Schneider v. Phelps

The plaintiffs in this action seek to foreclose a second mortgage on defendant’s home given by the defendant Alma G. Phelps as security for her guarantee of a loan made by plaintiffs to her corporation, Mrs. Bradley G. Phelps, Inc. Defendant asserts that the transaction was usurious and the mortgage, therefore, unenforceable under section 5-501 of the General Obligations Law. Plaintiffs counter that the loan was made not to an individual but to a corporation, which by section 5-521 of the same statute is barred from interposing the defense of usury, and point out that the individual guarantor…