Bliven v. Lydecker — 28 N.Y. St. Rep. 387

Majority

p. 387

Albert A. Bliven, App’lt, v. Smith Lydecker et al., Resp’ts.

(Supreme Court, General Term, Second Department,

Filed December 9, 1889.)

Headnote

Usury—Knowledge and assent op lender to exaction op, must be shown.

To render an obligation by way of mortgage or otherwise void for usury, it is necessary to clearly establish knowledge and assent on the part of the lender. No usury on the part of an agent is fatal to the validity of an obligation unless such assent is shown beyond a reasonable doubt.

Appeal from judgment of special term dismissing plaintiff’s complaint on the merits, in an action of foreclosure, on the ground of usury.

Garrett Z. Snider, for app’lt; Irving Brown, for resp’ts.

The action in this case is one for foreclosure of a mortgage, and the defense to the same is based upon the usury exacted from the borrower by John W. Schuler, acting as agent for his wife, Margaretta1 Schuler.

The mortgage in this case was executed March 25, 1879, and dated February 1, 1879, and has been transferred by a subsequent assignment to the plaintiff Bliven. The testimony on behalf of the defendant tends to show that the mortgage, amounting to $4,000, was made up of the following items:

p. 388

There is no evidence in this case bringing the details of the loan home to Mrs. Schuler, or showing that she took any part active or passive in effecting the same. The testimony of Smith Lydecker, for the defense, expressly states that he never heard her name mentioned in connection with the transaction ' until John W. Schuler said that he wished the mortgage to be made out in her name.

In order to render an obligation by way of mortgage or otherwise void on account of usury, the recent decisions in this state seem to demonstrate that it is necessary to clearly establish knowledge and assent on the part of the lender, and that no usury on the pai’t of an agent is fatal to the validity of an obligation unless such assent is shown beyond a reasonable doubt. In the case under consideration there' is nothing in the evidence to justify the findings in support of such assent. Stillman v. Northrup, 109 N. Y., 473 ; 16 N. Y. State Rep., 417; cited and approved in Baldwin v. Doying, 114 N. Y., 453 ; 23 N. Y. State Rep., 759; Philips v. Mackellar, 92 N. Y., 34 .

In Stillman v. Northrup, cited above, the court says: “ It was not sufficient for the defendants merely to show that plaintiff’s agent took and exacted the $5,000 as a condition of the loan, but it was incumbent upon them to show that he took the $5,000 with the knowledge and assent of the plaintiff, or that she at least by acquiescence became a party to the usurious exaction.”

The tendency and spirit of the cases above referred to seem to overrule the decision in Wyeth v. Braniff, 84 N. Y., 627 , and to establish a more just and equitable rule than that there laid down. In Stillman v. Northrup the court further decides that any subsequent knowledge, after the date of the making of the loan, by lender in regard to usury on the part of the agent in connection with the making thereof, even if proved, makes no fatal objection to the force and validity of the obligation.

The judgment, therefore, should be reversed, with costs.

Pratt, J., concurs.