Guardian Mutual Life Insurance v. Kashaw

Rapallo, J. The referee" found, as matter of fact, that the mortgagor agreed to give for the loan a bonus of $3,000 by the assignment of eight small mortgages, but that such bonus was agreed to be given to Newel W. Bloss and Frederick W. Caruthers; that the small mortgages were assigned to B. G. Bloss, who was second vice-president of the mortgagee, and father of Newel W. Bloss. But the referee refused to find that B. G. Bloss acted in relation to these small mortgages as and for the mortgagee, and he also refused to find that the assignment of the small mortgages was for the benefit of the mortgagee., Upon these findings the defendant failed to make out the *546 allegation of usury. (Condit v. Baldwin, 21 N. Y., 219; Bell v. Day, 32 id., 165; Lee v. Chadsey, 2 Keyes, 543; Estevez v. Purdy, Ct. of Appeals, June, 1876; ante, 446.) But the General Term reversed the decision of the referee, upon the facts as well as the law, and it is, therefore, necessary to refer to the evidence to ascertain whether it establishes that the assignment of the small mortgages was for the benefit of the mortgagee, or that the mortgagee was a party to- the arrangement under which they were transferred. The defense set up in the answer was that the mortgagee (The Mutual Protection Society) agreed to make the loan of $7,000 to Mrs. Kashaw, the mortgagor, provided she would pay the bonus of $3,000 by the assignment of the small mortgages. It was incumbent upon the defendant to prove that the mortgagee was a party to this agreement. If the bonus. was contracted for and received by Caruthers and IT. W. Bloss for their, own benefit, the mortgagee receiving only lawful interest for the money advanced, by it, the defence of usury must, under the authorities before cited, fail. The exorbitant amount of the bonus cannot affect the legal question. The evidence showed that Caruthers and IT. W. Bloss were solicitors for life insurance for the mortgagee, and had desks in its office. It does not appear that they, or B. G. Bloss, had authority to contract in behalf of the mortgagee to make loans. The son of Mrs. Kashaw applied, on her behalf, to Caruthers to negotiate the loan, and he applied to IT. W. Bloss. Kashaw had personal interviews on the subject with Caruthers and IT. W. Bloss, and at one of these offered to pay the $3,000 in small mortgages if they would get the loan through. The arrangement made with Kashaw, as testified to by Carathers without contradiction, was that Mrs." Kashaw was to give a commission to IT. W. Bloss, and that he was to share it with Caruthers, and that the transfer of the small mortgages was' that commission. Thus far there is nothing to connect the mortgagee with this commission, but the circumstances relied upon for that purpose are, in the first place, that when the transaction came *547 to be closed, the papers were all drawn by the counsel of the company, and the assignments of the small mortgages were made to B. G. Bloss, and executed in the office of the company. B. G. Bloss explains this circumstance by testifying that he took these assignments in his own name at the request of his son, who was at the time of their execution absent in Georgia; that he had no interest in them and was to give the whole proceeds of them to his son; that they all belonged to him, except the part to which Oaruthers was entitled. It is also claimed, that "the president of the company mortgagee was cognizant of and sanctioned the transaction, but this fact is not established. At the time of the execution of the assignments, the president was absent and said to be sick. The next day Mrs. Kashaw’s attorney went to the office of the mortgagee, and went into the president’s room and received from him a check for the full amount of the loan. He (the attorney) testifies that the small mortgages were taken by Mr. Bloss and put in the safe, but he does not say that this was done in the president’s room or in his presence, and there is no evidence in the case that the president had any knowledge of the transaction. It is unnecessary, therefore, to consider what effect such knowledge would have had, if it had been shown. The next fact relied upon is, that some of the small mortgages were subsequently assigned by B. G. Bloss to the company mortgagee, but he testifies that he received credit from the company for the full amount of the principal and interest of the mortgages so transferred. That the company had no interest in them, but they belonged to his son and Caruthers. This is all the evidence tending to connect the mortgagee with the exaction of the bonus. There is no conflict in the testimony of the witnesses, and bearing in mind that the burden was upon the defence to establish that the company was a party to the agreement for the bonus or accepted the benefit of it, we think the evidence fails to establish that fact, and that the court at General Term was not justified in reversing the judgment entered upon the *548 report of the referee. Usury,- like every other defence, must be established by proof, and cannot be sustained on mere surmise and conjecture, especially when the direct evidence, so far as it goes, tends to refute it. The order of the General Term should be reversed and the judgment entered upon the report, of the referee affirmed, with costs. All concur, except Church, Ch. J., dissenting. Order reversed and judgment accordingly.