APPEAL (1) from an order of the Supreme Court at Special Term (EDER, J.), entered November 27, 1953, in New York County, which granted a motion by plaintiff for summary judgment of foreclosure and sale, and (2) from the judgment entered thereon on December 4, 1953.
Edward Nathan of counsel (Irving E. Fromer, attorney), for appellants.
Henry L. Redner of counsel (Ader & Smith, attorneys), for respondent.
The complaint is in the usual form for the foreclosure of a purchase-money mortgage which plaintiff holds as assignee. The defendants Calvente, who were the mortgagors, and the defendant Duchesne, their grantee now in possession, assert that the mortgage is usurious and unenforcible. The court at Special Term was of opinion that usury is no answer to the foreclosure of a purchase-money mortgage and plaintiff has had summary judgment.
A purchase-money mortgage is, of course, a closely integral part of a bargain and sale transaction in passing real property. It is not legally objectionable for a man to pay too much for property; and it is not objectionable when he does pay too much to give the excessive consideration in the form of a mortgage rather than in cash. This may be hard dealing but it is not usury. The seller may also properly demand and get a higher price for his property because part of the price will be paid by a mortgage. This, too, may not be usury even though the higher price reflects itself in the amount of the very mortgage given.
There are circumstances, however, when the usual protection afforded to the holders of purchase-money mortgages are utilized as a cloak to cover a truly usurious loan; and if the mortgage becomes unenforcible for usury its invalidity does not disappear because of the legal name it bears.
This would usually involve some separation of the course of bargaining from the making of the loan; and some separation of the true party in interest selling the land from the party loaning the money. It would suggest a device by which the form of a purchase-money mortgage would be used to help a lender of money to obtain a premium on a loan rather than the expression of a better price on a sale.
There are some difficulties inherent in the closely overrunning legal concepts involved and even larger difficulty in the pattern of proof possible, but the case before us seems to illustrate one way in which a purchase-money mortgage might be found to have been usurious.
For the purpose of reviewing the order granting plaintiff's motion for summary judgment of foreclosure we accept as true the factual statements made in defendants' opposing affidavits relating to the purchase of the property and the execution of the mortgage; because defendants are entitled on the motion, and on the appeal from the order against them, to the benefit of the facts they set up in support of their right to a trial under their pleading. In this case there is the additional consideration that the facts as thus set up are not denied by the plaintiff.
The affidavit of the defendant Vincente Calvente shows that for fifty years he was a merchant seaman. Desiring to retire, he became interested in the purchase of a four-story building at 128 East 109th Street, Manhattan, to provide some income. He and his wife could speak English to a 'limited extent' but could not read or write it. The owner of the property was Frank Rosado. Mr. Rosado told Mr. and Mrs. Calvente that 'the price was $10,000' but he wanted all cash. 'We told him that we were interested, but that we had only $3,000.00 in cash, and that we could not pay all cash.'
A real estate broker who was acting in the transaction said 'Well, we can get you a mortgage of $7,000.00, and I will ask Mr. Del Rubio, who is here in the office if he wants to give such a mortgage.' The 'Mr. Del Rubio' referred to is the ...