Mutual Life Insurance v. Bowen

Sutherland, J. The usury was established. It was a bald case-of usury. The cases appear to show, conclusively, that the holders of the 4th mortgage could set up the usury. (Post v. Dart, 8 Paige, 640. Morris v. Floyd, 5 Barb. 130. Dix v. Van Wyck, 2 Hill, 522, and other cases cited by Mr. Smith.) If the Broadway Bank mortgage was affected or tainted with usury, it was and is void as to the holders of the 4th mortgage, and as to them was not a lien either at law or in equity, on the surplus moneys. The court had not only the power, but it was its duty in this action to provide for the equitable distribution or disposition of the surplus moneys. (Livingston v. Mildrum, 19 N. Y. Rep. 440. Beekman v. Gibbs, 8 Paige, 511, 512. Field v. Hawxhurst, 9 How. Pr. 77. The Eagle Fire Company of N. Y. v. Flanagan, 1 How. Ct. of Appeals Cases, 303.) In fact, I do not think it can properly be said that this action has terminated, until the surplus moneys are disposed of in it. It is a mistake, I think, to call the reference a collateral reference, or the issue as to the usury, arising on the reference, a collateral issue. I think this issue may be said to be a direct issue, arising, to be sure, on the reference, but necessarily to be determined by the court, before the [623] court can finally and completely administer the whole of the fund resulting from the purchase and sale. [New York General Term, June 7, 1866. I can see no reason why the question of usury, and the rights of parties to the reference proceeding, resulting from the determination of that question, should not be determined in this action. I can not see why the holders of the 4th mortgage, in this case, should be forced to bring another and independent action, to stay the payment of the moneys, and to litigate the question of wrong. I am not clear that the cases of King v. West, (10 How. Pr. 333,) and Husted v. Dakin, (17 Abb. 137,) interfere materially with the views above expressed. I think the order should be reversed. Geo. G. Babnabd, P. J. concurred.