Per Curiam:
It appeared from the evidence that, at the time of the loan which resulted in this action, there was great stringency in the money market in Buffalo. Loans were hard to obtain, and that was the reason given by the plaintiff’s agent for the extraordinary demand of $10,000 bonus out of a $50,000 loan, with interest on the whole amount. The circumstances surrounding the case and the careful examination of the evidence leaves no doubt of the oppressive character of the contract forced upon the defendant.
The plaintiff seeks to shield herself from complicity in the transaction by saying that she was ignorant of its usurious nature, and, though she received the fruits of the transaction to the extent of $5,000 of the bonus which was actually taken out of the loan at the time it was made, and although she received a portion of the interest, she was still ignorant of the means by which it was brought about and excuses this position in her testimony. The action was com[283] menced the 12tli of Hovember, 1895. She testified in October, 1896. After stating that she did not know about the bonus, etc., she testified as follows :
“ Less than a year ago was the first time I heard anything about any commissions having been paid to anybody in connection with that loan. This time was at the time the foreclosure was begun. I left all my matters to Mr. Bliss — the management of my business matters. I gave him the entire control. I often signed checks when he asked me; I paid no attention to the details of business; I left it to his judgment. The consequences thereof, I made no inquiries in regard to the details of this loan. I simply knew that he made this loan for me. I trusted him to protect my interests, to do what lie saw fit. I was perfectly satisfied with everything he did in regard to it. This balance in the Union Bank has not been checked out. It remains there to my credit just as it was placed. I had no separate business of my own except the loaning of this money.”
There is no evidence in the case that the money deposited by the husband before the loan was made, and out of which it was made, was the money of the plaintiff except the testimony of the husband in which he says that he was owing the plaintiff $54,000 or $55,000; that this indebtedness grew out of his having received the proceeds from the sale of property which she had owned; that his. wife requested him as soon as he had collected in any money to invest it in some way in hér name and that he directed Sickles to invest $50,000 or $55,000 for the plaintiff, and he concludes by saying : “ There was an arrangement between myself and my wife that after the real estate which had belonged to her had been sold and converted into money, that 1 might use some of it in my business.”
Considering the relation of these parties, husband and wife, and the failure of the case to disclose anything but this bare statement as to how this large sum of money became the property of the plaintiff, and this testimony given at the trial by an interested party when the testimony was absolutely necessary to save this loan from the effect of the statutes against usury, we can hardly escape the conclusion, under all the circumstances of this case, or at least the strong suspicion, that this was the property of the husband that was being loaned and that the transaction was carried on in the name of the plaintiff as a contrivance to cover the usury. It is, perhaps, not [284] necessary to go to this extent in order to reverse the judgment appealed from, but it is a consideration that addresses itself to a court of equity in view of the extraordinary features of this case.
The appellant insists that as the husband was the agent of the plaintiff for all purposes, and in no sense an intermediary, he represented the plaintiff in this transaction and she is bound by his acts.
The plaintiff’s counsel insists that as the plaintiff was ignorant of the usurious nature of the loan, and the trial court has so found, she had the right to recover in this action and to enforce the mortgage for the whole amount advanced, including the $10,000 of bonus that her agents received, $5,000 of which was paid to her husband and by him paid to her. And that, too, notwithstanding the fact that before the trial of the action she had discovered the existence of the facts. And he cites as sustaining him in this remarkable position, Condit v. Baldwin (21 N. Y. 220); Bell v. Day (32 id. 165); Estevez v. Purdy (66 id. 446); The Guardian Mutual Life Ins. Co. v. Kashaw (Id. 544); Van Wyck v. Watters (81 id. 352); Fellows v. Longyor (91 id. 324); Philips v. Mackellar (92 id. 34); Stillman v. Northrup (109 id. 473.)
In Condit v. Baldwin (supra) a Wayne county lawyer had $400 to loan for a client in Hew Jersey. A bargain was made with the defendant by which the defendant was to pay for attorney’s fees, etc., $25 out of the $400 for the loan. The client advanced the $400 and the attorney kept the $25. It was held that this was a separate arrangment between the attorney and the defendant, of which the client was ignorant and that she could recover.
This was the first of a series of cases upon that subject and was decided by a divided court, five to three.
Bell v. Day (supra) was a curious case where no opinion was pronounced in favor of the reversal of the judgment. One Mrs. Earl had $1,000 in gold to lend. She intrusted it to one Glover as her agent. He loaned the money on a note to the defendant Day, and Day agreed to pay Glover $50 bonus, which he did. The Court of Appeals held (two of the judges writing strong dissenting opinions against it and another judge concurring with them) that the decision in Condit v. Baldwin governed on the principle of stare decisis. Two of the five judges not dissenting (Demio and Porter) expressed the concurrence in the views [285] expressed in one of the dissenting opinions, but acquiesced in a reversal on the authority of Condit v. Baldwin. So that five of the eight judges constituting the court, in effect, repudiated the doctrine of Condit v. Baldwin.
Algur v. Gardner (54 N. Y. 360) substantially disapproved the case of Condit v. Baldwin.
In Estevez v. Purdy (supra) it was held that the employment of an agent to effect a loan does not impliedly or apparently authorize him to violate law or do any illegal act. There the agent exacted a bonus, but stress was laid upon the fact that the lender did not receive any portion of the bonus.
In Guardian Mutual Life Ins. Co. v. Kashaw (supra) the court says that evidence failed to show that the plaintiff was a party to the agreement for the bonus or received any benefit therefrom, and so the defense of usury was not sustained.
In Van Wyck v. Waters (supra) there was no knowledge of the usurious contract by the principal, nor was there any proof that he received a portion of the bonus, or in any form reaped any benefit from the same.
Fellows v. Longyor (supra) was where the guardian of an infant loaned the infant’s money and exacted a bonus, and it in no manner aids the plaintiff.
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Per Curiam:
It appeared from the evidence that, at the time of the loan which resulted in this action, there was great stringency in the money market in Buffalo. Loans were hard to obtain, and that was the reason given by the plaintiff’s agent for the extraordinary demand of $10,000 bonus out of a $50,000 loan, with interest on the whole amount. The circumstances surrounding the case and the careful examination of the evidence leaves no doubt of the oppressive character of the contract forced upon the defendant.
The plaintiff seeks to shield herself from complicity in the transaction by saying that she was ignorant of its usurious nature, and, though she received the fruits of the transaction to the extent of $5,000 of the bonus which was actually taken out of the loan at the time it was made, and although she received a portion of the interest, she was still ignorant of the means by which it was brought about and excuses this position in her testimony. The action was com[283] menced the 12tli of Hovember, 1895. She testified in October, 1896. After stating that she did not know about the bonus, etc., she testified as follows :
“ Less than a year ago was the first time I heard anything about any commissions having been paid to anybody in connection with that loan. This time was at the time the foreclosure was begun. I left all my matters to Mr. Bliss — the management of my business matters. I gave him the entire control. I often signed checks when he asked me; I paid no attention to the details of business; I left it to his judgment. The consequences thereof, I made no inquiries in regard to the details of this loan. I simply knew that he made this loan for me. I trusted him to protect my interests, to do what lie saw fit. I was perfectly satisfied with everything he did in regard to it. This balance in the Union Bank has not been checked out. It remains there to my credit just as it was placed. I had no separate business of my own except the loaning of this money.”
There is no evidence in the case that the money deposited by the husband before the loan was made, and out of which it was made, was the money of the plaintiff except the testimony of the husband in which he says that he was owing the plaintiff $54,000 or $55,000; that this indebtedness grew out of his having received the proceeds from the sale of property which she had owned; that his. wife requested him as soon as he had collected in any money to invest it in some way in hér name and that he directed Sickles to invest $50,000 or $55,000 for the plaintiff, and he concludes by saying : “ There was an arrangement between myself and my wife that after the real estate which had belonged to her had been sold and converted into money, that 1 might use some of it in my business.”
Considering the relation of these parties, husband and wife, and the failure of the case to disclose anything but this bare statement as to how this large sum of money became the property of the plaintiff, and this testimony given at the trial by an interested party when the testimony was absolutely necessary to save this loan from the effect of the statutes against usury, we can hardly escape the conclusion, under all the circumstances of this case, or at least the strong suspicion, that this was the property of the husband that was being loaned and that the transaction was carried on in the name of the plaintiff as a contrivance to cover the usury. It is, perhaps, not [284] necessary to go to this extent in order to reverse the judgment appealed from, but it is a consideration that addresses itself to a court of equity in view of the extraordinary features of this case.
The appellant insists that as the husband was the agent of the plaintiff for all purposes, and in no sense an intermediary, he represented the plaintiff in this transaction and she is bound by his acts.
The plaintiff’s counsel insists that as the plaintiff was ignorant of the usurious nature of the loan, and the trial court has so found, she had the right to recover in this action and to enforce the mortgage for the whole amount advanced, including the $10,000 of bonus that her agents received, $5,000 of which was paid to her husband and by him paid to her. And that, too, notwithstanding the fact that before the trial of the action she had discovered the existence of the facts. And he cites as sustaining him in this remarkable position, Condit v. Baldwin (21 N. Y. 220); Bell v. Day (32 id. 165); Estevez v. Purdy (66 id. 446); The Guardian Mutual Life Ins. Co. v. Kashaw (Id. 544); Van Wyck v. Watters (81 id. 352); Fellows v. Longyor (91 id. 324); Philips v. Mackellar (92 id. 34); Stillman v. Northrup (109 id. 473.)
In Condit v. Baldwin (supra) a Wayne county lawyer had $400 to loan for a client in Hew Jersey. A bargain was made with the defendant by which the defendant was to pay for attorney’s fees, etc., $25 out of the $400 for the loan. The client advanced the $400 and the attorney kept the $25. It was held that this was a separate arrangment between the attorney and the defendant, of which the client was ignorant and that she could recover.
This was the first of a series of cases upon that subject and was decided by a divided court, five to three.
Bell v. Day (supra) was a curious case where no opinion was pronounced in favor of the reversal of the judgment. One Mrs. Earl had $1,000 in gold to lend. She intrusted it to one Glover as her agent. He loaned the money on a note to the defendant Day, and Day agreed to pay Glover $50 bonus, which he did. The Court of Appeals held (two of the judges writing strong dissenting opinions against it and another judge concurring with them) that the decision in Condit v. Baldwin governed on the principle of stare decisis. Two of the five judges not dissenting (Demio and Porter) expressed the concurrence in the views [285] expressed in one of the dissenting opinions, but acquiesced in a reversal on the authority of Condit v. Baldwin. So that five of the eight judges constituting the court, in effect, repudiated the doctrine of Condit v. Baldwin.
Algur v. Gardner (54 N. Y. 360) substantially disapproved the case of Condit v. Baldwin.
In Estevez v. Purdy (supra) it was held that the employment of an agent to effect a loan does not impliedly or apparently authorize him to violate law or do any illegal act. There the agent exacted a bonus, but stress was laid upon the fact that the lender did not receive any portion of the bonus.
In Guardian Mutual Life Ins. Co. v. Kashaw (supra) the court says that evidence failed to show that the plaintiff was a party to the agreement for the bonus or received any benefit therefrom, and so the defense of usury was not sustained.
In Van Wyck v. Waters (supra) there was no knowledge of the usurious contract by the principal, nor was there any proof that he received a portion of the bonus, or in any form reaped any benefit from the same.
Fellows v. Longyor (supra) was where the guardian of an infant loaned the infant’s money and exacted a bonus, and it in no manner aids the plaintiff.
The cases we have traced so far treat the contract for the bonus as purely the contract of the agent and separate and apart from the contract made by the principal. The principal, having given instructions only to make a valid loan, and parting with the full amount of the loan and being ignorant of the side arrangement between the agent and the defendant and not participating in the bonus, could recover.
We now reach the case upon which the trial court mainly depended in reaching its judgment in this case. (Philips v. Mackellar, supra.) That case was an action brought to foreclose a mortgage given by the defendant to the plaintiff’s testator for §12,000. The testator loaned the money through an agent and parted with the full amount of the loan for that purpose. Two days after the money was received by the defendant he gave his check to the agent, embracing §1,200, and it was claimed that that was an amount paid in excess of the legal interest by the defend[286] ant upon a usurious contract with the agent It was denied by the agent that it was given for that purpose, and he claimed that it was given to apply on another and legitimate business transaction that the testator had with the defendant. It appeared .that this $1,200 was received by the testator, but he supposed that it related to other transactions. The trial court found that there was usury in the matter. The Court of Appeals held the other way and reversed the judgment by a divided court, and the burden of the opinion is that, inasmuch as the $1,200 was received by the testator in good faith as a payment on another matter, and as it turned out in fact that it was not such a payment, it would not invalidate the mortgage that it was sought to foreclose, but it might be treated as a payment upon such mortgage.
This case is plainly exceptional, and it was very doubtful from the evidence whether the $1,200 was paid to the agent as a bonus; and upon the whole case the Court of Appeals disposed of the matter upon equitable principles. We think there is nothing in that case to afford justification for the judgment in the case at bar.
Stillman v. Northrup (supra) is in line with the cases we have discussed preceding the last, Judge Earl saying (at p. 477): “ There is no proof or claim that the plaintiff received any part of the $50, which was exacted by her brother as a condition of the loan to Thomas Bishop, or that she had any benefit whatever therefrom. It is undisputed that she actually loaned and advanced to Bishop $1,000, the full amount of the note, that the money loaned belonged to her.”
The learned counsel for the defendant urges the proposition that, .assuming that the plaintiff at the time that the loan was made was ignorant of its true character, yet she, by her subsequent knowledge and conduct and the receipt of a portion of the bonus and interest, and with full knowledge of the usurious arrangement, sought to enforce it by action, thus ratifying the act of her husband, and making the usurious contract her own, which ratification was equivalent to an original authority. There is much force in this position. (Elwell v. Chamberlin, 31 N.Y. 611; Bliven v. Lydecker, 130 id. 102.)
The head note to the last case is as follows :
“ When an agent, authorized to lend moneys of his principal, but not to take usury, lends such moneys at a usurious rate, and both [287] tlie sum lent and the usury exacted are secured by the same obligation which the principal, knowing that it is for a larger amount than the sum loaned, without explanation, accepts and has the benefit of, it is an adoption and ratification by him of the act of the agent, and neither the principal nor his assignees can enforce the obligation.”
It is true that a ratification can only occur where the principal has knowledge of the material facts, but the ratification may be implied from circumstances. The ratification of an unauthorized act is effected more frequently by implication, from the acts and conduct of persons in whose behalf the act is done, inconsistent with any intention other than the adoption of such acts, than by express words. (1 Am. & Eng. Ency. of Law [2d ed.], 1195, and cases cited in note 1.)
• The circumstances of this case make the above rule quite applicable.
As we have seen, the plaintiff testified to her entire ignorance of the transaction, but she seems to have reposed upon her ignorance, and would not or could not see.
It is also a rule governing ratifications that ignorance which is intentional or deliberate will not defeat the principle of ratification. (1 Am. & Eng. Ency. of Law [2d ed.], 1190, and cases cited in note 2; and see Johnson v. Jones, 4 Barb. 369 ; Dove v. Martin, 23 Miss. 588; Bank of Augusta v. Conrey, 28 id. 667.)
It was the duty of the plaintiff to know something about her bank account — to have her husband report to her what he was doing with this large amount of her property. She could not, without investigation and care, permit her husband to proceed with this property, violate the law, oppress the public by usurious contracts, giving her the benefit of it, and she neglecting and refusing to know anything about it. “ Left all my matters to Mr. Bliss,” as she says, “ gave him the entire control,” “paid no attention to the details of business.”
In so doing she infringes another principle of the law of agency, which requires that “ a principal should, within a reasonable time, examine his agent’s report and disavow such acts as are unauthorized, and, if he fails to do so, his silence will be deemed good evidence of a ratification.” (1 Am. & Eng. Ency. of Law [2d ed.], 1206, and cases cited in note 3.)
[288] The facts of this case clearly take it out of the line of cases cited by the respondent’s counsel. In none of those cases were such broad powers given to the agent as in this. The husband here was in fact the principal. The wife, so to speak, was absorbed in him, and he proceeded as her alter ego. A case resembling this in many respects is Braine v. Rosswog (13 App. Div. 249), which may be perused with profit in the disposition of this case.
We have reached the conclusion that this' judgment cannot stand.
The trial court sought to relieve the loss that would come to the plaintiff or her husband (who had loaned the money invested) by treating the bonus as a payment and giving judgment for the residue.
The judgment should be reversed and a new trial ordered, with costs to abide the event.
All concurred.
Judgment reversed and a new trial ordered, with costs to appellant to abide the event.