Y.S. 584 | N.Y. Sup. Ct. | 1893
This suit was brought in equity for the cancellation of certain promissory notes made by plaintiff, and indorsed by her in blank, secured by a chattel mortgage, and for the cancellation of said mortgage, upon the ground that both notes and mortgages were tainted with usury. The evidence was sufficient to support the conclusion of the learned trial judge that the whole scheme arranged by defendants the Forgotstons was resorted to as a cloak to evade the statute against usury. Nothing upon the facts need be added to the very satisfactory opinion of the court below. The claim that the extortionate amounts exacted from plaintiff were compensation for the guaranty given by defendants is effectually disposed of in such opinion. It is entirely competent for one to lend his credit to another, and receive a compensation therefor, but this rule of law will afford no protection to persons who resort to a legal form with a view of covering up a usurious transaction.
The only serious questions urged relate to the sufficiency of the complaint as setting forth an equitable cause of action, and the failure therein to allege that the plaintiff had no adequate remedy at law. The complaint does allege “that the said chattel mortgage constitutes the vital part of the said loan, and is tainted with the same fraud and illegality that affects the promissory notes given by plaintiff to defendants upon the same transaction, which said notes are still in the defendants’ possession; that the said defendants have threatened to sell and remove the furniture of this plaintiff, summarily, under the aforesaid chattel mortgage, by reason whereof irreparable loss and damage will be sustained by the said plaintiff, the amount of which it is .at present impossible, definitely, to compute.” These allegations are claimed to be insufficient, and we are referred to Allerton v. Belden, 49 N. Y. 373, which has been cited with approval in subsequent cases, and which holds that “the mere fact that the party has made an agreement, or given a security, which is void for usury, is not sufficient to entitle him to apply to a court of equity to have the contract annulled. The right to this relief exists only when, from the form of the security, the defense cannot be made available at law, or where the instrument sought to be avoided is a cloud upon the title to land, or some other necessity for the interposition of a court of equity is shown.” It will be noticed that in that case, as in others that might be referred to, the question was presented by a demurrer to the complaint. In this case, however, no demurrer was interposed, nor was there any allegation in the answer that the plaintiff had an adequate remedy at law. Instead, the defendant submitted himself to a court of equity, and for the