The assignment to Rutan was made December 18, six months after the appointment of the receiver. The order of the New York Court authorizing the assignee to make the settlement was made September 12, 1885, and the settlement was made very soon thereafter. The at-1. tachment was not issued until October 27, 1885, about a month after the receiver had made the settlement with the assignee. The assignee had, under his assignment, a good title to the property thereby assigned; but that title was (as to assets in States whose policy it was not to recognize, as against the claims of creditors of the assignor domiciled there, the validity of general assignments for the benefit of creditors with preferences) liable to be defeated by attachments sued out of the courts of those States by creditors domiciled therein to recover their debts out of such assets.

The receiver made the settlement with the assignee, without any manner of opposition or objection on the part of the creditors of Lee domiciled here. And that settlement was made in conjunction with other creditors of the construction company and as part of a plan into

which they and other persons interested in the B The questions raised ure stated in the

The mother of the defendant was not only administratrix of the estate of the mortgagor, but was also guardian of her son, the defendant. The mother died in February, 1883. On August 4, 1884, the defendant became of age, soon after which he learned of the amount which had actually been paid on the bond.

As between this heir at law and the assignees of the mortgage, ought the claim for $700 to be enforced? I think not. I believe that the mortgagor may voluntarily increase the amount due upon a mortgage in the manner above presented, because the land he is burdening is his, but I cannot perceive any ground for such right on the part of his administratrix. The administratrix had no power to execute a mortgage on the real estate of the intestate. did not own the land and, in that capacity, had no interest in the land. Indeed, except in case of debts which the personal estate would not pay, she could not reach the land for any purpose, and then only through an order of the orphans' court.

She

Jeremiah E. ADAMS
v.

Cord MAHNKEN et al.

1. Evidence on the question whether a mortgage, given to secure a usurious premium in addition to the debt, had been paid off, or whether the indebtedness secured thereby was included in a later mortgage, examined. Held, that the first mortgage had been fully paid before the second was executed and that recovery of the usurious premium paid was barred by limitation.

2.

A draft drawn upon a fund not then in existence, and the value of which depended upon the result of a pending law suit, held, upon the evidence, to have been given as additional security for an existing indebtedness, and not in payment thereof.

Nor can it be said that it will be equitable to BILL for relief. Dismissed.

allow this $100, at this time, because the estate of the intestate had the benefit of it. I say it would not be equitable, because there is no sufficient proof that the estate had the benefit of it. Besides, the pleadings are not framed to raise such an issue. And if that were possible, under the circumstances of this case, I think the court should wait long before entertaining the question at all.. How can this heir at law meet such an issue in this court? How can he be called upon to answer whether or not that $100 was used by the administratrix to his advantage in discharging the liabilities against his father's estate?

The orphans' court was the tribunal to raise and to determine that question, and the person to present it was the administratrix herself upon the filing of the account.

As to the proof, what is it? Most uncertain. There is the oath of the mortgagee that he advanced the money, and there the proof ends. Whether it was used for the estate or not in no sense appears. Therefore, to decree that this money was devoted to the interests of the estate would be making a decree without any proof for it to rest upon. Everyone would pronounce such course highly inequitable.

Was the tender good in law? As I understand the evidence, the interest had been paid on $700 until May 1, 1884, and it had been paid at this rate for six years and six months after the mortgage had been reduced to $600.

Finding as I have above, the interest paid in excess must be credited upon the principal. The interest so paid amounted to at least $45.50, which would make the principal due May 1, 1884, $549.50.

On October 4, following, the tender of the $600 was made, at which time there was less than $19 interest due, making the whole amount due less than $568.50. Therefore, as the tender was made without demanding any change or without any other condition whatever, and as the only ground of refusing to accept it was that it was not enough, the law pronounces the tender good.

The complainant is entitled to the $600 with out costs, and the defendant is entitled to his costs. I will so advise.

On final hearing on pleadings and proofs. The evidence examined is set forth in the opinion.

Mr. J. Alward, for complainant.

Mr. A. C. Hartshorne, for defendant Mahnken.

Runyon, Chancellor, delivered the following opinion:

The object of this suit is to bring the defendants (who, from April, 1871, to April, 1882, were partners in the wholesale grocery business in the City of New York, under the firm name of Mahnken & Moorhouse) to an account with the complainant, who during that period was their customer and bought goods of them to sell at retail in his store in Elizabeth, in this State, in respect to certain business transactions which took place between them during the before mentioned period.

The bill alleges that about the 16th of August, 1872, the complainant borrowed $2,000 of the defendants on a usurious contract between him and them for the payment by him to them of a premium of $500 for the loan; that the payment of the $2,500 with interest at 7 per centum per annum was to be secured by his bond and mortgage on real property of his in the City of Elizabeth; that the loan, which was of $2,000 only, was made, and the bond and mortgage for $2,500 were given accordingly; that in January, 1875, the complainant had paid up the interest on the bond and mortgage and $500 of the principal; that then a new bond and mortgage of the same property for $2,000 were given instead of the bond and mortgage for $2,500, and the last mentioned mortgage was canceled of record; that the complainant afterwards, in August, 1878, on account of and in further dealings between him and the defendants, gave them another mortgage (for $1,500 and interest) upon the same property, and other land also in the City of Elizabeth; that after the giving of the last mentioned bond and mortgage the complainant continued to deal with the defendants; that on or about the 30th day of March, 1881, he had paid up all the interest on the two mortgages of $2,000 and $1,500 respectively; that he was then desirous of paying his entire indebtedness

to the defendants and of redeeming his lands | the complainant to the defendants established. from the lien of those mortgages; that he was When that order was given (it is dated March then the owner of an order given by one Will- 19, 1881) the complainant owed the defendants iam H. Adams upon his attorney, Allen C. a large sum of money (about $5,340) upon the Clark, of Washington, D. C., calling for the two mortgages of $2,000, and $1,500 respectsum of $5,500, which order was accepted by ively, and upon a note of $964.14, payable on Clark, and was considered good; that the com- demand, given to them by him April 27, 1880, plainant, wishing to dispose of that order and on settlement for a balance of account due realize the amount due thereon, offered it to them March 1, 1880, and $502.57 for a balance the defendants; and they made due inquiry of account due them from him when the order about it and agreed with him that they would was given. take it in payment of the mortgages and his further and other indebtedness to them, if any existed, and pay him the difference between the amount of the order and the amount which should be found due upon a proper statement of the account between him and them; and that as part payment of that difference they paid him, on the 30th of March, 1881, $450, and promised to give him credit for the order on their books, and state the account, and account to him for the balance of that difference, and deliver up to him the bonds and mortgages receipted and canceled, and execute to him discharges of the mortgages.

At the time when the note for $964.14 was given, the complainant's credit with the firm of Mahnken & Moorhouse was not good. As conditions of further credit it was then agreed between him and them that the balance of his indebtedness thereafter to be incurred should not exceed $300, that he should pay all bills promptly within thirty days after they had been contracted, and should pay $50 a month upon that note. From about the first of November, 1880, until the time when the order was given, he was unable to purchase any goods from them on credit, but was required to pay on delivery. From the time when the order was The defendants dissolved their copartnership given, to the dissolution of the firm, he again in April, 1882. Mahnken bought out Moor- had credit; and at the latter date he owed them house's interest in the firm's property and as-on account, for goods sold and cash advanced sumed the payment of the debts. Mahnken has answered. Moorhouse has not. The former, in his answer, states that the $2,500 mortgage was paid off before the $2,000 one was given, and denies that the order was given in payment of the complainant's indebtedness, but alleges that it was given as additional security therefor.

The only questions discussed upon the hearing were whether the $2,500 bond and mortgage were usurious, and whether the order was taken in payment of the complainant's indebtedness to the firm or merely as collateral security therefor.

That the loan of $2,000 was made upon an agreement that in consideration thereof the complainant should pay to the defendant a premium of $500 is established by the proof. It is urged, however, on the part of Mahnken, that that mortgage was paid off in full before the $2,000 mortgage was given, and that the latter was given, not for part of the money secured by the $2,500 mortgage but for an entirely different indebtedness. This claim is established by the evidence. The $2,500 mortgage was paid off by payments made directly thereon before the $2,000 mortgage was given. The last payment (which was of $150.13) was made January 9, 1875. The $2,000 mortgage was given January 15, 1875. When it was given, there were $2,548.58 due from the complainant to the defendants on book account. No part of the money secured by the $2,500 mortgage was in any way included in the $2,000 mortgage. As just stated, the last payment on account of the $2,500 mortgage was made January 9, 1875. The bill was not filed until October 3, 1882, nearly eight years after that payment. Recovery of the premium paid upon the loan of $2,000 secured by that mortgage is barred by limitation. Moorhouse has lived in this State ever since the mortgage was given. Bruce v. Flagg, 1 Dutch. 219.

Nor is the claim that the order was given and accepted in payment of all indebtedness of

from August 18, 1880, to August 16, 1881, a balance of $1,121.11.

According to the weight of the evidence, the order was given as additional security for his indebtedness to the firm. It was drawn by William H. Adams upon Allen C. Clark, his attorney, and accepted by the latter. It directed the drawee, after deducting his fees and incidental expenses in the prosecution of the drawer's claims against the District of Columbia before the United States Court of Claims, and also $1,100, the amount of a previous acceptance then outstanding, to pay to the order of Mahnken & Moorhouse $5,500 out of any money that might be awarded to the drawer by the court of claims in his suits then pending against the District of Columbia in that court.

The claim mentioned in the order was for work done in Washington by William H. Adams (the complainant's brother), as contractor for certain municipal works there; and although the contract was made and the work done by him, they were made and done on behalf of the complainant also, who was a silent partner with him therein. The $5,500 were due to the complainant for profits and money advanced for the works; and part of the $2,000 borrowed of the defendants, which had gone into the works, was embraced in the $5,500. It will be seen that the draft was upon no existing fund. Whether it would have any value or not depended entirely upon the result of a law suit.

The complainant and Mr. Moorhouse, indeed, both swear that the agreement between them (Mr. Mahnken appears to have been personally no party to it) was that the order was to be taken absolutely as satisfaction for the complainant's then indebtedness; and they also say that he was to receive from the firm the difference between the amount mentioned therein, $5,500, and the amount of that indebtedness. That indebtedness at the date of the order was over $5,340. They state that $450 were paid to him at about that date on account of that difference. The two sums of $5,340 and $450 to

gether make an amount greater by nearly $300 | at the store, and he thinks Mr. Mahnken was than the amount mentioned in the order.

It seems very improbable that the firm would have agreed not only to accept such an order in satisfaction of his indebtedness to them and give up the mortgage security which they held, but, in addition, to advance him $450 on account of a merely supposed difference between the amount of his indebtedness and the amount mentioned in the order.

On the one hand, the complainant, who is an interested witness, and Mr. Moorhouse, who, although he is disinterested, would seem to be unfriendly to Mahnken, testify to the existence of the agreement as alleged in the bill. On the other, there is the evidence of the defendant Mahnken, who is interested, and of Mr. Jansen, the book-keeper of the firm, who is entirely disinterested, and of Edward A. Mahnken, son of the defendant Mahnken.

not present but the book keeper was.

The defendant Mahnken also testifies that after the dissolution he called on the complainant for payment of his indebtedness to the late firm and offered to deduct 15 or 20 per cent from the amount, if the complainant would pay it; and that the latter said he would pay if he had the money. He says they referred to the Washington claim, and complainant said that he had got nothing from it and doubted very much whether he ever would get anything; that as soon as he got that money he would settle up, but that there was no depending upon it. He also swears that Moorhouse told him that he had to give the complainant some cash, but did not say how much, to get the order.

including them, to Mahnken for $40,000, the latter to pay the debts.

When the firm dissolved, a written agreement of dissolution was signed by Mahnken and Moorhouse. By it all the assets were assigned to the Mr. Jansen testifies that before the order was former, and bonds and mortgages are specially given, Mr. Moorhouse, in his presence, pressed mentioned, the words "stocks, bonds and mortthe complainant for payment, saying that they gages" having been interlined before it was were not sufficiently secured by the mortgages signed, and therefore the attention of Moorhouse and note, and that he wanted to be better se- was drawn to it. He thus recognized the bonds cured; and the complainant then proposed to and mortgages given by the complainant as valgive the order as additional security, and Mr. id existing evidences of debt, for the firm does Moorhouse accepted it as such. He also testi- not appear to have any other bonds and mortfies that Moorhouse told him that he had re-gages. He sold out all his interest in the assets, ceived the order as additional security, and that the complainant was to have credit again on account of it. The order was never credited There are other weighty reasons against acon the books of the firm, and the complainant cepting the complainant's version of the transwas well aware of that fact but never com- action under consideration. Not only were the plained of it. He also knew that he was charged bonds and mortgages and notes not surrendered, on the books with the $450 advanced to him at and the account receipted when the order was the time when the order was given. He re- given, but there was no written evidence given ceived numerous statements of account after the of any undertaking by or on the part of the deorder was given, from which, as well as from fendants to accept the order in discharge of all his examination of the books, he was apprised claims against the complainant, or to surrender of the fact that he was not credited with the the bonds and mortgages, and note and receipt order. He attempts to avoid the force of this his account. He left the bonds and mortgages fact by saying that he very seldom looked over and note in the hands of the defendants after the statements that he received because, al- giving the order. He says, indeed, that he dethough his home was in Elizabeth, he was in manded them from Moorhouse and was put off business in Washington, and adds that he was from time to time, but he not only took no steps "back and forth." His business in Washing- to obtain them but never complained that they ton, he says, was the business of contracting for were not delivered to him. He never demandmaking sewers, laying pavements, etc. He ad-ed them from Mahnken. When the relations mits that from 1875 to the time of the commencement of this suit (October, 1882), he was in Washington but once.

Edward A. Mahnken, who was a clerk of the firm, testifies that Moorhouse, when he, Mahnken, asked him whether certain goods which he was about to send to the complainant, and which the latter had bought of the firm, should be so marked as that they should not be delivered without payment of the bill therefor, as had previously, from October, 1880, been the method adopted by the firm in their dealings with the complainant, answered: "No, it is all right now; I have got more security; I have got an order on Washington."

And

Mr. Mahnken, defendant, testifies that Moorhouse told him that the order was taken as collateral security for the payment by the complainant of his indebtedness to the firm. here it will not be out of place to say that although Moorhouse swears that the order was left at the store of the firm during his absence at home by reason of illness, the complainant

of the parties to each other and the character of the order before adverted to and the conduct of the parties are considered, it seems quite clear that the order was not accepted as satisfaction but merely as additional security and that in order to get it as security Moorhouse advanced to the complainant, for the firm, $450.

On the hearing, a motion was made on the part of the defendant Mahnken for leave to introduce evidence that the suit mentioned in the order has been decided adversely to the plaintiff therein, and so the order has proved to be utterly worthless. The decision upon that application was reserved until this time. The evidence would be irrelevant and immaterial. The motion, therefore, is denied.

The bill will be dismissed, with costs.

Charles BORCHERLING'S EXECUTOR

v.

Christina TREFZ et al.

testifies that he gave it to Moorhouse himself If a bonus for the loan of money, which

N. J.

C. 2., V. IV.

22

449

BILL

if paid to the lender directly would ren- | him. The mortgagor and his book keeper der the loan usurious, is paid to the thereupon went to see the son and told him agent of the lender without the knowl- the object of their visit. The son said that he edge and against the will of the lender, would see his father and talk with him about he is not affected by the illegality of the the loan. They subsequently saw the son again, transaction and may enforce a mort- when he told them that his father had the gage given him to secure such loan; but money, but that he (the son) had received an if the bonus is taken by the agent with offer from other parties, of $5,000 as commisthe knowledge of the lender, then his sions for procuring a loan of $20,000; that he mortgage must be declared usurious.* could get that from other parties, but if they LL to foreclose a mortgage. were willing to pay the same sum they could Defense sus have the money. At this time the mortgagor tained. On final hearing on bill and answer and declined to take the loan on the terms proposed. Subsequently his necessities became so pressing that he was compelled to submit; and to notify him that he would take the money on he accordingly sent his book keeper to the son the terms offered. The son furnished the money for the whole loan. He owed his father, for |collections previously made, between $2,000 and $3,000. This he paid, and the father raised the balance by selling United States bonds to his son. The son says: "I had money on hand which I wanted to invest, and so I concluded to take father's bonds at their market value."

proofs taken in open court.

The facts are stated in the opinion.
Mr. Cortlandt Parker, for complainant.

Mr. Joseph Coult, for defendants.
Van Fleet, V. C., delivered the following
opinion:

This is a suit to foreclose a mortgage bearing date November 16, 1874, made by the defendants' testator to the complainant's tes tator, to secure $20,000. The mortgage was payable in one year from its date, and bore interest at the rate of 7 per cent per annum.

The defense is usury. It is undisputed that in the negotiation of the loan secured by the mortgage the mortgagee's son acted as the agent of his father and, on the conclusion of the transaction, received from the mortgagor the sum of $5,000 in addition to $50 which the mortgagor paid him for making searches and drawing papers connected with the loan. The mortgagor paid interest on the $20,000 at the rate of 7 per cent per annum; so that it will be seen that the sum which he actually received, $15,000, cost him (for the period for which by the terms of the papers the loan was to run) the enormous sum of 43 per cent.

The whole $20,000 was drawn from bank by the son and delivered to his father and then passed back. Five thousand dollars was drawn on November 17, 1874. The whole of this sum was delivered to the mortgagor on the same day, and the bond and mortgage were at the same time delivered to the mortgagee. The mortgagor was required on the same day to sign a receipt under seal, acknowledging the receipt of the $5,000. The remaining $15,000 was drawn on November 20, 1874. The son, on the same day, delivered the money to his father; who at once laid it on a table in his son's office, at which his son, the mortgagor It is manifest that no honest business can be and the mortgagor's book keeper were sitting. conducted successfully which purchases the The mortgagor was then required to sign anuse of money at such a price. This fact of it- other receipt under seal, admitting the receipt self makes it the plain duty of the court, as it of the $15,000, and stating that that sum, seems to me, to examine this transaction with together with the $5,000 previously received, the most jealous scrutiny, and to denounce it made up the amount of the mortgage. This as highly illegal, unless it satisfactorily appears paper on being signed was given to the that the mortgagee was in no way responsible mortgagee, who immediately left the room for this extraordinary exaction. The design of where the parties were, and the door between the statutes against usury has been said to be to that room and the one into which the mortgaprevent avarice from preying upon necessity; gee went was closed. The $15,000 was then but if this transaction must stand, and the de-counted and $5,000 of it was handed over by vice resorted to in this case to defeat the pur- the mortgagor to the son. The son says that pose of the law must be held to be beyond his father got no part of this money and did the reach of judicial correction, it is certain not know that he received it; that his father that our law has not accomplished its purpose knew that he was in the habit of getting comand that the evil it was intended to correct still missions for procuring loans, but he did not exists in full vigor. know what they were. The son further says that he told the mortgagor during the negotiation that if the loan was made, his fee would be $5,000; and that he stated as the grounds of his charge that the loan was a large one; that the security offered was not the first lien, and that he could get a fee of that amount from other parties. The property pledged for the payment of the loan was, in the judgment of the son, sufficient to render the money entirely safe. The person who got the $5,000 was the only child of his father and is the person now before the court asking that a decree be made that the mortgage sought to be foreclosed is a valid lien for $20,000.

The following statement presents all the material facts attending the making and execution of the contract of loan:

The mortgagor, through his book keeper, applied to the mortgagee for a loan of $20,000, to be secured by mortgage; the mortgagee said he could make the loan, but in order to do so he would have to sell some of his securities, which he could only do at a great loss; to this the mortgagor's agent replied that if he would raise the money and make the loan the mortgagor would stand the loss. The mortgagee then said that his son was his agent, and that mortgagor's agent had better go and talk with *See Demarest v. Van Denberg, 3 Cent. Rep. 90.

A charge of usury, whether made as the