usury defense in New York

2011Contrary to the plaintiff’s contention, the evidence failed to raise a triable issue of fact as to whether the defendants took advantage of, or the plaintiff relied upon, an alleged fiduciary or confidential relationship between the plaintiff and Sagona (cf. Abramovitz v Kew Realty Equities, 180 AD2d 568 [1992]; Schaaf v Borsher, 82 AD2d 880 [1981]), or that the plaintiff was unschooled in financial matters and relied to his detriment on Sagona’s superior experience and knowledge (cf. Pemper v Reifer, 264 AD2d 625, 626 [1999]; Angelo v Brenner, 90 AD2d 131, 132-133 [1982]; Hammond v Marrano, 8

1992The Appellate Divisions, and the majority of States to consider the issue, have recognized that a borrower may be estopped from interposing a usury defense when, through a special relationship with the lender, the borrower induces reliance on the legality of the transaction (see, Abramovitz v Kew Realties Equities, 180 AD2d 568 , lv denied 80 NY2d 753 [decided today]; Schaaf v Borsher, 82 AD2d 880 [2d Dept]; Angelo v Brenner, 90 AD2d 131 [3d Dept]; Hammond v Marrano, 88 AD2d 758 [4th Dept]; Annotation, Usury — Borrower’s Initiation, 16 ALR3d 510, 513-516).

2025Owners , 79 NY2d 735, 743 [1992] ["a borrower may be estopped from interposing a usury defense when, through a special relationship with the lender, the borrower induces reliance on the legality of the transaction"]), nor did the forbearance agreement assert such a relationship.

2025Owners ( 79 NY2d 735 ), in which the Court of Appeals held that "a borrower may be estopped from interposing a usury defense when, through a special relationship with the lender, the borrower induces reliance on the legality of the transaction" and that even under those circumstances, the borrower is "entitled, at most, to recovery of the amount advanced, with legal interest" ( id. at 743 ).

2024To that end, although "[a] usurious contract is void and relieves the borrower of the obligation to repay principal and interest thereon" ( Roopchand v Mohammed , 154 AD3d at 988 [internal quotation marks and citation omitted]), we agree with Supreme Court's reasoning that "it would be inappropriate for [defendant] to skirt his obligation to pay back a loan on the basis of a usury defense when [the] testimony clearly revealed that he, a lawyer by trade, fraudulently induced [plaintiff], a co-owner member of a business entity that [defendant] previously represented[,] into a usurious loan" ( se

2024To that end, although "[a] usurious contract is void and relieves the borrower of the obligation to repay principal and interest thereon" ( Roopchand v Mohammed , 154 AD3d at 988 [internal quotation marks and citation omitted]), we agree with Supreme Court's reasoning that "it would be inappropriate for [defendant] to skirt his obligation to pay back a loan on the basis of a usury defense when [the] testimony clearly revealed that he, a lawyer by trade, fraudulently induced [plaintiff], a co-owner member of a business entity that [defendant] previously represented[,] into a usurious loan" ( se

2024Civil Court erred in, sua sponte, granting summary judgment to defendants on a usury defense that was not raised by the only appearing defendant, Miralys Garcia ( see Baseball Off. of Commr. v Marsh & McLennan, 295 AD2d 73, 82 [2002]), either in her answer or on the motion, upon which she defaulted, where plaintiff had no notice of the defense and thus no opportunity for opposition ( see Quizhpe v Luvin Constr. , 70 AD3d 912, 914 [2010]; Lanoce v Anderson, Banks, Curran & Donoghue , 259 AD2d 965 [1999]; Credit Acceptance Corp. v Holness , 81 Misc 3d 133[A] , 2023 NY Slip Op 51376[U] [App Term,

2024Civil Court erred in, sua sponte, granting summary judgment to defendants on a usury defense that was not raised by the only appearing defendant, Miralys Garcia ( see Baseball Off. of Commr. v Marsh & McLennan, 295 AD2d 73, 82 [2002]), either in her answer or on the motion, upon which she defaulted, where plaintiff had no notice of the defense and thus no opportunity for opposition ( see Quizhpe v Luvin Constr. , 70 AD3d 912, 914 [2010]; Lanoce v Anderson, Banks, Curran & Donoghue , 259 AD2d 965 [1999]; Credit Acceptance Corp. v Holness , 81 Misc 3d 133[A], 2023 NY Slip Op 51376[U][App Term, 1

2024To that end, although "[a] usurious contract is void and relieves the borrower of the obligation to repay principal and interest thereon" ( Roopchand v Mohammed , 154 AD3d at 988 [internal quotation marks and citation omitted]), we agree with Supreme Court's reasoning that "it would be inappropriate for [defendant] to skirt his obligation to pay back a loan on the basis of a usury defense when [the] testimony clearly revealed that he, a lawyer by trade, fraudulently induced [plaintiff], a co-owner member of a business entity that [defendant] previously represented[,] into a usurious loan" ( se

2024To that end, although "[a] usurious contract is void and relieves the borrower of the obligation to repay principal and interest thereon" ( Roopchand v Mohammed , 154 AD3d at 988 [internal quotation marks and citation omitted]), we agree with Supreme Court's reasoning that "it would be inappropriate for [defendant] to skirt his obligation to pay back a loan on the basis of a usury defense when [the] testimony clearly revealed that he, a lawyer by trade, fraudulently induced [plaintiff], a co-owner member of a business entity that [defendant] previously represented[,] into a usurious loan" ( se

2024Balancing the jury's findings that the subject loan was both usurious but induced by fraud, such that both parties were at fault, we find that Supreme Court providently exercised its broad equitable powers in awarding $200,000 in damages to plaintiff — the principal amount on the loan without interest — while imposing the statutory interest rate of 9% from the time of the jury verdict until payment ( see CPLR 5001, 5004; see generally Matter of ANO, Inc. v Goldberg , 167 AD3d at 733; Tucker v Mashomack Fish & Game Preserve Club , 199 AD2d at 958-959 ; compare Norwest Mtge., Inc. v Brown , 35 A

2024Balancing the jury's findings that the subject loan was both usurious but induced by fraud, such that both parties were at fault, we find that Supreme Court providently exercised its broad equitable powers in awarding $200,000 in damages to plaintiff — the principal amount on the loan without interest — while imposing the statutory interest rate of 9% from the time of the jury verdict until payment ( see CPLR 5001, 5004; see generally Matter of ANO, Inc. v Goldberg , 167 AD3d at 733; Tucker v Mashomack Fish & Game Preserve Club , 199 AD2d at 958-959 ; compare Norwest Mtge., Inc. v Brown , 35 A

2024Civil Court erred in, sua sponte, granting summary judgment to defendants on a usury defense that was not raised by the only appearing defendant, Miralys Garcia ( see Baseball Off. of Commr. v Marsh & McLennan, 295 AD2d 73, 82 [2002]), either in her answer or on the motion, upon which she defaulted, where plaintiff had no notice of the defense and thus no opportunity for opposition ( see Quizhpe v Luvin Constr. , 70 AD3d 912, 914 [2010]; Lanoce v Anderson, Banks, Curran & Donoghue , 259 AD2d 965 [1999]; Credit Acceptance Corp. v Holness , 81 Misc 3d 133[A] , 2023 NY Slip Op 51376[U] [App Term,

2024Civil Court erred in, sua sponte, granting summary judgment to defendants on a usury defense that was not raised by the only appearing defendant, Miralys Garcia ( see Baseball Off. of Commr. v Marsh & McLennan, 295 AD2d 73, 82 [2002]), either in her answer or on the motion, upon which she defaulted, where plaintiff had no notice of the defense and thus no opportunity for opposition ( see Quizhpe v Luvin Constr. , 70 AD3d 912, 914 [2010]; Lanoce v Anderson, Banks, Curran & Donoghue , 259 AD2d 965 [1999]; Credit Acceptance Corp. v Holness , 81 Misc 3d 133[A], 2023 NY Slip Op 51376[U][App Term, 1

2011Contrary to the plaintiff’s contention, the evidence failed to raise a triable issue of fact as to whether the defendants took advantage of, or the plaintiff relied upon, an alleged fiduciary or confidential relationship between the plaintiff and Sagona (cf. Abramovitz v Kew Realty Equities, 180 AD2d 568 [1992]; Schaaf v Borsher, 82 AD2d 880 [1981]), or that the plaintiff was unschooled in financial matters and relied to his detriment on Sagona’s superior experience and knowledge (cf. Pemper v Reifer, 264 AD2d 625, 626 [1999]; Angelo v Brenner, 90 AD2d 131, 132-133 [1982]; Hammond v Marrano, 8

1992The Appellate Divisions, and the majority of States to consider the issue, have recognized that a borrower may be estopped from interposing a usury defense when, through a special relationship with the lender, the borrower induces reliance on the legality of the transaction (see, Abramovitz v Kew Realties Equities, 180 AD2d 568 , lv denied 80 NY2d 753 [decided today]; Schaaf v Borsher, 82 AD2d 880 [2d Dept]; Angelo v Brenner, 90 AD2d 131 [3d Dept]; Hammond v Marrano, 88 AD2d 758 [4th Dept]; Annotation, Usury — Borrower’s Initiation, 16 ALR3d 510, 513-516).

2024Estate Planning Corp. v Trachtenberg , 114 AD3d 477, 478 [1st Dept 2014]).

2021Today the majority declares the fixed discount equity conversion option in all cases an interest rate, and upsets this carefully calibrated structure—at the behest of a corporation well “aware of the potential risk” (Schneider, 41 NY2d at 243; see also Seidel, 79 NY2d at 740 [describing corporations as “generally the antithesis of ‘desperately poor people’”]; Butterworth v O’Brien, 23 NY 275, 276 [1861] [noting that prior to the ban on corporations interposing a usury defense, a corporation could “avail() itself of the statutes to prohibit 5 As noted above, GeneSYS has three days from receipt

2021Today the majority declares the fixed discount equity conversion option in all cases an interest rate, and upsets this carefully calibrated structure—at the behest of a corporation well “aware of the potential risk” (Schneider, 41 NY2d at 243; see also Seidel, 79 NY2d at 740 [describing corporations as “generally the antithesis of ‘desperately poor people’”]; Butterworth v O’Brien, 23 NY 275, 276 [1861] [noting that prior to the ban on corporations interposing a usury defense, a corporation could “avail() itself of the statutes to prohibit 5 As noted above, GeneSYS has three days from receipt

2021Nonetheless, the Second Circuit recognized that some New York courts, in other contexts, had added the value of future, contingent payments to a note’s stated interest rate when evaluating a usury defense (id., citing Blue Wolf Capital Fund II, L.P. v American Stevedoring Inc., 105 AD3d 178, 182 [1st Dept 2013]).

2021The Second Circuit also discerned ambiguity as to whether a loan made to a corporation, even if determined to exceed the criminal usury rate by a court, was void or subject to reformation in the exercise of equitable jurisdiction (id. at 92, citing Blue Wolf, 105 AD3d at 183 and In re Venture Mtge.

2021It is “the established principle” that “the usury defense must be established by clear evidence as to all the elements essential thereto,” that the court “will not assume that the parties entered into an unlawful agreement,” and that “[o]n the contrary when the terms of the agreement are in issue, and the evidence is conflicting, the lender is entitled to a presumption that he did not make a loan at a usurious rate” (Giventer v Arnow, 37 NY2d 305, 308 [1975] [quotations omitted]).

2017Criminal usury, which is the only usury defense that a corporation may assert. (see General Obligations Law § 5-521 [3]; Fred Schutzman Co. v Park Slope Advanced Med., PLLC, 128 AD3d 1007, 1008 [2015]; Tower Funding v Berry Realty, 302 AD2d 513, 514 [2003]), occurs when a person “knowingly charges, takes or receives any money or other property as interest on the loan or forbearance of any money or other property, at a rate exceeding twenty-five per centum per annum” (Penal Law § 190.40; see Venables v Sagona, 85 AD3d 904, 905 [2011]).

2017“A usurious contract is void and relieves the borrower of the obligation to repay principal and interest thereon” (Venables v Sagona, 85 AD3d at 905 ; see General Obligations Law § 5-511; Seidel v 18 E. 17th St.

2017Criminal usury, which is the only usury defense that a corporation may assert. (see General Obligations Law § 5-521 [3]; Fred Schutzman Co. v Park Slope Advanced Med., PLLC, 128 AD3d 1007, 1008 [2015]; Tower Funding v Berry Realty, 302 AD2d 513, 514 [2003]), occurs when a person “knowingly charges, takes or receives any money or other property as interest on the loan or forbearance of any money or other property, at a rate exceeding twenty-five per centum per annum” (Penal Law § 190.40; see Venables v Sagona, 85 AD3d 904, 905 [2011]).

2017Criminal usury, which is the only usury defense that a corporation may assert. (see General Obligations Law § 5-521 [3]; Fred Schutzman Co. v Park Slope Advanced Med., PLLC, 128 AD3d 1007, 1008 [2015]; Tower Funding v Berry Realty, 302 AD2d 513, 514 [2003]), occurs when a person “knowingly charges, takes or receives any money or other property as interest on the loan or forbearance of any money or other property, at a rate exceeding twenty-five per centum per annum” (Penal Law § 190.40; see Venables v Sagona, 85 AD3d 904, 905 [2011]).

2016On the other hand, if the parties agree to abandon their usurious agreement and execute a new obligation for the amount of the actual debt, free from usury and bearing only legal interest, the second agreement purges the first of its usurious taint and makes the second obligation valid and enforceable ( Matter of Estate of Jackson , 120 AD2d at 313 ).

2016On the other hand, if the parties agree to abandon their usurious agreement and execute a new obligation for the amount of the actual debt, free from usury and bearing only legal interest, the second agreement purges the first of its usurious taint and makes the second obligation valid and enforceable ( Matter of Estate of Jackson , 120 AD2d at 313).

2011Contrary to the plaintiff’s contention, the evidence failed to raise a triable issue of fact as to whether the defendants took advantage of, or the plaintiff relied upon, an alleged fiduciary or confidential relationship between the plaintiff and Sagona (cf. Abramovitz v Kew Realty Equities, 180 AD2d 568 [1992]; Schaaf v Borsher, 82 AD2d 880 [1981]), or that the plaintiff was unschooled in financial matters and relied to his detriment on Sagona’s superior experience and knowledge (cf. Pemper v Reifer, 264 AD2d 625, 626 [1999]; Angelo v Brenner, 90 AD2d 131, 132-133 [1982]; Hammond v Marrano, 8

2011Consequently, since plaintiff’s averments set forth facts upon which such an estoppel may be applied, a triable issue of fact exists requiring a trial” (Angelo v Brenner, 90 AD2d 131, 132-133 [1982]; see also Russo v Carey, 271 AD2d 889 [2000]; Abramovitz v Kew Realty Equities, 180 AD2d 568 [1992]; Keezing v Rodriguez, 196 Mise 2d 408, 411 [Sup Ct, Kings County 2003]).