Winter & Hirsch, Inc. v. Passarelli

259 N.E.2d 312 (1970)

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Nature of the Case

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Facts

Ds approached Equitable Mortgage & Investment Corporation to secure a $10,000 loan. Equitable is a brokerage firm, which makes its profits by selling loan contracts to finance companies at a discount. For the $10,000, Ds agreed to repay a total of $16,260 over a period of 60 monthly payments of $271 each; and 2) a contract, which had a confession of judgment clause. The promissory note provided for payment to the bearer and was secured by a trust deed. It is uncontested that Equitable charged a usurious rate of interest. After the loan papers were signed, P issued a check to Equitable for $11,000 on February 18, 1963, with the notation on the stub that the funds were for 'the Passarelli deal.' The load did not close until February 28, 1963, ten days later. Ds defaulted on the note and P obtained a judgment by confession. At the trial, ds attempted to show that before P purchased the note, it knew of the usurious interest being charged, and consequently could not have become a holder in due course. Ds moved to vacate the judgment by confession, and it was denied. Ds appealed.