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U.S. Supreme Court

New England Mortgage Security Co. v. Gay, 145 U.S. 123 (1892)

New England Mortgage Security Company v. Gay

No. 221

Argued March 22, 1892

Decided May 2, 1892

145 U.S. 123


When the jurisdiction of this Court depends upon the amount in controversy, it is to be determined by the amount involved in the particular case, and not by any contingent loss which may be sustained by either one of the parties through the probative effect of the judgment, however certain it may be that such loss will occur.

The plaintiff made a loan to the defendant upon his promissory notes to the amount of $8,500, secured by a mortgage of real estate in Georgia of the value of over $20,000. In assumpsit to recover on the notes, the jury found the transaction to have been usurious and gave judgment for the sum actually received by the debtor, which was $1,700 less than the amount claimed, and for interest and costs. The effect of that judgment, if not reversed, is, under the laws of Georgia, to invalidate the mortgage given as security, in proceedings to enforce it. Held that notwithstanding such indirect effect, this Court has no jurisdiction, the amount directly in dispute in this action being only the usurious sum.

This was an action of assumpsit by the plaintiff in error against Jacob M. Gay upon four promissory notes, made by Gay, amounting to $8,500, with interest at eight percent, payable annually, with all costs of collection, including ten percent attorneys' fees. These notes were made payable to Charles L. Flint or order at the office of the Corbin Banking Company, New York City, and as to each of them the defendant waived his right to the benefit of the exemption provided for by the Constitution and laws of Georgia. To secure these notes, a deed was given by Gay, with the consent of his wife, to said Flint, of land in Schley County, Georgia, with release of homestead and dower. At the same time, a bond for a reconveyance on payment of the notes was given by Flint to Gay, according to the usual course of business in Georgia, where such deed and bond stand in the place of a mortgage.

Page 145 U. S. 124

Flint took the notes and deed in behalf of the plaintiff, and afterwards endorsed the notes to the plaintiff.

The defendant pleaded four pleas, two of which were stricken out by the court, and the case was tried upon the first, which was an ordinary plea of nil debit and upon the second, wherein the defendant alleged that the consideration of these notes was a loan of money by the plaintiff to the defendant of the sum of $6,463, and that all of said sum and notes sued on in excess of said sum was contrary to law, and defendant was only liable for the sum received by him and lawful interest thereon from the dates of the notes, which amount he averred his willingness to pay. Upon the trial, the defendant relied solely upon the defense of usury, and the court charged the jury that the defendant admitted an indebtedness of $6,463, with interest, etc., and instructed them, in any event, to return a verdict for that amount. 33 F.6d 6. In this connection, he further charged that if they believed the defendant received $6,800, they were then directed to return a verdict for that sum, with interest and attorneys' fees, etc. The jury returned a verdict for $6,800 principal, $2,041.51 interest, and $884.15 attorneys' fees, making a total amount of $9,725.66, for which a judgment was entered, with costs.

Plaintiff thereupon secured the settlement of a bill of exceptions, and sued out a writ of error from this Court.

Page 145 U. S. 127

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