Neefus v. Vanderveer

The Assistant' Vice-Chancellor. The usury as it is alleged in the answer, is quite incomprehensible. Neefus held a mortgage for $15,300, payable May 1, 1840, with annual interest at six per cent. In October, 1836, he relinquished that mortgage, taking in lieu of it, thirteen mortgages on distinct parcels of the same premises, for the aggregate sum of $15,300, payable on the same 1st of May, 1840, with interest annually, at seven per cent.; and the answer gravely asserts, that for this new loan and forbearance, the mortgagor paid to Neefus $500. The statement in effect is, that the.mortgagor raised the rate of interest from six to seven per cent, on a mortgage which had nearly four years to run, and paid $500, for the forbearance, when there was not a day’s forbearance given. The answer itself, shows to my satisfaction, that the forbearance of the debt, was not the real consideration for the payment of the $500. It is however stated in the bill, and so is the proof so far as it respects the two mortgages now in suit, that the new mortgages were made payable on the 1st of September, 1840 ; and as matter of evidence, the defendants are perhaps entitled to'insist that their answer is erroneous. But they encounter another serious difficulty, for this evidence does not sustain the agreement as it is set forth in the answer; and the rule is very strict, in equity as well as at law, that in pleading an usurious agreement, its terms must be distinctly stated, and it must be proved as it is alleged. (Smith v. Brush, 8 Johns. 84; Vroom v. Ditmars, 4 [271] Paige, 526; New Orleans Gas Light and Banking Company v. Dudley, 8 ibid. 452.(a) If the answer had been correct, as to the time of payment inserted in the new mortgages, the testimony fails utterly in supporting the alleged usury. The only witness sworn, so far from proving that there was to be any extension of time or forbearance says his opinion is that the principal was to be made payable at the same time, with the old mortgage. He shows not only that there was no agreement for an extension, but there was no negotiation for any thing of the kind. It was not treated of, or mentioned. It was not the subject of the mortgagor’s application, or of the contract which ensued. How the 1st of September, 1840, came be inserted, is not shown ; but both the answer and the evidence prove, that it was not a part of the contract on which the $500 was paid. The evidence shows the nature of the transaction, and for what consideration that payment was made. The mortgagor wanted to lay out this farm into town lots, and it was obvious, that a large mortgage covering the whole farm, would seriously interfere with the sale of such lots. He declared to the mortgagee, what in this point of view was plain enough, that it would be a material advantage to him, to have separate mortgages given on the sections which he proposed to lay out and sell. It was equally obvious, that this scheme was not to work any advantage to the mortgagee. It was certain to occasion hhit inconvenience to some extent, quite likely to disappoint him in the punctual payment of the debt, and might possibly lead to actual "loss. Thus he had a large security, the principal payable at one time, and the interest in a single annual sum. By taking thirteen mortgages, he would have to keep as many different accounts of the interest, and principal. The lots were to be sold subject to the mortgages, and it was extremely improbable, that thirteen different debtors would.be punctual at all times, in paying their interest and principal. Then as to his security, errors [272] of judgment might be made in the apportionment, as to the relative value of the different subdivisions ; in the division, the farm was to be cut up by streets and avenues, and by the new mortgages, the land included within the streets was virtually ceded to the public use ; the scheme for selling it in lots, might prove a partial failure; and in the end .the mortgagee might have to take the least desirable sections, in payment of the mortgages charged on them, and so detached, that they would not be valuable for farming, and not worth the amount of the mortgages. For the anticipated advantages to himself, and the disadvantages to the mortgagee, the mortgagor offered and agreed to pay $500, in order to have the mortgage for $15,300, divided up into thirteen separate mortgages, on distinct parcels of land. The evidence is positive, that this was the consideration for the $500, and I see nothing unreasonable in it, and no color for calling it usury. There is another objection to these mortgages, on the score of usury, viz. that although given on the 15th of October, 1836, and the old mortgage then cancelled, they were dated on the first of September, thereby including one per cent, more of interest for the intervening time, than was due on the old mortgage on the day of its cancellation. It is a perfect answer to this, that the defendants sets up no corrupt or usurious agreement in respect of it; in their answer. The discharge of the old mortgage, corresponds in date, with the mortgages in question ; but it is needless to speculate on the explanations which might have been given on this point,, if it had been put in issue by the pleadings. The complainant is entitled to the usual decree for a foreclosure and sale. Footnotes [(a)] And Rowe v. Phillips, 2 Sand. Ch. R. 14.