Bischoff v. Packard

McLaughlin, J.: This action is brought to procure a judgment that a note given hy the plaintiff to the defendants, and an assignment of his interest in his grandfather’s estate as collateral security for the payment of the same, are usurious and void and for a cancellation of the assignment. The defendants as an affirmative defense alleged that they brought an action against .this plaintiff in the City Oourt of the city of New York upon the note referred to in the complaint, and there procured on the 16th of December, 1908, a judgment against him for the amount due upon the note, with interest; that the summons in that action was personally served on this plaintiff, and alb the issues in this action* were conclusively resolved in fayor of • these defendants. [407] After issue had been joined the defendants procured an order requiring the plaintiff, within twenty days after the service of the same upon him, to reply to this affirmative defense. He failed to reply, and thereupon they moved for judgment on the pleadings dismissing the complaint on the merits. The motion was denied and the defendants appeal. The note was the principal obligation. The assignment was given as collateral security for its payment. The judgment in the City Court finally and conclusively determined—the summons having been personally served on the defendant in that action and no appeal having been taken from the judgment — the validity of the debt represented by the note, as well as the amount due. The existence of the debt and the validity of the note,- as well as the validity of the assignment, cannot now be questioned. The assignment was a mere incident to the debt given solely as collateral security for its payment. It cannot be separated from the debt and exist independently of it. (Manhattan Life Ins. Co. v. Johnson, 188 N. Y. 108; Merritt v. Bartholick, 36 id. 44.) In Manhattan Life Ins. Co. v. Johnson (supra) a mortgage on property in this State was given to secure the payment of promissory notes payable in Massachusetts, and it was urged, notwithstanding the notes were valid in Massachusetts, nevertheless the mortgage was void for usury in the State of New York. The court held that the notes being valid in Massachusetts the mortgage could not be here attacked. Judge G-ray, who wrote the opinion, said: “The giving of security was but an incident of the agreement of the parties; for it was but a means of securing what was agreed to be done. It did not. affect the fulfillment of the agreement, and, if that is unassailable, how can the defense of usury in the agreement for the loan or forbearance of money be made out ? Manifestly it cannot be. The borrower could not show, that the loan to him .was so affected by usury that the repayment of the principal sum was unenforceable. * * * .The legal fulfillment of a contract of loan on the-part of the borrower'is repayment of the money, and the security given is but the means of securing what he has contracted for.” When the plaintiffs in the action in the City Court proved [408] the note, and established its _validity by the judgment there rendered in their favor, this plaintiff could not thereafter, without setting aside that judgment, question the validity of the assignment. A judgment obtained without fraud or collusion is conclusive between the parties to an action as to all the matters which were or might have been litigated. (Nicholas v. Lord, 193 N. Y. 388; Reich v. Cochran, 151 id. 122; Carpenter v. Osborn, 102 id. 552.) The plaintiff in the City Court.had an opportunity to litigate the question as to whether the loan were usurious, but he did not see fit to do so. He permitted the defendants there to establish the validity of the note and take a judgment for the. amount due. That judgment is a complete defense to the cause of action set out in the complaint. The plaintiff by not replying to the affirmative defense, as he was directed to do, thereby admits all of the facts set forth as true. These facts all .being admitted defendants were entitled under section 516 óf the Code of Civil Procedure to judgment dismissing the complaint on the merits. The order appealed from, therefore, should be reversed, with ten dollars costs and disbursements, and the motion granted, with ten dollars costs. Ingraham, P. J., Scott, Miller and, Dowling, JJ., concurred. Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.