This is an action for the foreclosure of a mortgage executed by the defendants Carl Sotscheck and Julia A. Sotscheck, his wife, on premises owned by him, to one Sarah E. Sinnigar and delivered to her on the 15th day of February, 1911, as collateral security for the payment of §12,000 evidenced by their bond executed concurrently therewith. The bond and mortgage were in fact executed for the purpose of having them assigned to the plaintiff; but that was unknown to him. Concurrently with their execution and delivery to the mortgagee, or within an hour or two thereafter, she assigned the mortgage to the plaintiff; but a corrected assignment executed by her next day was substituted therefor and placed on record.
The mortgagors defended on the ground that the bond and mortgage were void for usury, and they counterclaimed for the cancellation thereof. On a former trial the defense and counterclaim as pleaded were held to be insufficient; but this court reversed the judgment of foreclosure then entered and *204held that the facts pleaded, if proved, would constitute a good defense and counterclaim. (Schanz v. Sotscheck, 160 App. Div. 798.) On the second trial the court held that the bond and mortgage had their inception in the purchase thereof by the plaintiff at a usurious discount, and, therefore, were void; but that Carl Sotscheck, who will be referred to as the mortgagor, was estopped from asserting their invalidity for usury, and consequently the plaintiff was entitled to maintain the action for the foreclosure thereof against his interest in the premises to the extent of the consideration paid by plaintiff for the bond and mortgage, and to a judgment against the mortgagor for any deficiency; but that the wife of the mortgagor was not so estopped and that as to her the bond and mortgage were void and she was entitled to judgment accordingly and adjudging that the sale will be subject to her inchoate right of dower, and dismissing the complaint as against her.
The plaintiff appeals from the judgment in so far as the mortgage is declared void and limits his recovery to the consideration paid and dismisses the complaint as to the wife of the mortgagor, with costs, and decrees that the sale shall be subject to her contingent right of dower; and the mortgagor appeals from the judgment in so far as it decrees that he is estopped to plead usury and that the bond and mortgage are enforcible against him.
There were two mortgages on the premises, a first for $35,000 and a second for $10,000. The second mortgage was overdue, and the owner thereof was threatening foreclosure. The mortgagor was unable to pay the mortgage debt, and had been endeavoring to obtain a further loan on the premises for that purpose. The attorney representing the owner of the second mortgage drew this to the attention of one Zittel, a real estate broker. Zittel called on the mortgagor and was employed to endeavor to obtain a loan on the security of the premises, but within a few days thereafter reported his inability to do so, and expressed the opinion that he might be able to sell a second mortgage on the premises at a discount of ten per cent. The mortgagor suggested that a second mortgage be executed for $15,000, but Zittel said that one for that amount could not be negotiated. It was finally agreed that a second mortgage for-*205$12,000 be placed on the premises, and the mortgagor authorized Zittel to sell it at a discount of ten per cent and agreed to pay his commissions and expenses, including the mortgage tax and “ lawyer’s fees,” which Zittel stated to him would aggregate about $600. The plaintiff was a merchant tailor. Zittel, who was one of his customers, while at plaintiff’s shop ordering a suit of clothes, opened the negotiations, which are now the subject of review, by asking if he would be interested in buying a second mortgage. Plaintiff manifested an interest and was informed with respect to the location of the property, the owner, and that the mortgage was, or was to be, subject to a first mortgage for $35,000. Nothing was said as to who the mortgagee was, but it is claimed by counsel for the mortgagor that the plaintiff must have understood from what Zittel stated to him that the mortgage was not then in existence. It is true that Zittel during the interview used expressions indicating that the mortgage was to be given, but he also referred to the mortgage as an existing instrument, and the conversation as a whole does not indicate that either of them spoke with any degree of accuracy in the use or tense of the words employed. Therefore, I think it is fairly to be inferred that the plaintiff was led to believe that the mortgage was in existence, for the broker was endeavoring not to procure from him a loan but to sell a second mortgage to him; but if he understood that the mortgage was still to be executed it might well be that he supposed that the mortgagor was to execute a valid mortgage to the broker, or to some one else, and that the mortgagee to be, as a condition of taking it, was desirous of the negotiating a sale thereof which would have been perfectly lawful. The plaintiff viewed the premises, and subsequently agreed to buy the mortgage, and on the 14th day of February, 1911, delivered to Zittel a check for $10,800, payable to the order of Zittel’s firm, for the purchase price of the bond and mortgage, and Zittel promised to bring the bond and mortgage to him. There was nothing said between Zittel and the plaintiff about the examination of the title, the preparation of the papers, the insuring of the building or the title, or the employment of an attorney. The plaintiff relied upon his view of the premises on the question whether the property was adequate security, and upon *206express representations made by Zittel that he was to receive a “ first class,” “ perfectly good ” mortgage. There was nothing in the negotiations to indicate to the plaintiff that anything was required to be done, other than the payment of the money and the delivery of the bond and mortgage with an assignment thereof, if that were required. It is true that the plaintiff says that he relied on Zittel to bring the papers to him as the latter promised; and when asked whether he told Zittel to do anything for him, he answered in the negative and was then asked: “Q. Did you ever ask him to look out for your interests?” and replied, “Mr. Frank Zittel looked out for my interests,” and that he did not have an attorney. The fair inference from this testimony is that the plaintiff had confidence in Zittel, and relied upon the promise that he would receive a good, first-class mortgage; but it does not show that he employed Zittel as his agent or conferred any authority upon him to employ others for him. The bond and mortgage had not been executed when the plaintiff delivered the check to Zittel. They were dated that day, however, and executed the next day. The interest, which was payable semi-annually at the expiration of each six months, was paid by the mortgagor until February 15, 1913, when the principal became due, and he then defaulted in the payment of both interest and principal. No question with respect to the validity of the bond and mortgage was raised, and no thought of usury entered the mind of the mortgagor, according to his testimony, until the plaintiff, after having had the premises appraised, refused an application for an extension of the time of payment and commenced this action. The first plaintiff knew or heard of the claim of usury was when the answer interposing it as a defense was served.
Zittel, without authority from and without consulting the plaintiff, but on his own responsibility and doubtless with a view to delivering to the plaintiff a valid bond and mortgage as he had agreed, and acting for himself to earn a commission and under his employment by the mortgagor, who had agreed to pay all the expenses, including the “lawyer’s fees,” employed one Day, an attorney who was associated with the attorney who had charge of the second mortgage which was to *207be paid off, to arrange the legal details, “to create,” as he expressed it, a legal second mortgage for $12,000, which he said he informed the attorney he had made an agreement with the mortgagor “ to sell ” to the plaintiff at a discount of ten per centum. Day, who considered that Zittel was his client, thereupon employed the Lawyers’ Title Company to examine the title, with a view to insuring it for plaintiff’s benefit, and drew the bond and mortgage running to Miss Sinnigar, who was a stenographer in his office, whom he selected for that purpose without further authority from or consultation with any one, as mortgagee and obligee. The closing was at Day’s office and there were present the attorney representing the owner of the mortgage that was to be paid off, a representative of the title company, Zittel, the mortgagor and another attorney representing him. The plaintiff was not present and had not authorized any one to represent him, and had no notice or knowledge of what took place, or of the steps previously taken, and knew none of the parties other than Zittel. An estoppel certificate had been prepared by Day, and he requested the mortgagor to execute it, and on its being executed and redelivered to him he delivered it to the representative of the title company, who retained it. The estoppel certificate described the mortgage and recited that it was about to be assigned by the mortgagee to the plaintiff, and that in order “to enable said assignment to be made ” by her, the mortgagor certified “that said mortgage is a valid lien on said premises for the full amount of principal and interest now owing thereon, namely, Twelve thousand ($12,000) dollars, and interest thereon” from date, “ and that there are no defenses or offsets to said mortgage or to the bond secured thereby, and that all the other provisions of said bond and mortgage are in force and effect. ” The attorney for the mortgagor delivered an executed bond and mortgage to Day, who, after examining them, passed them over to the representative of the title company, and the mortgage was recorded that day. Zittel, who had deposited plaintiff’s check for $10,800 to the credit of his firm, thereupon produced two certified checks of his firm to their own order, one for $10,000 and the other for $2,000, and indorsed them to the order of the mortgagee and delivered *208them to Day, who took them to the mortgagee, who was in an adjoining room, and she indorsed them over to the mortgagor, who indorsed the check for $10,000 and delivered it in payment of the second mortgage, and indorsed the other check to the order of Zittel’s firm and received their check for $200, which he delivered in part payment of the interest on the second mortgage that was being paid off. Thus the mortgagor received and retained to his own use $10,200, which is the amount he was to receive according to the arrangement between him and Zittel. Title and fire insurance policies payable to plaintiff as mortgagee were issued on the same day. Zittel took the bond to the plaintiff’s store and left it with his bookkeeper, and subsequently took the mortgage and assignment and title insurance policy and left them with the bookkeeper. This, however, was in the absence of the plaintiff, who testified that he did not examine any of the papers. Of the net amount of $600 received by Zittel’s firm, they paid Day $268.50, and retained the balance of $331.50 for their services. As already stated, the assignment of the mortgage was executed and delivered at the same time or an hour or two thereafter, and a corrected assignment was substituted therefor the next day on the suggestion of the title company that the street number of the house on the premises should be inserted.
The answer charged, in effect, a usurious agreement exacted of the mortgagor and his wife by the brokers, who obtained for themselves and plaintiff, or one of them, a bonus of $1,600, and that the mortgagee was a dummy for plaintiff, or for the brokers, or for both, and furnished no part of the consideration, and that the scheme originated in, and was consummated by, a conspiracy between plaintiff, the brokers and the mortgagee to exact a usurious rate of interest for a loan of the money. The mortgagor and his wife failed to prove the defense pleaded, excepting to the extent of showing that the mortgagee had no interest and was used as a dummy or conduit as already stated.
It is claimed that the defense proved was not alleged, but I think the evidence was admissible under the answer, and that if the facts proven constitute a defense they were sufficiently pleaded.
*209It is quite clear that the broker Zittel attempted to evade the Usury Law by giving the bond and mortgage an apparently valid inception. (See General Business Law [Con-sol. Laws, chap. 20; Laws of 1909, chap. 25], § 370 et seq.) I would not say that the evidence shows that he had the Usury Law in mind or intentionally violated it or any other law; but he knew or understood that the bond and mortgage for some reason would not be valid if they ran to the plaintiff and he loaned the money thereon at a discount of ten per cent of the face value of the instruments. Doubtless he had been advised or informed that the same result could be accomplished lawfully in another way, as by creating a second mortgage and selling and assigning it, and evidently the attorney employed by him was of like opinion, for he proceeded without consultation or question to create an apparently valid bond and mortgage. If the plaintiff had knowledge or was chargeable with knowledge that the mortgage had no inception until it was assigned to him, he would not be in a position to invoke the doctrine of estoppel and could not enforce the mortgage, for that would constitute the transaction in effect a loan by him at a usurious discount. (Smith v. Cross, 90 N. Y. 549; Siewert v. Hamel, 91 id. 199; Dunham v. Cudlipp, 94 id. 129; Gilbert v. Real Estate Co. of Brooklyn, 155 App. Div. 411.) It, however, satisfactorily appears that plaintiff was not a party to that scheme, and that he purchased the bond and mortgage in good faith, relying on the representations of Zit-tel, who was authorized by the mortgagor to sell the bond and mortgage, and, therefore, had implied authority to represent that they were valid and enforcible, which is the effect of the representations made as intended and understood, and the mortgagor is, therefore, estopped from contending to- the contrary. (See Barnett v. Zacharias, 24 Hun, 304; affd., 89 N. Y. 637; Ahern v. Goodspeed, 72 id. 108; Fleischmann v. Stern, 90 id. 110.) The only significance to be attached to the estoppel certificate is as showing that the mortgagor knew that the broker had negotiated a sale of the bond and mortgage to the plaintiff, and it presumptively shows his authority to do so, or if not, that the mortgagor ratified his acts. (Bliven v. Lydecker, *210130 N. Y. 102; Ahern v. Goodspeed, supra; Krumm v. Beach, 96 N. Y. 398.) The estoppel certificate was not brought to the attention of the plaintiff, or of any one authorized to represent him. Day did not represent the plaintiff either in selecting the mortgagee or in preparing or passing upon the papers. He was employed by and represented the brokers only, or the brokers and the mortgagor, and, therefore, neither are his acts chargeable to the plaintiff nor is his knowledge imputable to him, nor would the plaintiff be liable to him for services. The trial court found that both Day and Zittel were agents for the plaintiff to a limited extent. Zittel was in fact the agent of the mortgagor to negotiate a sale of the bond and mortgage, and was acting for him in receiving the consideration from plaintiff. In Henken v. Schwicker (174 N. Y. 298) it was held that a broker employed by the borrower to negotiate a contract for a loan was not authorized by the borrower to receive the money, and was, therefore, the agent of the lender in receiving a check for the money before the bond and mortgage were executed, but here the broker had full authority to represent the mortgagor and to consummate the sale of the bond and mortgage, and that authorized him, to receive the consideration for the mortgagor and the case falls within the doctrine of Yeoman v. McClenahan (190 N. Y. 121). We are of opinion that the findings with respect to Day and Zittel having acted as agents of the plaintiff are against the preponderance of the evidence. They should,' therefore, be reversed, and findings substituted therefor to the effect that neither of them acted in the premises as agent for the plaintiff.
After a note, bond or other obligation has had a valid inception, it may be sold at any discount the parties agree upon, without violating the statute against usury, which operates only on the contract by which the instrument has its inception, and, therefore, if the bond and mortgage had had a valid inception, that is, without the taint of usury and had been issued to an obligee and mortgagee to take effect according to their tenor before they were assigned to the plaintiff, he could enforce them for the full amount or for the amount they were intended to secure no matter at what discount he purchased them. (Siewert v. Hamel, supra; Dunham v. Cudlipp, supra; Union Dime Savings
*211Inst. v. Wilmot, 94 N. Y. 221.) To give an instrument a valid inception, it is essential that the transaction he real, and that is not disproved by the mere fact that it was understood in advance that the bond and mortgage were to he at once assigned. (See Dunham v. Cudlipp, supra.) The determining factor is whether there was an actual bona fide contract between the mortgagor and mortgagee, by which the bond and mortgage were enforcible in the hands of the latter, for if not, and the mortgagee was merely a dummy or conduit to pass title, and the actual transaction to which the statute applies was that between the mortgagor and the assignee, it would be in effect a loan by the latter at a usurious rate of interest, even though, as here, those facts were concealed from the assignee and he was led to believe that he was purchasing the securities. (Eastman v. Shaw, 65 N. Y. 522; Miller v. Zeimer, 111 id. 441; Tiedemann v. Ackerman, 16 Hun, 307; affd., 84 N. Y. 677; Verity v. Sternberger, 62 App. Div. 112; affd., 172 N. Y. 633; Mason v. Lord, 40 id. 476; Bliven v. Lydecker, 130 id. 102; Smith v. Cross, 90 id. 549; Claflin v. Boorum, 122 id. 385; Dunham v. Cudlipp, supra.) There are other authorities upon which the plaintiff relies, indicating that in such circumstances the securities may he enforced for the full amount thereof, on the theory that the borrower by passing the legal title and giving the securities an apparent valid inception should not he heard, as against one purchasing them in good faith, to question the bona fides of the original transaction, upon which he has led the purchaser to rely (Seo Rider v. Gallo, No. 1, 153 App. Div. 334; Union Dime Savings Inst. v. Wilmot, supra; Siewert v. Hamel, supra; Dunham v. Cudlipp, supra); but we are of opinion that on the facts in the case at bar, the authorities holding that the securities are enforcible only to the extent of the consideration paid are controlling. If the transactions between the mortgagor and the mortgagee were had in good faith and without intent to evade the statute against usury, and it should he held that the mortgagee parted with some consideration for the bond and mortgage, hut not full consideration, still that would not change the result, for the transaction would he subject to the condemnation of the usury statute, and the securities *212could not have been enforced by the mortgagee, and the only theory upon which they would be enforcible by an assignee is that of estoppel, in which case, to prevent injustice and fraud, the courts hold that they are enforcible to the extent of the consideration paid or parted with in good faith. (Verity v. Sternberger, supra ; Miller v. Zeimer, supra ; Payne v. Burnham, 62 N. Y. 69; Smyth v. Munroe, 84 id. 354; Mechanics Bank of Brooklyn v. Townsend, 29 Barb. 569; Rollins v. Barnes, 11 App. Div. 150. See, also, Sickles v. Flanagan, 79 N. Y. 224.)
It would not do to hold that the Usury Law may be evaded in the manner shown by the evidence in this case. The vice at which the Usury Law was aimed exists in such a transaction quite as much as if the parties were permitted to negotiate directly for the usurious discount; and if this transaction were sustained as a successful evasion of the Usury Law, the statute against usury would be of little practical value.
The question remaining is whether the court erred in dismissing the complaint as against the wife of the mortgagor. It may be that the transaction inured to her benefit quite as much as that of her husband, for the entire proceeds were applied by him to the payment of a mortgage then existing on the property, by the foreclosure of which, if she joined therein, her contingent right of dower would have been cut off; but it was neither shown that she joined in that mortgage nor that she was liable for the debt secured thereby, and, therefore, she is not chargeable with his representations on the theory that she received the benefit of the transaction. (Krumm v. Beach, supra.) Her husband, in her behalf as well as for himself, was authorized, I think, to negotiate the bond and mortgage with the mortgagee, for that was the purport of the papers as presented to her for execution and executed by her; but there is no evidence that she conferred any authority on her husband or was aware of the plan by which he was to sell the bond and mortgage to plaintiff, and, therefore, in so doing he was not her agent. (Parker v. Collins, 121 N. Y. 185, 188; Payne v. Burnham, supra.) It has been held that a subsequent mortgagee or judgment creditor may interpose the defense of usury against a prior mortgage. (Union Dime Savings Inst. v. *213Wilmot, supra; Mason v. Lord, 40 N. Y. 476.) By analogy I think a wife may interpose the defense to protect her inchoate right of dower, and since she is not estopped the bond and mortgage are not enforcible against her. Since the mortgage was void, I think her inchoate right of dower remains unaffected thereby. (See Simar v. Canaday, 53 N. Y. 298; Malloney v. Horan, 49 id. 111; Wilkinson v. Paddock, 3 Silv. App. 411; Hinchliffe v. Shea, 103 N. Y. 153; Mackenna v. Fidelity Trust Co., 184 id. 411; Clifford v. Kampfe, 147 id. 383.)
It follows that the judgment should be affirmed, with costs to the respondent Julia A. Sotscheck against plaintiff, appellant, but without costs to either appellant.