200 A. 813 | Conn. | 1938
The plaintiff brought an action upon a joint and several note of the defendants, not incorporating a copy of it in the complaint nor annexing it as an exhibit. On the defendant's motion for oyer the plaintiff filed a copy. This made it a part of the pleadings and laid the basis for a demurrer by the defendants that the terms of the note violated the usury statute. Morehouse v. Employers' Liability *487
Assur. Corp.,
The plaintiff filed a substitute complaint, the allegations of which, so far as necessary to present the determinative issue upon this appeal are as follows: The plaintiff is a mutual association, the principal purpose of which is to accumulate the savings of its members and make loans to them; the defendants are members of the association; they applied to it for and received from it a loan to be repaid in two years under the usual terms of the association as provided in its bylaws; under these by-laws money was loaned to the members of the association at a charge of 6 per cent. per annum payable in advance, the loan to be repaid in instalments; "as security, defendants gave a mortgage to plaintiff association" made payable to its secretary but upon the agreement that the obligation "should be evidenced by a mortgage note, made payable to" the secretary and immediately transferred to the plaintiff, an assignment of the mortgage deed to be executed but not recorded, in order that the plaintiff's name should not appear upon the land records. The defendants filed a motion for a more specific statement asking that the complaint be amplified in several respects, particularly by stating whether there was any written agreement for the repayment of the loan and whether the note referred to in paragraph 8 was the same note, a copy of which had been filed in connection with the original complaint, and also by filing a copy of the mortgage referred to in that paragraph. The trial court granted the motion and the plaintiff filed a statement including the facts that there was no written agreement for the repayment of the loan, and the note referred to was that a copy of which had been filed, and giving a copy of the mortgage. The defendants again demurred, the substance *488 of that demurrer being that the loan as evidenced by the note was usurious. The trial court ultimately sustained the demurrer on the ground stated. That a loan upon the terms stated in the note would be usurious and not recoverable is not questioned.
The plaintiff claims that the action under the substitute complaint is one to recover a loan made under and governed by the by-laws of the association and is not one upon the note which with the mortgage is only collateral security for the repayment of the debt. If that claim is sound the plaintiff might prove itself entitled to recover, for the provisions of the by-laws referred to in the complaint only call for the payment of interest at 6 per cent. in advance, and a loan made upon that basis might not prove to be usurious. General Statutes, 4732. A debtor may give as collateral security for a debt another obligation of his own where that is secured by a lien on property or the like. First National Bank v. National Grain Corp.,
It follows that if the note and mortgage here in question were found not to represent the loan as such, but to constitute a separate and distinct obligation given by way of collateral security, the invalidity of the mortgage note would not prevent the plaintiff from recovering upon the loan itself. If the note represented the obligation of the loan, its provision for an unlawful rate of interest would preclude a recovery in the action and no attempt to separate the transaction into several parts could avail. Columbia Industrial Bank v. Rosenblatt,
The granting of the motion for the more specific statement, also assigned as error, and the plaintiff's compliance with it did not prevent it from proving such a cause of action or make its burden of proof heavier. It does not appear that, if the trial court erred in its ruling, this was in any way harmful to the plaintiff.
There is error and the cause is remanded to be proceeded with according to law.
In this opinion the other judges concurred.