Sherling v. Gallatin Improvement Co.

New York Supreme Court

Sherling v. Gallatin Improvement Co.

145 Misc. 734, 260 N.Y.S. 229, 1932 N.Y. Misc. LEXIS 1578

CourtNew York Supreme Court

DecidedSeptember 10, 1932

StatusPublished

Cited by2 cases

This text of 145 Misc. 734 (Sherling v. Gallatin Improvement Co.) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Sherling v. Gallatin Improvement Co., 145 Misc. 734, 260 N.Y.S. 229, 1932 N.Y. Misc. LEXIS 1578 (N.Y. Super. Ct. 1932).

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Opinion

Cuff, J.

Action to foreclose mortgage on realty. Defendant Bakrat states that, at the time the mortgage became due, plaintiff agreed to renew it, if plaintiff was paid $3,800 by defendant Bachrach in addition to the legal rate of interest. After this arrangement was settled, plaintiff stated “ before the mortgage would be extended a corporation would have to be formed and a deed would have to be made transferring these properties to that corporation so that the corporation could make the extension agreement.” This is clearly subterfuge — using the corporation as a cloak to shield the illegal transaction.

Plaintiff relies upon Jenkins v. Moyse (254 N. Y. 319). In that case the defendant refused to lend to the individual, and told him to organize a corporation if he wanted the loan. In the case at bar, plaintiff said “ the mortgage will be renewed only on condition that defendant (Bachrach) would pay, in addition to the 6% annual interest, a cash bonus in advance of $3,800.” The distinction is that in the Jenkins case the loan was refused, while in this case it was agreed upon. In the Jenkins case the corporation was formed expressly to make the loan. Here the corporation was formed to conceal the loan agreed to be made to the individual. The difference is in the way the lender approached the deal. If he knew how, he could have brought himself within the Jenkins rule. On this motion defendant’s affidavit is accepted at face value. It seems that the teeth have been extracted from the usury laws. Only the uninitiated fail to escape their requirements.

This plaintiff, who did not invoke the finesse of the usurer, must meet the defendant at a trial. The motion is denied.

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Cuff, J.

Action to foreclose mortgage on realty. Defendant Bakrat states that, at the time the mortgage became due, plaintiff agreed to renew it, if plaintiff was paid $3,800 by defendant Bachrach in addition to the legal rate of interest. After this arrangement was settled, plaintiff stated “ before the mortgage would be extended a corporation would have to be formed and a deed would have to be made transferring these properties to that corporation so that the corporation could make the extension agreement.” This is clearly subterfuge — using the corporation as a cloak to shield the illegal transaction.

Plaintiff relies upon Jenkins v. Moyse (254 N. Y. 319). In that case the defendant refused to lend to the individual, and told him to organize a corporation if he wanted the loan. In the case at bar, plaintiff said “ the mortgage will be renewed only on condition that defendant (Bachrach) would pay, in addition to the 6% annual interest, a cash bonus in advance of $3,800.” The distinction is that in the Jenkins case the loan was refused, while in this case it was agreed upon. In the Jenkins case the corporation was formed expressly to make the loan. Here the corporation was formed to conceal the loan agreed to be made to the individual. The difference is in the way the lender approached the deal. If he knew how, he could have brought himself within the Jenkins rule. On this motion defendant’s affidavit is accepted at face value. It seems that the teeth have been extracted from the usury laws. Only the uninitiated fail to escape their requirements.

This plaintiff, who did not invoke the finesse of the usurer, must meet the defendant at a trial. The motion is denied.

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Bluebook (online)

145 Misc. 734, 260 N.Y.S. 229, 1932 N.Y. Misc. LEXIS 1578, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sherling-v-gallatin-improvement-co-nysupct-1932.

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