Underhill v. Crennan

Barnard, P. J. : The plaintiff held two mortgages against the defendant Orennan, one for $2,000 and one of $700. These mortgages were canceled, and the amount due upon them entered into a new loan of $4,000. Usury was taken upon this loan of $4,000. The mortgage has been adjudged a nullity at the instance and upon the answer of the mortgagor. This action is brought to set aside the certificates of satisfaction of the two mortgages amounting to $2,700. It was admitted upon the trial that the two mortgages for which the said certificates of satisfaction were given wTent to make part of the consideration for the giving the $4,000 mortgage referred to in the [570] complaint. The judgment restored the mortgages canceled. It has been repeatedly held that a valid claim is not invalidated by being embraced in an usurious security. (Winsted Bank v. Webb, 39 N. Y., 325 ; Cook v. Barnes, 36 id., 520; Real Estate Trust Co. v. Keech, 69 id., 248; Crippen v. Heermance, 9 Paige, 211.) A mortgage security avoided for usury revives the good debt, and the satisfaction of the good debt will be set aside and the canceled mortgage enforced (Gerwig v. Sitterly, 56 N. Y., 214), and the canceled debt has been held to have passed with the assignment of the usurious mortgage which embraced it. If the case of Lafarge v. Herter (9 N. Y., 241) can be said to conflict with this principle, it conflicts with antecedent and subsequent cases. It does not, however, conflict with the principle on which this case rests. In that case the creditor held an usurious mortgage which embraced a good judgment. "While he so held the mortgage he proceeded to enforce the judgment. The court held that he could not prove his own usury to avoid the satisfaction of a prior demand. In this case the usurious mortgage was canceled at the suit of the debtor; and in such a case clearly the old debt may be enforced. (Patterson v. Birdsall, 64 N. Y., 294.) Judgment affirmed, with costs. Gilbert, J., concurred; Dykman, J., not sitting. Judgment affirmed, with costs.