149 F. 818 | U.S. Circuit Court for the District of New Jersey | 1907
The complainants, who are the executors of the last will and testament of William Brewster Wood, deceased, are seeking in this action to obtain a decree against the defendants for the payment.of the amount due upon two several promissory notes made by the defendant, Anna D. Babbitt dated March 24, 1902, by one of which notes she promised to pay to the order of the said William Brewster Wood, in the city of Philadelphia, on March 24, 1905, the sum of $10,000, together with interest at 6 per cent, per annum, payable semiannually, and by the other of which she promised to pay to the order of the New York Einance Company, at its office in the borough of Manhattan, in the city of New York, the sum of $5,000, at and after the death of one Charles G. Campbell. At the foot of each of said notes, the maker thereof pledged as collateral security for the payment thereof, all her right, title, and interest in and to the estate of said Charles G. Campbell, coming to her at his death, as by certain assignments bearing even date therewith, would more fully appear. These assignments will be referred to more fully later. Prior to the making of these notes, and in the month of July, 1898, Charles G.
The notes referred to were given under the following circumstances: Early in the month of March, 1902, .Mrs. Babbitt’s attention was directed to an advertisement in the New York Sunday Herald, which represented in 'substance that one Helffrich could
“And I do further, undertake and agree with the said New York Finance Company that, in consideration of its negotiating tlfe aforesaid loan for me, and of guarantying me against any demands for the payment of the principal thereof, and against any foreclosure of the same until after the death of the aforementioned Charles G. Campbell, and also of its paying the interest on the said loan for me as the same may from time to time accrue at the rate of 6 per cent, per annum, and also of the payment of the premiums upon a satisfactory policy of insurance upon my life as they may from time to time mature and become payable, that there shall be paid to the New York Finance Company for such services and advances as aforesaid, the sum of five thousand dollars ($5,000) together with the actual moneys advanced for interest and premiums as hereinbefore recited; it being understood and agreed, however, that the said sum of five thousand dollars, together with the afore-mentioned advances on account of interest and premiums, and together with the principal loan of ten thousand dollars, shall be paid out of the legacy and devise hereinbefore referred to.”
And, in addition to the foregoing, by the last paragraph of the agreement, it was provided that Mrs. Babbitt should execute and deliver such instruments as might be necessary to secure the payment of the loan of $10,000, and the moneys to the New York Finance Company as therein above recited.
The foregoing agreement was signed and sealed by Mrs. Babbitt, and witnessed by her husband and Mr. Helifrich. In brief, it shows that the company was to negotiate a loan of $10,000 for Mrs. Babbitt, and was to be paid for its services in guarantying the continuance of the loan, and advancing interest and life insurance premiums, the sum of $5,000. The matter of procuring the loan of $10,000 for Mrs. Babbitt, was intrusted by the New York Finance Company to one Charles H. Burr, a member of the bar of the state of Pennsylvania, who, in turn, spoke of it to one James McF. Gummey, then engaged in real estate business in Philadelphia. Both of these men were di7 rectors in the finance company, and Gummey had general charge of the investments of Mr. Wood. The loan was subsequently recommended, to Mr. Wood by Gummey, and he, Mr. Wood, and Mr. Burr, later went to Newark and looked at some of the real estate included in the trust, and after such examination, Mr. Wood agreed to take the loan,
The burden of proof always rests upon the party setting up usury. The facts necessary to constitute it must be clearly established beyond reasonable doubt by the decided preponderance of evidence. It is not enough that the circumstances proved, render it highly probable that there was a corrupt bargain; such a bargain must be proved, and not left to conjecture. Berdan v. Trustees, etc., 47 N. J. Eq. 3, 10, 21 Atl. 40, s. c. affirmed on the opinion below, 48 N. J. Eq. 309, 24 Atl. 130; Taylor v. Morris, 22 N. J. Eq. 606, 612; Guardian Mutual Life Ins. Co. v. Kashaw, 66 N. Y. 544, 547, 548. In the view I take of this case, however, it is unnecessary to determine whether the $5,000 note was usurious in its inception or not, since I find that Mr. Wood became the owner and holder of it for full value before maturity, and without notice of any illegality or infirmity connected therewith. These facts under the “negotiable instrument law” of the state of New York, passed in 1897, render the note free from defenses available to prior parties among themselves. But aside from this, and assuming that the $5,000 note was taken as a bonus in pursuance of a usurious contract or agreement between Mrs. Babbitt and the finance company, such defense cannot be imputed to Mr. Wood, or his executors, without affirmative proof that he had some knowledge of, or interest in, the illegal transaction,,which, as already stated, he did not have. Lane v. Washington Life Ins.’ Co., 46 N. J. Eq. 316, 19 Atl. 617, 618; Guardian Mutual Life Ins. Co. v. Kashaw et al., 66 N. Y. 544; Van Wvck et al. v. Watters, 81 N. Y. 352; Philips et al. v. Mackellar, 92 N. Y. 34.
“The rule in regard to the pleading of usury has always been exceedingly strict. * * * It is necessary both at law and in equity, that the plea and answer should specifically set forth with the utmost certainty and distinctness, the terms and nature of the usurious agreement or transaction and all the facts and circumstances relating thereto. A general averment of usury is never sufficient”
The doctrine thus laid down is sustained by numerous authorities cited in the footnotes. See, particularly, Kase v. Bennett, 54 N. J. Eq. 97, 33 Atl. 248; Taylor v. Morris, 22 N. J. Eq. 606, 611, the former case holding (page 101 of 54 N. J. Eq., page 250 of 33 Atl.) that the rule of pleading this defense is even stricter in equity than at law.
A decree will be entered in favor of the complainants for the amount due upon the two notes, with interest besides costs.