Opinion
03-02-1886
DEMAREST v. VAN DENBERG and others.
W. Prall, for complainant. J. W. Griggs, for defendants.
Bill to foreclose. On final hearing on pleadings and proofs.
W. Prall, for complainant.
J. W. Griggs, for defendants.
RUNYON, C. This is a suit to foreclose a mortgage, given by Aalt Van Denberg and his wife to Garret Demarest, May 4, 1869, upon land in Passaic county, to secure the payment of 87,000 in two years from its date, with interest at 7 per cent. per annum, payable semi-annually, according to the condition of a bond of the same date given to Demarest by Van Denberg, with Cornlius Van Winkle as surety. Nothing has been paid on account of the principal. The interest has been paid up to May 1, 1875. Van Winkle is dead. He left a will by which he gave to his wife $5,000, and devised to her certain real estate in Paterson for life, or during her widowhood, with remainder in fee to his daughter, Ann Elizabeth Romaine, to whom he gave that real estate at once in case his wife should predecease him. He also devised certain other real property in Paterson to his son, Simon P. Van Winkle, in fee, and gave the residue of his property, in equal shares, to Simon and Ann Elizabeth absolutely. His executors were his son, Simon P., and Socrates Tuttle, now deceased. They both proved the will. In the progress of the settlement of the estate they obtained a decree, March 14, 1874, barring creditors from claims against them as executors. Mrs. Van Winkle, the testator's widow, survived her husband, and died intestate in 1879. Her administrators were her son, the before-mentioned Simon P. Van Winkle, and Helmas Romaine, husband of her daughter, Ann Elizabeth. They obtained, in September, 1880, a decree barring creditors from claims against them as administrators. After he gave the complainant's mortgage, Van Denberg sold, April 12, 1872, to Nehemiah Millard, part of the mortgaged premises, and on the first of May in that year sold the rest of the property to Albert M. Bigelow, who assumed the paymentof the complainant's mortgage as part of the consideration of the deed to him. Bigelow was adjudged a bankrupt on April 1, 1879, and thereby discharged from all debts provable against his estate which existed May 1, 1878. The bill prays decree for deficiency against the executors of Cornelius Van Winkle, deceased, the administrators of his widow, and Simon P. Van Winkle and Ann Elizabeth Romaine, as heirs at law and devisees of Cornelius Van Winkle, deceased. The executors and administrators have set up the decrees barring creditors, obtained by them. Those decrees protect them from liability for deficiency in this suit, and his discharge in bankruptcy protects Bigelow.
The devisees of Cornelius Van Winkle are liable. By the will there was specifically devised to Simon land in Paterson of the value of $22,500; and to Ann Elizabeth, land in this state of the value of $7,500, and under the residuary clause there passed to each of them by devise land in this state of the value of over $55,000. The personal estate was more than sufficient to pay the debts which were proved.
The only question discussed at the hearing was the question of usury. The loan was made by the complainant to Van Denberg in 1869. Breen, a friend of the latter, in his behalf, applied to the complainant for a loan of $7,000. The complainant said that he had the money, but that his son, Garrett, did his business, and Breen must see him. Breen then went accordingly to see the son, who was a clerk in a grocery store in Paterson, and asked him if he had the money to put out on bond and mortgage for his father, and the son told him in reply that they would let Van Denberg have the money, $7,000, provided he would pay 10 per cent. bonus; to which Breen said that Van Denberg would take the money. Breen reported the matter to Vermenlen, who also was a friend of Van Denberg's, and lived and kept a store in Paterson. Van Denberg lived out in the country, and Breen therefore left word for him with Vermenlen, so that he might know, when he should come into town, what had been done. The transaction was completed, and the money paid over in Vermenlen's office. He was present. The complainant gave to Van Denberg the whole of the $7,000. Vermenlen says that, as to the 10 per cent., the complainant said he did not want that money, but "wanted it to be given to his son, Garry; that it had to be given to his son, Garry." He also says that he thinks the complainant made a remark that he "would not have the $700, but gave it to his son, Garry." An effort was made to cast discredit upon Vermenlen's statements by the testimony of other witnesses who were present on that occasion, and by the testimony of the complainant's son; but, although they contradict him in some respects, the contradictions do not deprive his testimony of weight. He is a disinterested witness, who, according to the testimony of the complainant's son, took a very considerable part in the transaction as to which he testifies, while the other witnesses who were present had no interest in it at all, and, under the circumstances, can scarcely be expected to remember as accurately as he what transpired after so great a lapse of time,—over 17 years. The complainant, who has, since the transaction under consideration, become insane, was thereforenot sworn, and his disability precluded Van Denberg from being a witness in his own behalf. Demarest v. Vandenberg, 39 N. J. Eq. 130.
It appears from the son's testimony that the complainant knew, before the transaction was completed, that his son intended to charge a commission. He says his father asked him why he was so anxious to let Van Denberg have the money, and he told him that he was to get a commission for letting Van Denberg have it. He says his father did not know the amount of the commission which he was to receive, but his testimony upon that head is evasive.' When asked whether he, at the time when the money passed from his father to Van Denberg, or at any time previous thereto, informed his father that Van Denberg had agreed to give him 10 per cent. for his services, he replied: "No, sir; not in that way." To the question, "Did you ever inform your father whether Van Denberg had agreed to give you any specific sum for your services?" he answered, "There never was any sum named." He says, however, that his father knew he received something, but adds that he did not know how much. It is quite improbable that his father did not know what premium Van Denberg had agreed to give to him for the loan of the money. It appears that he had invested for his father two other sums of money previously, upon one of which he had received a premium of 10 per cent., and on the other not quite so much. He says that at about the time when the loan to Van Denberg was made, and for a long time previously thereto, it was customary in Paterson to get 10 per cent. as a bonus or commission for a loan of money. The complainant referred Mr. Breen to his son as his agent, and the son acted for him because, as the latter says, his father was at that time not in very good bodily or mental health. He says his father relied chiefly on him and his brother-in-law, Cornelius A. Cadmus, to attend to his affairs. It appears, however, that the complainant in fact attended to this business himself. He required security upon the bond, and himself paid over the money for the mortgage; but it is proved that his son was his agent in this matter, and, with his knowledge and consent, received a bonus for the loan of the money at lawful interest. If Vermenlen is to be believed, (and I see no reason to doubt his sincerity or the accuracy of his recollection in this matter,) the complainant not only knew what the amount of the bonus was, but expressly declined to retain it, saying that it must be paid to his son. As before stated, Vermenlen says he thinks the complainant made the remark that he would not have the $700, but gave it to his son. The son relied upon Vermenlen, who he says had had a great deal to do and say about the matter, to get the $700 for him. He says that the reason why he did not go and get the money himself when the loan was made, was that he could not get away from the store in which he was employed, as his employer was away, and it was a very busy day. It seems that but for this he would have gone to Vermenlen's place of business when the loan was made, and would there have received the $700. The son really rendered no service in the matter for which he was entitled to $700 from anybody. He was a clerk upon a salary in a grocery store, and was 27 years old. Butwhatever services he rendered he rendered for his father, whose agent he was. He was not the borrower's agent, although he claims that he earned the commission of $700 by inducing his father to make a loan, which he was not disposed to make because he thought it unsafe. He says that the service for which he was to charge Van Denberg 10 per cent. was the endeavor to get the money for him; that his father objected to putting the money out upon a farm in the country; that he (his father) thought it was not safe, and he, the son, used his influence with him to let Van Denberg have the money. He also says that it was after he urged the matter for some time that his father agreed to let the money go upon the security. But he was his father's agent, and it was he who was to be satisfied with regard to the sufficiency of the security, and as to whether it would be prudent to make the loan. It was a direct violation of his duty to act as agent for the borrower in overcoming the objections of his father to making the loan, and the violation appears all the more flagrant when it is considered that, according to his own testimony, he, when acting as agent for his father, did not hesitate to undertake, in consideration of $700, to act for the other side contrary to his father's interest; that is, for that consideration to induce his father to make a large loan which but for that consideration he, to say the least of it, would not have urged him to make. It is quite plain that the reasons which he gives for demanding the bonus are but the considerations presented by the lender as an excuse for demanding a premium upon the loan. The complainant is chargeable with the payment to his son.
This case is not within the case of Muir v. Newark Sav. Inst., 16 N. J. Eq. 537, for here the principal had knowledge of the act of the agent, and consented to it. It would seem that in this case the lender referred the borrower to his son merely in order that thus a premium for the benefit of his son, if not for himself, might be secured. The case is similar to the Trefz Case, 2 Atl. Rep. 369, (recently decided in this court,) and is governed by the same principles. The defense of usury is established. The executors and administrators are entitled to costs.