152 N.Y.S. 851 | N.Y. App. Div. | 1915
Lead Opinion
This is an action for the foreclosure of a mortgage executed by the defendants Carl Sotscheck and Julia A. Sotscheck, his wife, on premises owned by him, to one Sarah E. Sinnigar and delivered to her on the 15th day of February, 1911, as collateral security for the payment of §12,000 evidenced by their bond executed concurrently therewith. The bond and mortgage were in fact executed for the purpose of having them assigned to the plaintiff; but that was unknown to him. Concurrently with their execution and delivery to the mortgagee, or within an hour or two thereafter, she assigned the mortgage to the plaintiff; but a corrected assignment executed by her next day was substituted therefor and placed on record.
The mortgagors defended on the ground that the bond and mortgage were void for usury, and they counterclaimed for the cancellation thereof. On a former trial the defense and counterclaim as pleaded were held to be insufficient; but this court reversed the judgment of foreclosure then entered and
The plaintiff appeals from the judgment in so far as the mortgage is declared void and limits his recovery to the consideration paid and dismisses the complaint as to the wife of the mortgagor, with costs, and decrees that the sale shall be subject to her contingent right of dower; and the mortgagor appeals from the judgment in so far as it decrees that he is estopped to plead usury and that the bond and mortgage are enforcible against him.
There were two mortgages on the premises, a first for $35,000 and a second for $10,000. The second mortgage was overdue, and the owner thereof was threatening foreclosure. The mortgagor was unable to pay the mortgage debt, and had been endeavoring to obtain a further loan on the premises for that purpose. The attorney representing the owner of the second mortgage drew this to the attention of one Zittel, a real estate broker. Zittel called on the mortgagor and was employed to endeavor to obtain a loan on the security of the premises, but within a few days thereafter reported his inability to do so, and expressed the opinion that he might be able to sell a second mortgage on the premises at a discount of ten per cent. The mortgagor suggested that a second mortgage be executed for $15,000, but Zittel said that one for that amount could not be negotiated. It was finally agreed that a second mortgage for-
Zittel, without authority from and without consulting the plaintiff, but on his own responsibility and doubtless with a view to delivering to the plaintiff a valid bond and mortgage as he had agreed, and acting for himself to earn a commission and under his employment by the mortgagor, who had agreed to pay all the expenses, including the “lawyer’s fees,” employed one Day, an attorney who was associated with the attorney who had charge of the second mortgage which was to
The answer charged, in effect, a usurious agreement exacted of the mortgagor and his wife by the brokers, who obtained for themselves and plaintiff, or one of them, a bonus of $1,600, and that the mortgagee was a dummy for plaintiff, or for the brokers, or for both, and furnished no part of the consideration, and that the scheme originated in, and was consummated by, a conspiracy between plaintiff, the brokers and the mortgagee to exact a usurious rate of interest for a loan of the money. The mortgagor and his wife failed to prove the defense pleaded, excepting to the extent of showing that the mortgagee had no interest and was used as a dummy or conduit as already stated.
It is claimed that the defense proved was not alleged, but I think the evidence was admissible under the answer, and that if the facts proven constitute a defense they were sufficiently pleaded.
After a note, bond or other obligation has had a valid inception, it may be sold at any discount the parties agree upon, without violating the statute against usury, which operates only on the contract by which the instrument has its inception, and, therefore, if the bond and mortgage had had a valid inception, that is, without the taint of usury and had been issued to an obligee and mortgagee to take effect according to their tenor before they were assigned to the plaintiff, he could enforce them for the full amount or for the amount they were intended to secure no matter at what discount he purchased them. (Siewert v. Hamel, supra; Dunham v. Cudlipp, supra; Union Dime Savings
It would not do to hold that the Usury Law may be evaded in the manner shown by the evidence in this case. The vice at which the Usury Law was aimed exists in such a transaction quite as much as if the parties were permitted to negotiate directly for the usurious discount; and if this transaction were sustained as a successful evasion of the Usury Law, the statute against usury would be of little practical value.
The question remaining is whether the court erred in dismissing the complaint as against the wife of the mortgagor. It may be that the transaction inured to her benefit quite as much as that of her husband, for the entire proceeds were applied by him to the payment of a mortgage then existing on the property, by the foreclosure of which, if she joined therein, her contingent right of dower would have been cut off; but it was neither shown that she joined in that mortgage nor that she was liable for the debt secured thereby, and, therefore, she is not chargeable with his representations on the theory that she received the benefit of the transaction. (Krumm v. Beach, supra.) Her husband, in her behalf as well as for himself, was authorized, I think, to negotiate the bond and mortgage with the mortgagee, for that was the purport of the papers as presented to her for execution and executed by her; but there is no evidence that she conferred any authority on her husband or was aware of the plan by which he was to sell the bond and mortgage to plaintiff, and, therefore, in so doing he was not her agent. (Parker v. Collins, 121 N. Y. 185, 188; Payne v. Burnham, supra.) It has been held that a subsequent mortgagee or judgment creditor may interpose the defense of usury against a prior mortgage. (Union Dime Savings Inst. v.
It follows that the judgment should be affirmed, with costs to the respondent Julia A. Sotscheck against plaintiff, appellant, but without costs to either appellant.
Concurrence Opinion
I concur with my brother Laughlin except in so far as he recommends the affirmance of the judgment in favor of Julia A. Sotscheck. The court having sustained the validity of the plaintiff’s mortgage to secure the amount actually loaned by the plaintiff, to the defendant, and the wife having joined in the mortgage, thereby releasing her right of dower, it seems to me that such right of dower is extinguished so far as necessary to protect the plaintiff in the enforcement of his mortgage. “ The settled theory of the law as to the nature of an inchoate right of dower, is that it is not an estate or interest in land at all, but is a contingent claim arising' not out of contract, but as an institution of law, constituting a mere chose in action incapable of transfer by grant or conveyance, but susceptible only during its inchoate state, of extinguishment. By force of the statute this is effected by the act of the wife in joining with her husband in the execution of a deed of the land. Such deed, so far as the wife is concerned, operates as a release or satisfaction of the interest and not as a conveyance, and removes an incumbrance instead of transferring an interest or estate.” ' (Witthaus v. Schack, 105 N. Y. 332.) After examining the cases, the court conclude: “ It would seem clear from the authorities that the act of the wife in joining her husband in the execution of a deed of his lands, does not constitute her a grantor of the premises, or vest in the
By joining in the mortgage to the plaintiff, therefore, the wife extinguished her inchoate right of dower, which could only be revived by the annulment or cancellation of the husband’s mortgage. If that had been declared void by reason of usury or for any other cause, undoubtedly the wife’s right of dower would never have been extinguished, and she would, therefore, be entitled to enforce it if it ever became absolute by the death of her husband during her life. The court, however, has found that the mortgage was valid as against the husband and created a lien upon his interest in the land to the extent of the money actually lent to the mortgagor, and has affirmed a judgment enforcing that mortgage. Whether this mortgage is sustained as against the husband by way of estoppel or for any other reason, it is a valid mortgage, subjecting his real property to a lien for the amount due to him, and by the act of the wife in joining with her husband in the mortgage, her inchoate right of dower to that extent was extinguished. In Hinchliffe v. Shea (103 N. Y. 153) it was said: “ The joinder by a married woman with her husband in a deed or mortgage of his lands, does not operate as to her by way of passing an estate, but inures simply as a release to the grantee of the husband, of her future contingent right of dower in the granted or mortgaged premises, in aid of the title or interest conveyed by his deed or mortgage. Her release attends the title derived from the husband, and concludes her from afterward claiming dower in the premises as against the grantee or mortgagee, so long as there remains a subsisting title or interest, created" by his conveyance.” It was further held in that case that her act in joining in the conveyance becomes a nullity whenever the title or interest to which the renunciation is incident is itself defeated. . Now, that condition has not arisen in this ease. The mortgage of the husband had not itself been defeated, but upheld and enforced. Therefore, it seems to me that she
McLaughlin, Dowling and Hotchkiss, JJ., concurred.
Judgment modified as directed in opinion of Ingkaram, P. J., and as modified affirmed, with costs against defendant Julia A. Sotscheck in favor of the plaintiff in this court and in the court below. Order to be settled on notice.