
    Albert Storer and Eben S. Stephenson, Plaintiffs and Appellants, v. Charles S. Coe, Defendant and Respondent.
    1. On a bill filed to recover back securities pledged for alleged usurious loans, if all the equities alleged in the bill are fully met and denied by the answer, and the defendant is fully solvent and of sufficient responsibility to answer to all claims the plaintiffs may establish, an injunction granted, ex parte, to restrain the collection or disposition of the securities, should be wholly dissolved.
    2. But the answer is not necessarily to be taken to meet and overcome the allegations in the complaint, merely because it is couched in such terms of denial and explanation of apparently usurious transactions, as if true in their proper and just meaning would show that there was no usury. When the denials and explanations are themselves such as to leave great suspicion that they are untrue or evasive, or, that under cover of words describing commissions and payment for services, usurious exactions have been made by the defendant, the injunction should be continued to the hearing.
    3. A voluntary payment of a mere gratuity by the borrower to the lender, on the return of a sum of money legally loaned, does not necessarily make the next loan between the same parties usurious, nor raise a presumption that it is so. But a long series of successive loans running through a period of fifteen months or upwards, and an invariable payment of large premiums on the return of the money or renewal of the period of credit, is so suspicious as to raise a presumption, that both parties understood that the payment of an exorbitant sum was the condition of the successive loans.
    4. The statement in the answer, that large premiums which were paid to the defendant, were for “ extra trouble,” either in lending the defendant’s own money, or in buying the borrowers’ note, is of no weight in rebutting the charge of usury, unless the answer shows the particulars so as to exhibit an actual and' bona fide sacrifice of time, money, or property, for the borrower’s benefit.
    5. It is competent to show, that an assignment of judgments against third parties, made by the borrower to the lender, was made and received as security for loans, although such assignment is absolute in form. And the truth of allegations in the answer of the defendant, that such assignment was absolute in fact, and on a purchase of the judgments, will be discredited where the whole transaction is such as to render that statement highly improbable.
    6. Where it is manifest that the plaintiffs may suffer loss by permitting the defendant to collect the moneys due upon securities held for loans, which are alleged to be usurious, the Court, if they deem the answer insufficient to overcome the equities in the complaint, should restrain such collection, although it may ap- . pear that the money, if collected, would, be entirely safe in the hands of the defendant.
    (Before Duer, Ch. J„ Bosworth, Hoffman, Slosson and Woodruff, J. J.)
    Heard, October, ;
    decided, October 31st, 1857.
    This case came before the Court, in General Term, on appeal from an order modifying an injunction.
    The plaintiffs filed their complaint, alleging, that from the month of November, 1855, to December, 1856, they had been in the constant habit of borrowing sums of money from the defendant, such loans, or extensions, of some of them, taking place in every month, and that each and every of the said loans were made upon usury, and that the defendant, on the 11th of December, 1856, claimed a balance upon one of such usurious'loans of $14,200, and held the plaintiff’s note for that amount, and claimed a balance of $4000 upon another usurious loan, and that he held various bonds and stocks as collateral security.
    The complaint then alleges, that the defendant lent them some further sums upon usury, and received an assignment of certain two judgments belonging to the plaintiffs, against The High Shoals Mining Company; one for $6166.70, and the other $21,045.02 ; as collateral security. That the plaintiffs are stockholders in the said company, and largely interested to sustain it and prevent a sacrifice of its property by a forced sale, or violent and speedy enforcement of the judgments.
    It then further alleges subsequent payments to the defendant bn account, the giving of notes in renewal, exorbitant charges by the defendant under the name of commissions, or for “ extra trouble that all the loans for which the said collateral securities were specifically pledged, have been repaid with the usurious interest there .on; that the plaintiffs have demanded a return of the various securities, but defendant refiises to return them, and has offered them, together with the said judgments, for sale; and that he claims that he has purchased the judgments, and holds them by an absolute transfer, and threatens to proceed to collect them without delay, or sell them as he shall find for his interest.
    The complaint prays for a surrender of the usurious notes made by the plaintiffs—a return of the bonds and stocks, and an assignment of the judgments against the High Shoals Mining Company, held by the defendant as security, as above stated. And prays, « also, an injunction to restrain the defendant from selling, assigning, or in any manner disposing of the notes, judgments, bonds, stocks, etc., and from collecting the judgments, and for a receiver.
    A temporary injunction, or order, in the nature of an injunction, was granted, ex parte, according to the prayer of the complaint, which, upon the coming in of the answer, and a hearing of the parties, was modified so as to permit the defendant to proceed to collect and enforce the said judgments.
    The opinion of the Court states, with sufficient particularity, the substance of the answer bearing upon the question, whether the injunction should have been continued.
    The plaintiffs appealed from the order, in so far as it modified the previous injunction.
    
      H. A. Oram, for the plaintiffs, appellants,
    insisted that the equity of the case made by the complaint, was not met by the defendant’s answer, and that the injunction should have been continued in full force.
    That to suffer the defendant to collect or enforce the judgments, would be destructive of the company and its property, destroy all hope of the ultimate collection of the judgments in full, injure the plaintiffs as large stockholders, and, as alleged,.leave them, also, personally liable for the debts of such company.
    
      Hoffman and Pirsson for the defendant
    insisted that the whole equity of the complaint was denied by the answer, and that the injunction should have been wholly dissolved.
   By the Court. Woodruff, J.

The complaint in this case shows, we think, a very clear case for relief, and entitling the plaintiffs to the interposition of the Court, to restrain the defendant from using the securities in his hands, upon the ground that the transactions between him and the plaintiff are usurious and void. If the facts stated by the plaintiffs are true, the defendant’s exactions were singularly exorbitant and oppressive.

This case, made by the complaint, the defendant seeks, by his answer, to rebut; and if he has fully met the charges of the plaintiffs, so that the case stands before us upon an equal balance of the evidence, or upon the oath of the plaintiffs, fully met, and opposed by the oath of the defendant, then we think the plaintiffs have no reason to complain of the modification of the injunction. Nor in such case, should we have deemed it erroneous to dissolve the injunction altogether, especially since there is no pretence in the complaint, that the defendant is insolvent, or not 'fully able to meet any responsibility the plaintiffs may be able to charge upon him by the final judgment, if rendered herein in their favor. The case, in this aspect, would stand upon the ground, that all the equities of the bill were fully met and denied by the answer, and by a defendant fully solvent, and of sufficient responsibility to answer to all claims the plaintiffs may establish.

It is, however, quite apparent, that the order appealed from did not proceed upon this ground; it contemplates the continued control of the Court over the securities in the defendant’s hands pendente lite, while it permits him to proceed to collect the judgments which it is the purpose of the complaint to reach and recover back.

With the apparent conclusion of the Justice, at Special Term, that the answer does not fully meet and disprove the allegations of the complaint, we concur.

The fact of the payment of very large sums by the plaintiffs, in consideration of the moneys loaned, or as a compensation to the defendant for having furnished to them the money, is admitted. These sums very greatly exceed the legal rate of interest.

The explanation given by the defendant is, in respect to very many of the payments, that they were not made in pursuance of any agreement made at the time of the respective loans, nor at any time previous thereto; but were paid to the defendant by the plaintiffs, voluntarily, at the time of refunding the respective loans, as a mere gratuity for his extra trouble in procuring said loans.

In respect to others, the explanation is, that the premiums were paid voluntarily, as a mere gratuity, without suggesting that the idea of “ extra trouble” entered into the consideration of the parties.

In respect to others, it is said that the premium was paid to the defardant upon his purchasing from the plaintiffs their own notes, as a commission for his “ extra trouble” in procuring the money to emble himself to make such purchase.

We have, then, some fifty transactions, in which the plaintiffs were, in fact, borrowers, and the defendant, in substance, and in most cases in form, the lender, running through a period of about 15 months, in which very large premiums were confessedly paid by the plaintiffs, over and above legal interest.

We think it was the part of the defendant, if these transactions were susceptible of explanation, to have shown their legality by something more specific than the vague generalities by which the answer seeks to defend them.

It is true, that a voluntary payment of a mere gratuity by a borrower to the lender, on returning a sum legally borrowed, does not necessarily make the next loan between the same parties usurious, nor raise a presumption that it is so; but a long series of successive loans, and an invariable payment of large premiums on the return of the money, or renewal of the period of credit therefor, has, at least, a very suspicious appearance, which the suggestion of a gratuity does not remove. The reception of gratuities by the lender from the borrower, in such cases, may be adopting a legal term to express what both parties perfectly understand to be a most exorbitant exaction, and, in truth, a condition of the continuance of favors which succeed each other as fast as the “gratuity,” so-called, is bestowed.

Such is, to our minds, upon a review of the complaint and answer, the nature of the transactions in question.

As to the idea, suggested in some cases, that the premium was for extra trouble, it must suffice to say, that if a lender may, in any case, charge more than legal interest for lending his own money, or for buying of the borrower the borrower’s own note, (upon which question it is unnecessary to speak decisively here,) the lender must, at least, show the facts and circumstances with sufficient particularity to enable the Court to see that there was some just and reasonable ground for such a charge, and some actual trouble taken, or service rendered, or sacrifice made: els3 the Court will be left to the probable inference, that, under circumstances like the present, it was, in truth, a mere cover, called by the name of compensation for “ extra trouble,” when no actual service was in fact rendered.

It is safe to say, that if any such charge can be permitted in any case, it can only be on clear allegation and proof of the actual and bona fide sacrifice of time, money, or property, for the benefit of the borrower, or for his accommodation.

The answer does not, we think, satisfactorily show this.

Without discussing the other particulars further, enough has been said to indicate our view of the effect of the answer, in reference to the matters contained in the account annexed to the complaint.

In respect to the judgments assigned, or caused by the plaintiffs to be assigned, to the defendant, he insists that he holds them by absolute purchase, having only given to them the privilege of repurchasing them within a limited time.

If we were bound to take the language of the writings as conclusive, or the mere words of the defendant’s answer, we must hold that the allegations in the bill, that the defendant took the assignments as security merely, were overcome. We do not so understand our duty. Parties seldom express in terms their design to secure to themselves an advantage, which they know to be illegal; and in weighing the proper effect of the answer, we may, and ought, to look at all the circumstances, and consider as well what is alleged and what is denied, as also what is probable.

The plaintiffs had long been borrowers from this defendant. They had béen long and continuously paying him, for the loans received, large amounts exceeding legal interest. In this state of things, they were anxious to purchase a j-udgment from Mr. Hilton, amounting to $6166.70, the immediate enforcement of which might operate greatly to their prejudice; they had negotiated a purchase, and had paid therefor all the purchase-money except,$2890.13. The defendant consented to advance this, and

now claims that the real understanding was, that for so doing he was to be deemed an absolute purchaser, and entitled to collect and retain the whole sum of $6166.70, although the plaintiffs themselves were, as stockholders, liable for the amount.

And further than this, the claim of the defendant is; that for advancing a further sum of $2726.57, he was to be deemed an absolute purchaser of the plaintiffs’ judgment for over $21,000, (embracing the amount of the first judgment,) subject to no other condition than that the plaintiffs might become re-purchasers, by re-paying, within 30 days, the two sums of $2890.13 and $2726.57, and one of the before-mentioned usurious loans of $4000, amounting to $9616.70, together with a premium or profit thereon of over $3500, for the favor thus extended to the plaintiffs.

The relation of the parties in the previous transactions, the known need of the plaintiffs, the significant fact, that the defendant treated the plaintiffs as debtors, by taking their note for the amount of the defendant’s advances, with the premium aforesaid, seem to us to indicate that, in this transaction the plaintiffs were • borrowers merely, with a degree of probability, at least, not sufficiently explained by the suggestion in the defendant’s answer, that the note was taken as a memorandum, and not with intent to enforce it.

And this view is further supported, by the admitted fact, that when the thirty days expired, the plaintiffs, seeking a further extension for thirty days, were required to give their note for $10,000, although they had paid $7000, thus adding about $4000 to the exorbitant premiums already reserved to the defendant. Indeed, it is apparent, that the defendant has been reimbursed all, and even more, than he has advanced upon the judgments, and yet holds the plaintiff’s note for $10,000, for which these extravagant premiums, to the extent of, at least, $6000, constitute the consideration. The remaining $4000 being alleged to be one of the previous loans, already above referred to, upon, or for which premiums were charged, exceeding the legal rate of interest.

We are not satisfied, that the account of the transaction, by the defendant, is so credible, that upon the mere answer, the injunction should be denied. By whatever name the parties may have, in form, denominated the transactions, they savor strongly of devices to secure to the defendant large premiums on what the parties, in fact, intended as loans of money.

Under these views, it is quite apparent, that the defendant’s" answer has not so fully met and answered the complaint, that the injunction should have been dissolved; and such, we think, must have been the view of the Court, at Special Term, in refusing to dissolve the injunction.

But the Court did modify the injunction, so far as to permit the defendant to proceed to collect and enforce the judgments. We think this modification was made without considering the peculiar relation of the plaintiffs to the company against whom the judgments were recovered ; for it is, we think, clear, that; if the plaintiffs have made a case for an injunction, which is not overcome by the defendant, then the modification should no more have been made than a dissolution ordered, if it is apparent, that the modification will expose the plaintiffs to the very injury which it is the object of the action to prevent.

The judgments are recovered against the High Shoals Mining Company. That company is alleged to be under present embarrassments, which would force it into insolvency, and sacrifice its property, if the judgments should be immediately enforced against them, and as we can readily perceive, such enforcement might render the ultimate collection of the debts impracticable—■ at all events, the plaintiffs, if they establish their title to the relief sought, are most interested in that matter, and they desire that the judgments be not now enforced.

Again, the plaintiffs are large stockholders in that company, and are in that manner greatly interested in sustaining the company, and preventing a sacrifice of its property. In this view, they are largely interested in restraining the immediate enforcement of the judgments, and although, as between them and the company, or its other stockholders, they would have a right to enforce the judgments at once, the plaintiffs have, (if entitled to the relief sought,) a clear right to consider, and determine for themselves, how their interests, as creditors, can be best harmonized with their interests as stockholders, and manage and control the judgments accordingly.

But still further and more conclusively, it is alleged that the plaintiffs, as stockholders in the company, are liable for its debts. Under such a responsibility, the control of these judgments and the preservation of the company from final insolvency, may be of very great moment to the plaintiffs.

If it were a matter of indifference to the plaintiffs, whether the money was or was not immediately collected, or, if both plaintiffs and defendant were alike interested, that the money should be collected, if possible, from the judgment debtor, then there would be obvious propriety in suffering the judgments to be enforced, and the defendant not being insolvent, it would be proper to suffer him to proceed with the collection. But the considerations above suggested, show that protection of the interest of the plaintiffs will not be so attained—to permit the defendant to proceed, is to defeat one of the principal objects of the action.

We conclude, therefore, that the order modifying the injunction should be reversed, and the injunction be reinstated.

The costs of this appeal must abide the event of the suit.  