89 N.J. Eq. 103 | New York Court of Chancery | 1918
The facts aie undisputed. William Runkle died January 31st, 1914. By his will the residuary estate went to Harry G. Runkle. There was also created a trust fund of $750,000, the income of which, during their lives, was to go to ITarry G. Runkle, Daniel Runkle and Mary Gray Runkle. For a considerable time there was litigation over the estate so that it could not be closed and no moneys could be distributed. Harry G. Runkle immediately after the death of William proceeded to realize moneys upon his interest, borrowed large sums from numerous individuals, I think fifteen or twenty, and as security executed to them assignments of his interest in the estate. On or about the 7th day of
It is conceded that of the $73,000, purporting to be secured by the assignment held by the Logan Trust Company, $7,300 was retained by that concern as bonus for making the loan. It is insisted by subsequent assignees that the Logan Trust Company cannot recover more than the amount it advanced with legal interest, or, in other words, that from the amount of its claim, $7,300 must be deducted. The insistence of the Logan Trust Company is that the contract was made in Pennsylvania; that it is to be enforced in accordance with the Pennsylvania law as established by the courts of that state; that, while, conceding that the original debtor, Harry G. Runkle, could not be compelled to pay the $7,300, the courts of Pennsylvania have established the rule that the defence of usury is personal to the debtor, and he alone can set it up.
The Pennsylvania statute, with respect to usury, is substan
By a further provision the debtor is given the right, if he has already paid the excess, to, within a limited space of time, obtain its return.
It, therefore, clearly appears that the contract for the payment of more than six per cent, was in direct violation of the usury laws of the State of Pennsylvania and contrary to the public policy as established by. legislation of both that state and this. It could not have been enforced against the debtor even if the interpretation put upon the Pennsylvania decisions by counsel for the trust company be correct. If the contract is to be governed by the laws of this state it could not be enforced either against the debtor or his privies. Cummins v. Wire, 6 N. J. Eq. 73; Warwick v. Marlatt, 25 N. J. Eq. (at p. 192); Brolasky v. Miller, 8 N. J. Eq. 790; 9 N. J. Eq. 814; Pinnell v. Boyd, 33 N. J. Eq. 600; Hackensack Water Co. v. DeKay, 36 N. J. Eq. 566.
The party now seeking to set up the invalidity of the contract did not take his assignment expressly subject to the assignment of the Logan Trust Company. I have examined with care the very numerous opinions cited by counsel on both sides from the State of Pennsylvania, and while it is true that there are several which indicate that, in the absence of proof, that the defence of usury was not made by the debtor with intent to defraud creditors, a judgment obtained against a debtor upon a usurious contract will not, at the instance of subsequent judgment creditors or others in privy with the debtor, be set aside. I am far from convinced that the Pennsylvania courts have gone to the extent of holding that in a case such as this where the creditor is endeavoring to enforce in a court of equity an equitable assignment, cognizable only in equity, the creditor will be permitted
The result is that the claim of the Logan Trust Company will be reduced to the extent of $7,300, and an order advised directing the distribution of the sum of $7,300 with its accumulations now reserved by the executor under a prior order to the creditor next in order of priority.