Majority
p. 170William T. Standen, App’lt, v. William L. Brown, Resp’t. (Supreme Court, General Term, First Department, Filed December 14, 1894.)
Headnote
Sale—Pno of.The evidence, in this case, was held sufficient: to establish - that the transfer of notes and mortgages, in the form of collateral security, was a sale.
Appeal from a judgment dismissing the complaint.
July 28, 1892, the plaintiff was the owner of the following bonds and mortgages:
July 28, 1892, the plaintiff assigned to the defendant the aforesaid fifteen bonds and mortgages, by a written instrument, “as-collateral security ” for the payment of the plaintiff’s bond, executed on that date, by which he undertook to pay to the defendant $10,000 one year from date, with interest at six per cent., payable semi-annually. On the same date the defendant, in consideration of said bond, assignment, and of the delivery of said bonds and mortgages to him, gave to the plaintiff his check for $9,800, which -was paid. On the 8th of September, 1892, the plaintiff was the owner of the following bonds and mortgages :
p. 171
September 8, 1892, the plaintiff asigned to the defendant said nine bonds and mortgages, by a written instrument, “ as collateral security” for the payment of the plaintiff's bond, executed on that date, by which be undertook to pay to the defendant $3,376.67 one year from date, with interest at six per cent, payable semiannually. On the same date the defendant, in consideration of said bond, assignment, and the delivery of the bonds and mortgages to him, gave to the plaintiff his check for $3,300, which was paid. On the 18th of October, 1892, the plaintiff was the owner of three shares of the stock of the Pelhamville Land and Homestead Association, of the par value of $600 each. October 18, 1892, the plaintiff assigned to the defendant said three shares of stock, by a written instrument, “ as collateral security ” for the payment of the plaintiff’s bond, executed on that date, by which he undertook to pay to the defendant $1,623.33 one year from date, with interest at six per cent., payable semi-annually. On the same date the defendant, in consideration of said bond, assignment, and the delivery of said shares, gave his check to the plaintiff for $1,590, which was paid. On November 8, 1893, this action was begun to have the three bonds and the three assignments, executed by the plaintiff to the defendant, canceled as usurious and void. The plaintiff alleges in his complaint that the ■complaint that the difference ($200) between the plaintiff’s bond .and defendant’s check of July, 28, 1892, the difference ($76.67) between the plaintiff’s bonds and defendant’s check of September 8, 1892, and the difference ($33.33) between the plaintiff’s bond and the defendant’s check of October 18, 1892, were retained by the defendant, pursuant to a usurious agreement between the litigants that the plaintiff should pay, and defendant receive, these ■sums in excess of the legal rate of interest on the sums which the plaintiff obligated himself to pay by those bonds. The defendant, in his answer, denies that any usurious agreement was made between the parties.
Argued before Van Brunt, P. J., and Follett and Parker, JJ.
Grove M. Harwood, for pl’ff; Eugene S. Ives, for resp’t.
The special term found as a fact that the transactions were not loans by the defendant to the plaintiff, but were sales by the plaintiff to the defendant, and that the securities mentioned in the assignments and the three bonds given by plaintiff to defendant were for the purpose of guaranteeing the payment of the bonds and mortgages sold to defendant. The plaintiff filed
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exceptions to the facts found by the special term and to its conclusion of law. The only question involved on this appeal is whether the findings are contrary to the weight of evidence. The fact that it was recited in all of the assignments that the bonds and mortgages were assigned by the plaintiff to the defendant “ as collateral security” for the payment of the bond of even date is strong evidence that the three transactions were loans instead of purchases. Again, the fifteen bonds and mortgages assigned July 28,1892, amount, without interest from their dates to July 28,1892, to $10,216.67, while the bond given by plaintiff to defendant was for $10,000, and the check given by him to plaintiff was for $9,800, making a discount of $416.67, besides accrued interest on the securities. The nine bonds and mortgages assigned by the plaintiff to the defendant September 8,1892, amount, without interest from their dates to September 8, 1892, to $3,376.67.. The bond given by the plaintiff to the defendant on this transaction was for the same amount, and the plaintiff’s check was for $3,300, making a discount of $76.67, aside from accrued interest on the securities. The par value of the three shares of stock assigned by the plaintiff to the defendant October 18,1892r was $1,800. The plaintiff received from the defendant $1,590, and gave his bond for $1,623.33, making a discount of $33.33. It will be observed that the first bond is less, by $216.67 and the accrued interest, than the amount secured by the first fifteen bonds and mortgages. If the transaction were a sale and guaranty of payment of the securities sold, it is difficult to see why the purchaser did not execute a guaranty of the payment of the bonds and mortgages, principal and interest. • The second transaction is not open to this criticism, though the bond taken is not equal to the principal and interest of the nine mortgages assigned. In respect to-the third transaction, it does not appear that the value of the three shares of stock was agreed upon or even discussed between the parties, .which is usual when a sale is made. The plaintiff swore positively that the three transactions were loans, and that the three assignments were, as recited in them, intended as collateral security for the payment of the sums loaned. In this he was corroborated by Charles M. Marvin, who was present at the first and second transactions. This witness testified that the agreement was that the plaintiff should pay the defendant a bonus of two per cent, in addition to the legal rate of interest, and that the two transactions were loans. In opposition to this, the defendant testified that the-transactions were not loans, but were purchases of the securities assigned, and that the bonds were taken as guaranties of the payment of the securities assigned. Exactly how the payment of the three shares of stock was or could be guarantied is not explained-In a letter written by the plaintiff, September 12, 1893, to the defendant’s attorneys, reference is made to a letter written by them to him September 11, 1893. Unfortunately, the letter of the 11th was not put in evidence. In the plaintiff’s letter he says:
“ When these transactions were made, it was certainly understood that this was only an indirect way to the purchase by Col. Brown of the numerous little mortgage which I held, and it was; done in this way in order that the colonel might not be bothered
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with the collection of small amounts of interest, but might look to me for such payments in one sum.”
This statement is a strong corroboration of the testimony of the ■defendant, and we regard it as of sufficient probative force to sustain the finding of the learned trial judge, who had the witnesses before him, and had an opportunity to observe their manner. The judgment should be affirmed, with costs.
All concur.