Crane v. Hubbel , 7 Paige Ch. 413 ( 1839 )

The Chancellor.

The decision and decree of the vice chancellor, declaring the bond and mortgage in this case usurious, was clearly wrong. The allegations in the bill that the defendant L. Hubbel had an interest in the $400 loaned to the complainant, and that he had some interest in the bond and mortgage at the time of the commencement of the suit were denied by the defendants; and no evidence whatever was adduced by the complainant in support of any allegation in the bill. Even if the answer of a defendant who was no way interested in this bond and mortgage could have been read as evidence against his co-defendant, the mortgagee, the answer of L. Hubbel does not establish the usury charged in the bill. On the contrary it appears from his answer that the complainant employed him as an agent to negotiate the loan of $400 for him, and that the $28, which the complainant was to pay the agent, was not for the benefit of the lender of the money, but was intended as a compensation for his own services in procuring the loan, and for investigating the title, drawing the securities, &c. If the complainant, therefore, paid his agent more than those services were actually worth, it could not affect the validity of the contract for the loan with the agent’s father, who knew nothing of the arrangement with the son, except that the title was to be investigated, and the security for the loan made perfect, at the expense of the borrower, and without any charge to the lender. A. Hubbel’s agreement with his son, as the complainant’s agent, was to lend the $400 for a year, at legal interest. And the facts, as detailed in the answers of both defendants, exclude the idea that this was a mere device on the part of the lender to obtain more than legal interest for the use of his money. If the money had been previously placed in the hands of the son for the purpose of being loaned out by him, as the agent of the father, a different question might have been presented, upon proof of the fact that $28 was more than a fair compensation for the trouble and expense of investigating the title, and preparing and recording the securities taken from the complainant for the loan. It is evident however, in this case, that L. Hubbel was not the agent of his father to loan this money at the time he made the agreement for the $28 for his services, and that he afterwards applied to his father for the loan, as the agent of the complainant, under that agreement. The fact that his son would be paid for his services in preparing the bond and mortgage, &c., and that the title would be investigated, without expence to himself, by one in whom he had confidence, were considerations which undoubtedly influenced the lender in making the loan to the complainant in preference to others. But there is nothing in the answers of either of the defendants to create a suspicion that A. Hubbel then supposed he was taking, or that his son intended to take, any more than seven per cent interest for the loan. And he constituted the son his agent for the mere purpose of taking a bond and mortgage for the $400 with legal interest thereon.

The subsequent arrangement with the son to loan to the complainant the $28, for one year at legal interest, and to have it secured by the same bond and mortgage for his benefit, could not make the securities usurious and void, if they would have been valid for the $400 and interest in case the son had taken his $28 for his services and kept it instead of thus loaning it. And when that sum was repaid to L. Hubbel, at the end of the year, the bond and mortgage remained valid and subsisting securities, both at law and in equity, for the repayment of the original loan of four hundred dollars ; in which L. Hubbel had no interest whatever. Such being the case, no subsequent agreement to pay an usurious premium for the further forbearance of the loan, even if made by the mortgagee himself, or by his agent for his benefit, could invalidate the bond and mortgage, or prevent the collection of the $400 and the legal interest thereon. The subsequent agreement only, for the usurious premium, would be void; and the money, if any, which had been received by the mortgagee or his agent, under the usurious agreement, would in equity be considered a payment upon the mortgage, pro tanto.

Whether the note of $28, which was taken by L. Hubbel in his own name and for his own benefit, is considered as an usurious premium for the further forbearance of the loan of $400, or as having been obtained by extortion and without consideration, there was no foundation for this suit ; as nothing had been paid on the note. It is true the defendant L. Hubbel had commenced a suit at law on the note. But if the note was invalid, either for usury or for a want of consideration, that formed a perfect defence at law. And the complainant had no right to file a bill for relief in this court for the trifling sum of $28, when the statute has declared that this court shall dismiss all such bills with costs, unless the amount in controversy, exclusive of costs, exceeds the value of $100. And as L. Hubbel is in no way interested in the bond and mortgage, the decree of the vice chancellor must be reversed as to him, as well as to the defendant A. Hubbel. The bill as to L. Hubbel must be dismissed with costs, according to the directions of the statute ; but without prejudice to the right of the complainant to defend himself as he may be advised, in the suit upon the note, or in any other suit to be brought thereon. The complainant must also pay to the defendants their costs on this appeal to be taxed.

A decree merely dismissing the bill as to the defendant A. Hubbel would probably have the effect to bar the complainant’s equity of redemption absolutely. The decree must, therefore, declare that the bond and mortgage are valid and subsisting securities for the payment of the original loan of $400 to the mortgagee, together with the interest thereon from the first of May, 1831; but that the complainant is entitled to redeem the mortgaged premises upon the payment of the $400 and interest, together with the costs of the defendant A. Hubbel in this suit, which costs the complainant is decreed to pay; and that if the mortgage money, with the interest and costs, is not paid within three months after the entering of the decree, the mortgagee is to be at liberty to apply to the court for a strict foreclosure, or for a sale of the mortgaged premises, or for such other directions herein as shall be just.

In the meantime the defendants are at liberty to take out execution against the complainant to collect the costs awarded to them; and they may enroll the decree for that purpose.