Perkins v. Hall

• Decision Date: 10 May 1887
• Citation: 12 N.E. 48,105 N.Y. 539
• Parties: PERKINS v. HALL and others.
• Court: New York Court of Appeals Court of Appeals

105 N.Y. 539

12 N.E. 48

PERKINS

v.HALL and others.¹

Court of Appeals of New York.

May 10, 1887.

Appeal from the general term of the supreme court, Fourth department.

SUBROGATION-MORTGAGE-RELEASE.

Plaintiff's assignor discharged certain prior mortgage liens on defendant's land, receiving, in return, a mortgage from defendant, which, in the foreclosure proceedings, was adjudged void for usury. The mortgagee thereupon assigned his rights to plaintiff, who sought to be subrogated to the liens discharged by his assignor. Held, that the claim was invalid, because based upon rights acquired under the void mortgage.²

John C. Hunt, for appellants.

J. R. Shea, for respondent.

RAPALLO, J.

The plaintiff, as assignee of Payn Bigelow, sought by this action to revive and be subrogated to and enforce certain liens upon real estate of the defendant Hall, which Bigelow had paid, and procured to be discharged of record under an agreement with Hall. These liens consisted of two mortgages executed by Hall, and of certain legacies which were charges on the real estate in question. It appears by the findings of the trial judge that on the seventeenth of October, 1874, an agreement was entered into between Hall and Bigelow whereby Bigelow agreed to advance the amount of the said liens, and pay them off, and also to advance to said Hall the sum of $919.71, in cash, and Hall agreed that, to secure the payment of said advances, and of the further sum of $150 as a bonus, Hall and his wife would execute a mortgage on said premises to Bigelow. In pursuance of this agreement, the mortgage was executed for $3,000 and interest, which amount included the amount then due on said liens, and the cash advance of $919.71, and the bonus of $150. This mortgage of $3,000 provided, in express terms, that, as part of the consideration thereof, Bigelow was to assume and pay the before-mentioned liens. Bigelow paid a portion of the liens, and they were discharged of record; and he afterwards brought an action against Hall and others for the foreclosure of the $3,000 mortgage, in which action such mortgage was adjudged void for usury. After that adjudication he assigned to the plaintiff his cause of action arising out of the satisfaction of said liens, and she thereupon brought this action, and judgment was rendered in her favor in the supreme court, adjudging that her assignor, having paid said liens, and there being a junior mortgage, was entitled to be subrogated to said prior liens so paid by him, and entitled to enforce the same.

We are of opinion that this judgment was erroneous. The only claim of Bigelow to be junior mortgagee rested upon his $3,000 mortgage, which was adjudged to be void for usury, and upon his agreement to pay off the prior liens, which agreement was part of the usurious contract. It was necessary to resort to this usurious contract and security to make out any equitable right in Bigelow to subrogation. If they were left out of the case, he would stand as a mere volunteer, and would have no right to subrogation, (Acer v. Hotchkiss, 97 N. Y. 395;Gans v. Thieme, 93 N. Y. 232;) and whenever an equitable right to subrogation cannot be made out without resorting to some agreement or security which is void for usury, no such equity exists. We think the case of Baldwin v. Moffett, 94 N. Y. 83, is decisive on this point. None of the cases cited on the respondent's brief, or in the opinion at general term, conflict with this principle, or sustain the claim of the...