
    SAMUEL. R. DICKSON, Appellant, v. WILLIAM C. VALENTINE and another, Impleaded, &c., Respondents.
    
      Equitable relief by assignee of collaterals given to secure payment of a usurious note.
    
    The assignee of collateral securities, which, the maker of a usurious note pledged as security for its payment, by his complaint seeks equitable relief in an action, namely, the cancellation of the note (also assigned) and the delivery of the collaterals, &c. A demurrer to the complaint on the ground that it does not state facts sufficient to constitute a cause of action, was sustained by the court below.
    
      Held, that the right of action, claimed by the complaint, is expressly given by section 1911 of the Code of Civil Procedure, and that before that action was maintainable on equitable principles generally; and plaintiff is entitled to the equitable relief sought, and is not bound to proceed at law. An action at law will not lie to cancel a transaction, nor will an action at law lie to recover things pledged without the alternative of damages, if not delivered. A tender of the amount advanced on the collateral is not necessary. The offer in the complaint to pay is sufficient.
    Before Sedgwick, Ch. J., Freedman and Trtjax, JJ.
    
      Decided June 28, 1889.
    Appeal by plaintiff from order, interlocutory judgment and final judgment sustaining defendant’s demurrer to the complaint.
    
      James W. Purdy, Jr., for appellant, argued :
    I. This action is maintainable (1) under § 1911 of Code ; (2) in equity. Under said section 1911 this action is one “ to cancel or otherwise affect an act done as security for a usurious loan,” where the “act created a specific charge upon property which is also transferred in disaffirmance thereof.” The “ act done ” here is the transfer of the security to the defendant Valentine by Wilkins ; the same having been given as security for a usurious loan. The security consisting of a certificate or memorandum entitling the holder to certain certificates of stock, which security is tainted with usury as alleged in the complaint, and this infirmity of course follows the said security into the hands of the defendant John Doe, the present holder. The specific charge referred to in the said section is the title to, or lien, on the said security, which defendant Valentine got, and which defendant Doe now has through him, both of which titles are of course tainted with the usury charged. The security being thus tainted, defendant Doe stands in the shoes of defendant Valentine—no better—no rights of bona fide third persons can possibly intervene. Plaintiff is not bound to proceed at law. He has a right to ask that this particular stock be returned to him. He does not want damages. Asking for the cancellation of the note is a mere incident to the relief he wants ; he cares naught for that, but he wants this particular stock ; its value to-day is very little, but its prospective value to him is very great. Defendant treats the return of the note as the main issue ; hence the fallacy of regarding the prayer at all on demurrer. The case of Allerton v. Belden, 49 N. Y. 373, cited by respondent, is not in point; plaintiff there sought to have a note declared void. He had a good defence at law ; hence no cause for affirmative relief. The law says the transfer was void, and that the property belongs to plaintiff; he asks for its return. Equity says he is entitled to it, but he must do equity, as defendant Doe has advanced money on it. He does equity by his offer in his complaint before relief can be granted to him. This is all defendant can ask. Schermerhorn v. Talman, 14 N. Y. 129 ; Post v. Pres, of Bank, 7 Hill, 399 ; Wheelock v. Lee, 64 N. Y. 247-8 ; Merch. Bk. v. Com. Co., 49 Ib. 635, and especially §§ 1, 2 and 8 of foot-note thereto ; Rexford v. Widger, 2 Ib. 131.
    II. Tender is not necessary. The offer in the complaint is all-sufficient. ' Eurthermore, a technical tender could not be made, because the identity of John Doe is not disclosed ; the complaint shows by clear inference that his identity has been concealed by defendant Dillingham. The cases cited by respondent below simply show what is necessary to an effective tender, when proper to be made. Mr. Wilkins could have brought this suit without tender of money, he being a “borrower” within the statute, but the plaintiff being his transferee, could not bring this action without an offer in thp complaint of the amount so advanced, which he makes. These facts are all set out. It is alleged that the security was transferred upon a usurious loan—and that the transferee had a specific charge upon the property follows as a matter of law from the facts alleged setting forth his possession and the lien which the law gives him under this section to be reimbursed the amount he has advanced before he can be compelled to restore. See foot-note of Judge Jones to the case of Mer. Ex. N'l Bank v. Com. W. Co., 49 N. Y. 635. This property, the shares of stock and the certificate, thereof and all the rights thereto are with the note, all transferred to the plaintiff, and he offers to pay the sum loaned with interest. Wheelock v. Lee, 64 N. Y. 248.
    
      Edward F. Brown, for respondents, argued:
    I. The plaintiff seeks equitable relief. He is not entitled to it, for the reason that he has a perfect defence at law and can obtain full relief by an action at law. The court, in the caso ofi Allerton v. Belden, 49 N. Y. 377, says : “ The allegations in his complaint disclose a perfect defence at law to any action which might be brought against him on his endorsement, and no fact is stated showing any necessity for the interposition of a court of equity, or entitling the plaintiff to become an actor in the matter. The mere fact that a party has made an agreement or given a security which is void for usury is not, and never was, sufficient to entitle him to apply to a court of equity to have the contract annulled. The right to this relief exists only where, from the form of the security, the defence cannot be made available at law, or where the instrument sought to be avoided is a cloud upon the title to land, or some other necessity for the interposition of a court of equity is shown.” The plaintiff has no reason for applying to equity, for, if sued, he can set up usury, and he can recover the value of his collateral by making a sufficient tender and bringing an action for conversion.
    
      II. Even if the action were sustainable in equity, the tender is insufficient. The plaintiff or his assignor should have sought the creditor and made a personal tender to him of the debt and interest or paid the money into court. Grussy v. Schneider, 55 How. 188; Halsey v. Flint, 15 Abb. 367; Bronson v. Rock island R. R. Co., 40 How. 48; Becker v. Boon, 61 N. Y. 317; Brown v. Ferguson, 2 Den. 196; Park v. Wiley, 67 Ala. 410; Sheridan v. Smith, 2 Hill, 538; Livingston v. Harrison, 2 E. D. Smith, 197; Simpson v. French, 25 How. 464.
    III. Plaintiff is not a borrower within the meaning of the statute relating to usury. 1 R. S. 772, § 8; Laws of 1837, chap. 430; Vilas v. Jones, 1 N. Y. 274-278; Post v. Bank of Utica, 7 Hill, 391; Rexford v. Widger, 2 N. Y. 131.
   By the Court.—Sedgwick, Ch. J.

The action is by the transferee of a borrower in a loan, averred by the complaint to have been usurious, and as averred, certificates of shares of certain stock had been pledged by the borrower.

The plaintiff as transferree of the shares from the borrower, and of the right to cancel the act by which the security was given, brings the action to cancel, and for a delivery to him of the certificates, offering in the complaint to pay, on such delivery, the amount of the note given by the borrower.

The objection to this complaint is, that the plaintiff could recover at law what he seeks, and, therefore, that an action in equity, which the respondents claim this to be, does not lie.

The objection is not sound. An action at law does not lie to cancel a transaction. In equity, in cases like the present, it does lie, and the recovery of the thing given in security is subordinate and occasional to the principal relief. Nor does an action at law lie for the recovery of the thing pledged without the alternative of damages if it be not delivered. In equity that specific relief may be given in a proper case, and then the delivery is enforced by proceedings for contempt.

In my judgment the demurrer to the complaint should have been overruled, with leave, upon payment of costs, to withdraw the demurrer and answer over.

Judgment and order reversed with costs, and judgment for plaintiff on the demurrer, with leave to defendants to withdraw demurrer and serve answer upon payment of the costs of the demurrer.

Freedman, J. (concurring).

This action is brought by the plaintiff as assignee of the collateral which the maker of a usurious note (also assigned) gave with the note, to procure a. delivery of the note and of the collateral to himself upon payment of the amount that was advanced on the note and the collateral by the present holder. The collateral consists of 5700 shares of the capital stock of the Walnut Grove Water Storage Company.

The complaint seeks equitable relief, and the joint demurrer of the present defendants is upon the ground that the complaint upon its face does not state facts sufficient to constitute a cause of action.

The demurrer was sustained upon the ground that the plaintiff has an adequate remedy at law, namely, that he has a defence at law to any action that may be brought on the note, and that he can recover the value of the collateral in an action of trover or for a conversion.

In coming to this conclusion the learned judge below overlooked the fact that the right of action claimed by the complaint is expressly given by section 1911 of the Code of Civil Procedure, and that even before that the action was maintainable on equitable principles generally.

In his note to that section Mr. Throop shows that the section establishes the rule in the special case of an equitable action to obtain relief against a usurious security, in substantial accordance with the rulings and principles laid down in Post v. Bank of Utica, 7 Hill, 391 ; Boughton v. Smith, 26 Barb. 635 ; Carow v. Kelly, 59 Ib. 239 ; Bissel v. Kellogg, 60 Ib. 617; Schermerhorn v. Talman, 14 N. Y. 93; Bullard v. Raynor, 30 Ib. 197; Freeman v. Auld, 44 Ib. 50; Tiedemann v. Ackerman, 16 Hun, 307; Wheelock v. Lee, 64 N. Y. 242, and various other cases..

Plaintiff is not bound to proceed at law. He has a right to ask that this particular stock be returned to him. He does not want damages. Asking for the cancellation of the note is a mere incident to the real relief he wants. He may care naught for the possession of the note, but he wants this particular stock. The value of said stock may be quite small to-day, but its prospective value to him may be very great.

As the demurrer is a joint one, no discrimination requires to be made between the demurring defendants.

A tender of the amount is not necessary to sustain the action. The offer in the complaint to pay is quite sufficient.

The judgment and order should be reversed with costs, and the plaintiff should have judgment ordered in his favor upon the demurrer with costs, with leave to the defendants to withdraw the demurrer and to answer on payment of both bills of costs.

Truax, J., concurs in reversing the judgment and order with costs. He is also of the opinion that plaintiff should have judgment ordered in his favor upon the demurrer with costs, with leave to the defendants to withdraw demurrer and answer upon payment of both bills of costs.  