Tousley v. Barry — 16 N.Y. 497

Majority

p. 489

Tousley v. Bárry and wife.

Headnote

The executors of a mortgagee, pending an action brought by them against the mortgagor, in which the defence of usury was interposed, assigned the mortgage to a purchaser, for value, without notice of the action or of the alleged usury, the executors guaranteeing the collection of the mortgage. In a subsequent action, brought by the assignee against the mortgagor;

p. 490

Held, That the latter could not give in evidence the declarations of the deceased mortgagor, made while he was the .owner of the security, for the purpose of establishing usury therein.

Appeal from the Supreme Court. The action was brought to foreclose a mortgage executed by the' defendants to one Reuben Sargeant, deceased, to secure $1000, with interest, and assigned by the executors of Sargeant to the plaintiff. The defendants alleged, in their answer, that the mortgage was executed upon an usurious consideration. The trial was at the Orleans circuit, before Mr. Justice Bowen, without a jury. The execution of the mortgage and the facts necessary to make a formal title thereto in the plaintiff vere admitted. The defendants called the plaintiff as a witness, who testified that he was accidentally at the office of Mr. Davis (the attorney, in this suit, of the plaintiff), and was asked by him if he wished to buy a bond and mortgage; that he looked at them; was told by Davis, in answer to an inquiry, that he thought they were good, and made an offer, which was subsequently accepted, to give his note for $900, payable in one year, for them, provided the executors would guaranty their collection; he executed and left with a third person the note, to be delivered if the executors accepted his offer, and that he paid the note at its maturity; he heard nothing from Mr. Davis about any suit pending in relation to the mortgage, or about any usury. Mr. Davis, who was also examined as a witness by the defendants, corroborated the testimony of the plaintiff, and proved the execution by the executors of the guaranty required by the plaintiff. He also stated that, at the time of- his negotiation with the plaintiff, he was the" counsel of the executors in a suit then pending fqr the foreclosure of the mortgage; that his negotiation-with the plaintiff took place during the adjournment of the trial of an action brought by the executors for the foreclosure of the mortgage before a referee, in which action the defence of usury was set up, and that on the conclusion of the negotiation the plaintiffs therein discontinued

p. 491

the action, and suffered a judgment against them for costs. Upon this evidence the defendants’ counsel insisted that the assignment of the bond and mortgage to the plaintiff was colorable, and not made or received in good faith; and he offered testimony of the declarations and admissions of Reuben Sargeant, the mortgagee, made at various times while be owned the bond and mortgage, showing the usurious agreement set up in the answer. The court decided that there was not sufficient evidence to impeach or qualify the transfer of the bond or mortgage, or to show any community of interest between the executors of Sargeant and the plaintiff, and excluded the evidence. The defendants took an exception. The judgment entered for the plaintiff was, on appeal, affirmed by the Supreme Court, at general term in the eighth district, and the defendants appealed to this court.

Henry R. Selden, for the appellants.

Without reference to the question of notice, actual or constructive, of the pending suit, the evidence offered was admissible. The contrary rule has never been carried, in the court of last resort, beyond the case of Paige v. Cagwin ( 7 Hill, 361 ), which related to a negotiable promissory note, the former holder, whose declarations were offered in evidence, being living, and capable of being called as a witness. It has been strongly intimated that this case is not to be extended, if it be not even entirely unsound. (Jermain v. Benniston, 2 Seld., 278; Christie v. Bishop, 1 Bari. Ch. R., 115 ; Beach v. Wise, 1 Hill, 612 .) In this case the security transferred was not negotiable; the transfer was during the pendency of an action upon it, manifestly to avoid the defence now sought to be interposed, and under circumstances tending strongly to the conclusion that the transfer was not made or accepted in good faith.

. Sanford E. Church, for the respondent.

Upon the evidence, the judge at the trial rightly decided that the defendants had failed to impeach or qualify the transfer to the plaintiff of the bond and mortgage in suit, or to show any identity of interest between the plaintiff and the executors of Sargent. A clear legal transfer was shown upon an ample consideration, and a strong case in the way of negative testimony was made out, of entire ignorance on the part of the plaintiff that any suit had been brought upon the security, or that any defence existed or was claimed to exist against it. Nor was any case made out for charging the plaintiff with notice in law of the pendency of the prior suit. The cases cited by the appellants’ counsel show that the effect of a pending suit as notice is such only, as to charge a purchaser during the suit with the decree which may be made in the suit. The principle on which the doctrine rests is that the court will nob suffer its decrees to be made ineffectual by an alienation pending the suit. (Preston v. Tubbin, 1 Vern., 286; Anonymous, id., 318; Self v. Madox, id., 459.)

The case is then brought to the question, whether the admission of a previous owner of a chose in action can be proved against a purchaser from him, who has bought for a fair consideration, and between whom and the former owner there exists no other relation than that of purchaser and seller. It is not the case of a nominal purchase, the former owner retaining the equitable interest, but of an actual and complete transfer of all interest to the purchaser. On that question, Paige v. Cagwin ( 7 Hill, 361 ) is a full authority. That case was ably considered by the court which determined it, and put an end to whatever doubts had been entertained upon the question involved. Stark v. Boswell ( 6 Hill, 405 ) was decided shortly after Paige v. Cagwin, and in its essential 'features was identical with the case before us; and the Supreme Court held the evidence of the mortgagee’s admission inadmissible to affect the purchaser of the land under a sale on a statute foreclosure. In Booth v. Swezey (4

p. 493

Seld., 276) the point was again raised, and this court held the admissions of the mortgagee inadmissible against his assignee.

The judgment should be affirmed.

Selden, J., expressed no opinion; all the other judges concurring,

Judgment affirmed