Jenkins v. Moyse
| Decision Date | 08 July 1930 |
| Citation | 172 N.E. 521,254 N.Y. 319 |
| Parties | JENKINS v. MOYSE et al. |
| Court | New York Court of Appeals Court of Appeals |
OPINION TEXT STARTS HERE
Action in equity by John F. Jenkins against Joseph L. Moyse, George Leerburger, and others. From a judgment of the Appellate Division (229 App. Div. 743, 241 N. Y. S. 901), affirming a judgment of the Special Term in favor of plaintiff, all defendants except George Leerburger appeal.
Reversed, and complaint dismissed.
Appeal from Supreme Court, Appellate Division, Second Department.
Benedict A. Leerburger, Joseph M. Proskauer, J. Alvin Van Bergh, and Avel B. Silverman, all of New York City, for appellants.
Florence J. Sullivan, of New York City, for respondent.
In May, 1926, the plaintiff was the owner of a parcel of real estate in Westchester county. He desired to borrow the sum of $52,000 to meet pressing obligations, including a mortgage debt upon his real estate. He requested George Leerburger, a broker, to obtain a mortgage loan. The plaintiff testified: ‘I was told I would have to be incorporated or I could not get this loan.’ The rate of 6 per cent., which might be exacted lawfully from an individual borrower, would apparently not satisfy a prospective lender, so the broker ‘said a corporation could not plead usury and they would not make the loan unless I was incorporated.’ The plaintiff acceded to the broker's suggestion and, in behalf of a corporation which should be formed to take title to the property, he authorized the broker to obtain a loan and agreed to pay a very large bonus in addition to interest. The defendant Joseph L. Moyse agreed to make a loan of $27,000, receiving a second mortgage of $45,000 with interest at 6 per. cent. The plaintiff in a writing addressed to Joseph L. Moyse and signed ‘John F. Jenkins, Inc., by John F. Jenkins, President,’ confirmed the arrangement. In accordance with that arrangement, ‘John F. Jenkins Company, Inc.,’ was incorporated. Plaintiff transferred to the new corporation his real estate. The corporation executed a second mortgage for $45,000 and received the sum of $27,000 in July, 1926.
About a year later the defendant Lawrence Blum Realty Company, Inc., which held title to the mortgage, began an action to foreclose the mortgage. John F. Jenkins Company, Inc., still held title to the property covered by the mortgage. The plaintiff John F. Jenkins owned the corporate stock and controlled the corporation. The summons was served on him as president of the corporation. The defense of usury was not available to the corporation. General Business Law, § 374 (Consol. Laws, c. 20). Judgment of foreclosure followed, and a sale was had. Then the plaintiff made a motion to vacate the sale and for leave to intervene in order to obtain an adjudication that the loan transactions were ‘personal transactions between Joseph L. Moyse and the said John F. Jenkins' and, as such, were usurious. That motion was denied. The judgment of foreclosure is unreversed and binding upon the parties thereto and their privies, though on other grounds the sale held under that judgment was vacated.
Then the plaintiff brought this action in equity, seeking a judgment that the mortgage is usurious and void and should be canceled and discharged of record. In the courts below he has been granted that relief. Findings have been made and affirmed that the form of a corporate form was used merely for the purpose of concealing and covering up a corrupt, unlawful and usurious loan made to the plaintiff.
To sustain the judgment there must be evidence from which the inference can be drawn that the defendants agreed to loan money to the plaintiff, and did in fact make the loan to him. Before any inference can be drawn that the corporate form was used to conceal an unlawful transaction with the plaintiff as an individual, there must be proof, at least, that there was an individual transaction which the parties might desire to conceal. The plaintiff desired to raise money on mortgage upon his real estate. The defendants could not lawfully make a loan to the plaintiff individually at a greater rate of interest than 6 per cent. They never offered or agreed to make a loan to the plaintiff, for the rate of interest which they could lawfully exact from an individual was not attractive to them. The defendants were willing to loan money upon the real estate owned by the plaintiff, provided they could lawfully exact a higher rate of interest. The statute left one way open to accomplish a result desired by both sides. The loan was needed to take care of a mortgage upon the property and to relieve the property from the lien of taxes and of judgments against the plaintiff. If the property were transferred to a corporation, the corporation could borrow the money upon mortgage given by it without limitation as to the interest...
To continue reading
Request your trial
-
Stillwater Liquidating LLC v. Net Five At Palm Pointe, LLC (In re Stillwater Asset Backed Offshore Fund Ltd.)
...loathe to disregard the corporate form for the benefit of those who have chosen that form to conduct business”); Jenkins v. Moyse , 254 N.Y. 319, 172 N.E. 521, 522 (1930) (denying shareholder's effort to apply alter ego to gain benefit of avoiding interest rate that would be usurious if app......
-
Kronovet v. Lipchin
...personal obligations. Schneider v. Phelps, 41 N.Y.2d 238, 242-3, 391 N.Y.S.2d 568, 571, 359 N.E.2d 1361, 1364 (1977); Jenkins v. Moyse, 254 N.Y. 319, 172 N.E. 521 (1930). 20 In addition, under the New York conflict of laws decisions involving usury, New York's internal usury policy is not t......
-
Webster v. Sterling Finance Co.
... ... L.Ed. 246; Curtis v. Leavitt, 15 N.Y. 9; Carozza ... v. Federal Finance & Credit Co., 149 Md. 223, 131 A ... 332, 43 A.L.R. 1; Jenkins v. Moyse, 254 N.Y. 319, ... 172 N.E. 521, 74 A.L.R. 205; Silverman & Kantrowich, ... Inc., v. Liebers, 224 N.Y.S. 332; Alston v. American ... ...
-
Adar Bays, LLC v. GeneSYS ID, Inc.
...the sole purpose of avoiding the usury statute (see e.g. Werger v. Haines Corp., 302 N.Y. 930, 100 N.E.2d 189 [1951] ; Jenkins v. Moyse, 254 N.Y. 319, 172 N.E. 521 [1930] ). Insecure businesses that had difficulty finding financing elsewhere naturally also proved an easy target for such pre......