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Fourth Department, March, 1910. have amended his complaint of course, and without costs. If he had availed himself of this remedy it would not have relieved him from the dilemma in which he was placed by the interposition of the demurrers. He could not sever the causes of action by amending his complaint containing one cause against the defendant corporation and another independent cause of action against the defendant Van Deusen upon her contract of guaranty.
The demurrers that had been interposed raised an issue of law that must be tried, unless the plaintiff could get rid of them by serving an amended complaint, and which would not accomplish the result as already suggested.
Section 497 of the Code of Civil Procedure provides : “If a demurrer to a complaint is allowed, because two or more canses of action have been improperly united, the court may, in its discretion, and upon such terms as are just, direct that the action be divided into as many actions as are necessary for the proper determination of the causes of action therein stated.” The authority in pursuance of this section has been several times exercised. (Roehr v. Liebmann, 9 App. Div. 247, 249; Myers v. Lederer, 117 id. 27, 30.)
The Code of Civil Procedure, therefore, preserves to a plaintiff his causes of action where it is held on demurrer that they are improperly united, so that he is not obliged to commence anew. If important, he is in the same condition as if the demurrer had been overruled so far as the defense of the Statute of Limitations is concerned.
In this case the plaintiff did not amend and he did not await the trial and decision of the demurrers in the orderly way to protect himself. He made this motion, evidently, in order to avoid the payınent of the costs of the demurrers, and has succeeded, for only motion costs were imposed, and he has gained every advantage and none of the disadvantages resulting from the allowance of the demurrers at the trial.
I find no authority for this practice. The demurrer is a pleading and it can be effectually killed by the service of an amended pleading within section 542, and I know of no other way. In this case the demurrers in effect have been upheld and their purpose thwarted by a short cut which finds no warrant in the Code procedure.
The plaintiff, apparently, concedes that he has improperly united
Fourth Department, March, 1910.
(Vol. 137. two causes of action by joining in one action two defendants against whom he may have separate, distinct causes of action, although that question is not before us. He wished to get rid of these pleadings which arc fatal to the maintenance of his action as now laid, and has attained his purpose by this order. The practice prescribed in section 497 results in disposing of the demurrer when sustained. The order in question does not allow or disallow the demurrers. There has been no trial of the issues of law which they raise.
Section 723 of the Code of Civil Procedure is the omnium gatherum of powers in the courts to make amendments, but the widest interpretation to any or all of its provisions does not justify the practice adopted on this proceeding.
There are several sections of the Code of Civil Procedure by which the severance of a cause or causes of action is permitted, but not one of them pertains to a proceeding like the present.
In section 511, when the answer admits a part of the plaintiff's claim, the court may, upon the motion of the plaintiff, order that the action be severed and that judgment be entered for the plaintiff for the part admitted.
In section 1220 where an issue of law and one of fact arise in different causes of action contained in the complaint, final judgment may be obtained with respect to one or more of the canses of action alleged, and the action continued as to the residue.
Sections 1522 and 1523 relate to severance in actions concerning real property where, pending the action, different persons succeed to different parcels by reason of the death of a party, etc. So, in an action against two or more defendants, where a several judgment is proper, the court may, in its discretion, render judgment, or require the plaintiff to take judgment against one or more of the parties, and the severance of the action may be ordered for the purpose of entering the judgment, and continuing as to the rest of the defendants. ($ 1205.)
The order should be reversed, with ten dollars costs and disbursements, and the application denied, with ten dollars costs.
Order reversed, with ten dollars costs and disbursements, and notion denied, with ten dollars costs.
REUBEN W. WRIght and David S. Wright, Plaintiffs, v. DANIEL
F. TOOMEY and CHARLES J. WIRTNER, Defendants, Impleaded with John S. LAMBERT.
Fourth Department, March 9, 1910.
Usury — bills and notes – demand note for over $5,000 secured by
A demand note for $5,500, of which $500 is compensation for the loan, secured
by the pledge of certificates of stock, is not void for usury. Such note is within section 379 of the General Business Law, providing that where
advances of money repayable on demand, to an amount not less than $5,000, are made upon warehouse receipts, bills of lading, certificates of stock, bills of exchange, bonds or other negotiable instruments pledged as collateral security, it shall be lawful to contract for any compensation for the advance which the
parties may agree upon in writing. Such note is not void, because it does not show what part thereof comprised the
compensation and what part the loan.
Motion by the defendants, Daniel F. Toomey and another, for a new trial upon a case containing exceptions, ordered to be heard at the Appellate Division in the first instance, the verdict of a jury having been rendered by direction of the court in favor of the plaintiffs against the said defendants, after a trial at the Chautauqua Trial Term in May, 1909.
Elton D. Warner, for the plaintiffs.
Herman J. Westwood and Lester F. Stearns, for the defendants Toomey and Wirtner.
In June, 1904, the plaintiffs were copartners in business under the name of the Lake Shore Seed Company. On the fourth day of that month they accepted the note in suit made by the defendant Toomey, as maker, and the defendant Wirtner as indorser. The note was dated May 12, 1904, given for $5,500, payable on demand, with use, to the order of the defendant Wirtner. It was expected that the note would be negotiated at the Fredonia National Bank,
App. Div.-Vol. CXXXVII. 26
Fourth Department, March, 1910.
[Vol. 137. where it was made payable and in whose custody it remained until delivered over to the plaintiffs by the defendant Toomey.
The defendants received in cash for the note $5,000, so that the plaintiffs received in excess of the legal rate of interest $500.
The defendants had each subscribed for twenty-five shares of the capital stock of the Land and Petroleum Company, a corporation with a capital stock of $25,000, divided into shares of $100 each. The note was made to enable the defendants to raise the money to pay for the certificates of stock in this corporation, and the avails of the note were used for that purpose. The loan or advance was made upon the agreement of the defendants at the time the note was delivered to assign and transfer to the plaintiffs as collateral security for the repayment of the money advanced the certificates of the fifty shares of such stock purchased with the $5,000 paid to them by the plaintiffs, and this transfer was in fact duly made in compliance with the agreement. The defendant Wirtner, although in form an indorser, was, in fact, equally interested with Toomey in the project, and also with like liability on the note. There was also an accommodation indorser on the note who does not defend.
The investinent made by the purchase of the stock proved to be a profitable one, but the defendants resist the payment of the note on the ground that it was usurious and the defense is a bar to any recovery, unless the plaintiffs are within chapter 237 of the Laws of 1882 (revised into General Business Law [Consol. Laws, chap. 20; Laws of 1909, chap. 25], $ 379).
Section 1 of this statute reads as follows: "In any case hereafter in which advances of money, repayable on demand, to an amount not less than five thousand dollars, are made upon warehouse receipts, bills of lading, certificates of stock, certificates of deposit, bills of exchange, bonds or other negotiable instruments pledged as collateral security for such repayment, it shall be lawful to receive or to contract to receive and collect, as compensation for making such advances, any sum to be agreed upon, in writing, by the parties to such transaction.”
The provisions of the act were complied with so far as the kind of loan and the sum of money advanced, and it was made upon certificates of stock ; but the defendants contend that the compensation received for making the advance was not specified in writing. App. Div.]
Fourth Department, March, 1910. The entire sum of $5,500, which the defendants agreed to pay, was contained in the note and included $500 compensation. A separate agreement pertaining to the compensation was not required by the statute. Nor was it necessary to state in the written contract fixing the full liability of the defendants precisely what comprised compensation and what money actually advanced. There is no limitation upon the amount which the parties may agree on as the compensation, and no controversy can arise over it where a note is delivered at the time the agreement is entered into and which measures the extent of the liability of the promisor. If the money is advanced upon the oral agreement of the borrower to pay and compensation in excess of the lawful rate of interest is agreed upon, that agreement probably should be in writing for the reason that there is no written obligation at all and the amount to be repaid would depend entirely upon oral proof. That reason does not obtain where the transaction is evidenced by a promissory note which includes both the compensation and the advance made. The maker of the note then knows what he has to pay, and the requirements of the statute have been complied with, and there is no ambiguity and nothing to be proved by parol, when an action is brought on the note.
While the statute has been in force since 1882, apparently it has not been fruitful in litigation. In Hawley v. Kountze (6 App. Div. 217) a loan of $15,000 had been made upon shares of stock, and the claim was made in defending against the notes evidencing the indebtedness that the amount of the compensation in excess of the interest must be provided for in writing. The court held otherwise, and used this langnage in commenting upon the scope of the statute (at p. 219): “But in the view which we take of the act of 1882, the only importance of an agreement in writing, as to the sum to be received by the lender, is to enable the lender to collect more than six per cent as his compensation. The effect of that enactment was to remove from the operation of the usury laws of the State all loans of money payable on demand, where the amount lent or advanced is not less than $5,000, and where warehouse receipts, bills of lading, certificates of stock, certificates of deposit, bills of exchange, bonds or other negotiable instruments are pledged as collateral security for such repayment of the money borrowed. If the agreement is merely