Baldwin v. . Moffett

Rapallo, J. We find it impossible to separate the agreement that the sum remaining due on the Appleby mortgage should be paid out of the $6,375 advanced by the plaintiff, from the usurious agreement under which the advance was made. The stipulation as to the application of the money was one of the conditions upon which the money was advanced, and was part of the same agreement by which a discount of five per cent in addition to legal interest was reserved to the plaintiff. The check of the plaintiff was given to Mr. Camp in payment for the second mortgage bonds of Sherman; at five per cent discount, and it was for the purpose of making those bonds and *85 the mortgage given to secure them, a first lien upon the property, that it was stipulated that the balance due on the Appleby mortgage, which was a prior lien, should be discharged with the proceeds of the check. The mere loan of the money to Sherman, or the simple purchase of the second mortgage bonds, without any agreement as to the application of the proceeds, would have conferred upon the plaintiff no right of subrogation, even if the proceeds were in fact used to pay off the first mortgage. The agreement that the first mortgage should be paid off with the plaintiff’s funds was, therefore, an essential part of the plaintiff’s case, 'and this agreement could not be established without resorting to the usurious agreement under which the plaintiff’s advance was made, the agreement having been all made at one time, and being entire. The mere facts that at the time of the advance the plaintiff was a subsequent incumbrancer to the amount of $750, and that the first mortgage was past due, and that the money of the plaintiff was used to pay off the first mortgage (if that fact was in the case) would not have been sufficient to entitle the plaintiff to be subrogated, for the payment was not made by the plaintiff to the mortgagee, but to the mortgagor or his agent, and if it be argued that the plaintiff constituted the mortgagor his agent to pay off the first mortgage, the answer is that that agency could not be shown without resorting to the usurious agreement under which the money was advanced, and claiming through the effect of that agreement. In the case of Patterson v. Birdsall (6 Hun, 632; S. C., 64 N. Y. 295; 21 Am. Rep. 609), this difficulty did not exist; for in that case the subsequent incumbrancer, having the right to protect his own security, himself paid off the first incumbrance. It was not necessary, for the ¡mrpose of establishing his right of subrogation, to resort to any dealing between him and his debtor. His right of subrogation sprang from the payment rightfully made by him to the holder of the first incumbrance for his own protection, and was complete without reference to any other dealing, and his taking a usurious security for his reimbursement was held not to vitiate the right of subrogation which had been thus acquired. In the present case *86 the claim to subrogation arises out of the agreement between the plaintiff and Sherman, and cannot be established without a resort to that agreement, and as that link fails by reason of the usury, the claim to subrogation must fall with it. The judgment should be affirmed,'with costs. All concur. Judgment affirmed.