
    Laura Verity and Benjamin Strauss, Appellants. and Respondents, v. Maud M. Sternberger and Minnie H. Sternberger, Respondents and Appellants, Impleaded with Others.
    
      Mortgage, given to an agent of the mortgagor to negotiate — it is enforcible only to the amount for which it is sold — effect of a certificate of the mortgagor as to its validity.
    
    A mortgage for §10,000, executed by the mortgagor to one of his employees for the purpose of negotiating a sale thereof, which mortgage was assigned by the employee for a consideration of §4,000, is usurious and is only enforcible to the extent of the amount actually advanced thereon, with interest, notwithstand- . ing that before purchasing the mortgage the agent of the purchasers obtained a certificate from the mortgagor as to the validity of the mortgage, and a waiver of any defense that might exist thereto, and that it was not shown that, the purchasers or their agent had knowledge of the falsity of the certificate.
    
      Semble, that if the purchasers of their agent did not rely on the mortgagor’s certificate of validity and knew that it was false, the certificate would be of no avail to them.
    Cross-appeals by the plaintiffs, Laura Verity and another, and by the defendants, Maud M. Sternberger and another, from a judgment of the Supreme .Court, entered in the office of the' clerk of the county of Mew York on the 5th day of July, Í900, foreclosing a mortgage and directing a sale of the premises therein described.
    The mortgage, to foreclose which the action is brought, purports to have been given to secure the payment of $10,000. The judgment declares it enforcible only to the extent of $4,000. The plaintiffs appeal upon the ground that the. mortgage should have been declared enforoiblei to the full extent of $10,000, and the defendants, Maud M. and Minnie H. Sternberger, appeal upon the ground that it should have been declared usurious and void.
    
      James G. JDe La Mare, for the plaintiffs.
    . Fra/ncis Burton Harrison, for the defendants.
   Laugklin, J.:

The mortgagor, Clarence S. Sternberger, inherited, subject to his mother’s life estate from his father, an- undivided one-eighth interest in four several parcels of land situated in the city of Mew York; an undivided one-sixteenth interest in another parcel of land situated in said city; and an undivided one-eighth interest in a tract of land situated in New Jersey.

The mortgage in question covered the mortgagor’s interest in these several tracts of land upon which there existed a prior mortgage for $9,000 executed by him, and also a second mortgage for $5,000, also executed by Sternberger upon his undivided interest, to one Ruble as security for about $3,000, and further advances contemplated to be made in the future.

Kraffmiller, the mortgagee, was an employee of the Standard Boole Company, in which the mortgagor was the only one interested and of which there were no officers. At the time of the execution of the mortgage the mortgagor was not indebted to the mortgagee, and the only interest of the latter in the mortgage was to negotiate a sale thereof for the mortgagor.

Ruble had made unsuccessful efforts to sell his mortgage and was pressing Sternberger for payment of the indebtedness secured thereby. The purpose for which Sternberger executed the $10,000 mortgage evidently was to negotiate a sale thereof and with the proceeds to pay the Ruble mortgage and have some cash surplus. Pursuant to the directions of the mortgagor, Kraffmiller took the $10,000 mortgage to Ruble for further directions as to what to do with it. At this point a conflict arises in the evidence, it being claimed by Kraffmiller that Ruble directed liim to one Etta Forgotston at 203 Broadway, and Ruble denying this, but giving another explanation as to how Kraffmiller came to go to this woman. It appears, however, that Kraffmiller did call upon her and offered the mortgage for sale. She declined to purchase it, which apparently surprised Kraffmiller, who stated that he had been directed to call at that number, whereupon she suggested that perhaps Hr. De La-Hare, whose office was adjoining, might take the mortgage as he sometimes dealt in such securities. Here another conflict arises in the testimony. Kraffmiller says that Hiss Forgotston conducted him to the office of De La Hare, who was not in at that time, and she subsequently introduced him to De La Hare as the man who had the Sternberger mortgage. Hiss Forgotston testifies that she had an office boy show Kraffmiller to De La Hare’s office but otherwise denies any connection with his meeting De La Hare. However, Kraffmiller finally met De La Mare and after recording thé mortgage at the latter’s suggestion, through him negotiated a sale .and'assignment thereof to .the plaintiff Verity for $4,000. Kraffmiller represented to De La Mare that he owned the mortgage, was desirous of selling it and consented to transfer it. for this amount. Before1 purchasing, De La Mare required an affidavit as to the mortgagor’s title to and interest in the premises and an acknowledged certificate of the mortgagor as to the validity of .the mortgage and a -waiver of any defense that might exist thereto. On the presentation of these papers De La Mare drew his personal check to the order of Kraffmiller for $3,057.23 and directed that the same be indorsed over to Ruble in payment of the indebtedness secured by the $5,000 mortgage held by him. This was done and Ruble deposited the check to his oivn credit in the bank and discharged the mortgage. Another personal check was drawn by De La Mare to the order of Kraffmiller for $898.92, being the balance of the $4,000, the purchase price of the mortgage, after deducting charges for drawing and expenses of recording the papers. Kraffmiller subsequently indorsed and delivered the smaller check to Sternberger.

JDe La Mare in this transaction represented the plaintiff Laura Verity, who was his daughter, and she took no part therein personally. The plaintiff Strauss, who resided in Philadelphia, had previously, by correspondence with De La Mare, consented to purchase a three-fifths interest in .the mortgage and pay therefor $3,000. Strauss personally had nothing to do with the negotiations for the purchase of the mortgage and was not present when the matter wras consumated, but Attorney Sternberger was there representing him. Four days after the assignment by Kraffmiller to her,, the plaintiff Verity executed an assignment of a three-fifths interest in the mortgage to the plaintiff Strauss, whose check for $3,000 was at that time delivered to her father for her.

The defendants who appeal are the heirs of the mortgagor.

This mortgage had its inception by the assignment from Kraffmiller, who had no interest therein, to the plaintiff Laura Verity. Only forty per cent of the amount which it was given to secure was actually advanced upon it. This brings the transaction within the prohibition of the usury laws and would render the mortgage void (Hall v. Earnest, 36 Barb. 585 ; Payne v. Burnham, 62 N. Y. 69), but for the advance of the $4,000 in good faith. The answer sets up the defense of usury. The plaintiffs contend that defendants are estopped, by the certificate and consent of the mortgagor, from interposing this defense. There may be an estoppel im,pais against the defense of usury as well as against other defenses. (Mason v. Anthony, 3 Keyes, 609 ; Barnett v. Zacharias, 24 Hun, 304; affd., 89 N. Y. 637.) It is claimed on the other hand that the purchaser-did not rely on the mortgagor’s certificate of validity and knew that it was false. If this appeared from the evidence, the certificate-doubtless would be of no avail to the plaintiffs (Eitel v. Bracken, 38 N. Y. Super. Ct. 7); but, as was observed by the learned trial judge, while the transaction is suspicious, the proof falls short of bringing home to the purchasers or their representatives knowledge as to the falsity of the mortgagor’s certificate. Suspicion is not proof, and courts must decide cases on evidence. It does not follow, however, that we must permit the enforcement of the security for tlie entire amount. Full indemnity will be afforded plaintiffs by holding defendants estopped from challenging the validity of the mortgage to the extent of the amount actually advanced upon the faith thereof together with interest thereon from that date. The trial court rendered judgment upon this basis.

This rule has been declared as the judicial policy of our State by a long line of authorities, and it is now the well-settled law in such cases. (Payne v. Burnham, 62 N. Y. 69 ; Miller v. Zeimer, 111 id. 441; Sickles v. Flanagan, 79 id. 224; Cross v. Smith, 85 Hun, 49; Rollins v. Barnes, 11 App. Div. 150.)

These views lead to an affirmance of the judgment, without costs to either party.

Patterson, O’Brien, Ingraham and Hatch, JJ., concurred.

Judgment affirmed, without costs.  