King v. McVickar. I have now gone over the points of law raised by the cross bill, and will next consider the only disputed fact which I deem material to the proper disposition of the cause at this time, which is whether W. B. Lawrence has paid his proportion of the Trust Company mortgages. In this inquiry, I set out with the apportionment made between him and McVickar in May, 1841, and I must say unhesitatingly, that there is no mode of stating the transaction upon that basis, by which I can make out that he has paid the share of those mortgages, which he assumed upon his lots in the apportionment. Whether the Trust Company debt embraced in the mortgages assigned to the New York Insurance Company, be included or omitted; and whether the calculation be made on the full amount of the Trust Company debt, or upon the sum which was required to pay for the certificates with which it was discharged; the result is in this respect, the same. In this conclusion I leave out of view, the sums which Dr. McVickar says he paid towards those certificates, and take all that Mr. Lawrence gives as paid by himself. I do this irrespective of the propriety of McVickar's claims; it being unnecessary at this time, to decide their validity. The question arises between Mr. King and the administrator, and the answer of W. B. Lawrence is not to be weighed in disposing of it. In my view therefore, the cross bill is sustained in its principle, and the administrator of Isaac Lawrence is entitled to a part of the relief for which he prays. As to a portion of his case, further parties are requisite, and the cross bill must stand over, to enable him to bring them before the court. Inasmuch as the case may be varied by the issues which may arise between him and the new parties, I will not at this time enter into the details of the payments made by McVickar and W. B. Lawrence respectively, towards the purchase of the Trust Company certificates. I trust, when that question comes up for decision, it will be better elucidated by the testimony, than it seems to be by the papers before me. To recur to the original suit. The complainants have a clear right to enforce the amount due to them against the lots of Dr. King v. McVickar. McVickar. Although by Mr King's vigilance, a subsidiary security has been obtained, to which the cross bill shows a qualified right, on the complainants' debt being paid, it would be in equitable and unjust, longer to delay their remedy against the primary fund, in order to settle the controversy between these. other parties, in which they have no interest. This consideration is strengthened by the fact, that the further delay occurs in consequence of the omission of parties in the cross bill. I feel warranted therefore, under the circumstances, in adopting the civil law rule of subrogation, instead of requiring the complainants in the first instance to resort to the ancillary securities for their debt. The complainants in the original suit, may have a decree reinstating the Trust Company mortgages against the lots of McVickar, and for a sale thereof to pay the amount remaining due to them on the $25,000, and their costs of that suit. The same decree will declare that Isaac Lawrence's administrator is entitled to the benefit of the mortgage to Mr. King, dated November 1, 1841, (after the payment of such amount to the complainants,) to the extent of so much of the $25,000, and interest, as W. B. Lawrence's lots ought to have paid, and which is collected out of the lots of McVickar. It will further direct that the cross bill stand over, with leave to the complainant therein to add parties, and reserving all the other questions and directions growing out of the cross suit; with liberty to apply &c., and for any party to set it down as upon the equity reserved, on the complainants' omission to proceed. On amending the cross bill, the complainant must pay the defendant's costs of the hearing. As the suit is to stand over, it is not proper in this stage of it, to make a final disposal of the case between the administrator and W. B. Lawrence. Decree accordingly. The N. Y. Dry Dock Co. v. The American Life Insurance and Trust Co. THE NEW YORK DRY DOCK COMPANY v. THE AMERICAN LIFE INSURANCE AND TRUST COMPANY and others. When a person in want of money, applies to a capitalist for his note payable at a future day; offering as security, his own obligation, with an indorser or a mortgage; and the respective obligations are executed accordingly; the transaction is a loan. When two persons, who are both desirous to raise money, exchange their own、 notes to be used for that purpose with third persons; it constitutes an exchange of securities merely. The effect is the same as if each had used his own note, with the other's indorsement. A banking company in New York, which had stopped payment, being desirous of borrowing a large sum of money, applied to a Trust Company usually lending money in New York, for a loan of their certificates of deposit payable at short dates, and offered to secure the payment of the amount, by their own obligations and a mortgage on real estate of sufficient value. The Trust Company agreed to issue their certificates bearing five per cent. interest, payable in London within two years, for £48,000, sterling, on receiving the bank's promissory notes for £50,000, sterling, payable in London at the rate of $5 for each £1 sterling, with six per cent. interest, within seven years; secured by a conveyance of the real estate to trustees, containing a provision that the bank should pay to the Trust Company in New York, the respective instalments of the £50,000, with interest at seven per cent. forty days before each instalment should mature in London, at the rate of $5, for every £1 sterling. It was understood by the parties, that the Trust Company would negotiate the bank's obligations in London, with their own guaranty, in order to meet their certificates of deposit. The arrangement was consummated between the parties. Held, 1. That the transaction was a loan by the Trust Company to the bank, and not an exchange of paper, or a sale. 2. That the reservation of £2000, or four per cent. on the principal sum secured to be paid, rendered the contract usurious. The notes of the bank were negotiated in London, to bankers there. Held, nevertheless, that the contract was governed by the laws of New York. Whenever a commission, in addition to legal interest, is charged by the lender, on discounting a bill or note, or on making advances thereon, unless it be for some real service distinct from the loan itself, and then be a moderate and reasonable charge; it will be referred to the use of the money loaned, and render the transaction usurious. On applying for a loan, the borrower offered to the lender's agent a collateral advantage, which was likely to be prejudicial to the former, and was certain to be The N. Y. Dry Dock Co. v. The American Life Insurance and Trust Co. profitable to the latter. The offer was accepted and the loan was made. Held, that the offer constituted one of the terms and conditions of the loan. November 12, 13, 14, 15, 1845; February 6, 1846.(a) THE bill in this cause was filed September 12, 1842, and as amended August 2, 1843, stated that the complainants, a corporation in the city of New York, having banking and other powers, in July, 1838, being in want of a considerable sum of money, to enable them to discharge its liabilities and their bank to resume specie payments, opened a negotiation with Mr. Duer, the vice president of The American Life Insurance and Trust Company, a corporation created by the state of Maryland, but then and still having an office or agency in the city of New York, and then professing to loan money in that city; and on learning that the Trust Company would loan the required amount, the complainants proposed to secure its payment by their bonds, secured by real estate in the city of New York, worth double the amount borrowed. That after much negotiation, it was finally arranged and agreed between the complainants and the Trust Company by its vice president, that the Trust Company should loan to the complainants two hundred and fifty thousand dollars for a term of years, upon the following terms and conditions, viz: The complainants should give their bills of credit or bonds, as they were called, for fifty thousand pounds sterling, payable in London to the order of Mr. Duer, bearing interest at six per cent. per annum, payable half-yearly, on the fifteenth days of July and January, until paid, and calculated at five dollars to the pound sterling; £10,000 being payable July 15, 1842; £10,000, July 15, 1843; £10,000, July 15, 1844; and £20,000, July 15, 1845; and that the same should be chargeable upon and secured by the complainants' real estate in the city of New York, worth double the amount. And further, that the com (a) The reporter has been induced by the frequent occurrence of defences on the ground of usury, the importance of the questions discussed in this case, and the magnitude of the interests involved; to deviate from his usual practice, and insert in full the arguments of the counsel on the principal points. The N. Y. Dry Dock Co. v. The American Life Insurance and Trust Co. plainants, instead of actually paying its bills of credit or bonds in London, and the interest thereon at six per cent., should pay the bills of credit or bonds to the Trust Company in New York, at the rate of five dollars to the pound sterling, and interest thereupon at seven per cent. half-yearly, and to make such payments at least forty days previous to the time when the same should fall due in London. The complainants being in effect required to pay $250,000 to the Trust Company, at seven per cent. interest, half-yearly, in New York, at least forty days before the times interest and principal were payable in London. And in addition to, and forming a part of the terms of the loan from the Trust Company, the complainants were to allow a deduction of one per cent. on the nominal amount of $250,000; which as represented, was to enure to the private benefit of Mr. Duer, and to be paid to him upon the consummation of the agreement. And also in addition to, and forming a part of the terms of the loan, it was agreed that the complainants should guaranty to Mr. Duer, that upon such consummation, (by which they would be enabled to resume specie payments,) he might and could purchase in the market, one thousand shares of their capital stock, at seventy per cent. on its par value; that being the reduced value of the stock at the time of making the coutract; the object and intention of the guaranty, being to secure to Mr. Duer the advantage of purchasing the stock at the then price, in case the contract were carried out and their resumption of specie payments should increase the market value of the stock; and to secure him against the rise of the stock, which the purchase of so large an amount might create in the market. Which guaranty, the parties then justly estimated might produce a loss to the complainants exceeding five thousand dollars, and a profit to Mr. Duer of ten thousand dollars. That the Trust Company, instead of actually loaning to the complainants upon the securities, the sum of two hundred and fifty thousand dollars, the nominal amount was agreed to be further reduced four per cent., and then instead of money, that the complainants should take and accept, in lieu thereof, certain certificates or obligations, made and given by the Trust Company, to the amount of twenty-four thousand pounds, adding VOL. III. 28 |