Ron King Corp. v. R. & R. Mohring Enterprises, Inc.
New York Supreme Court, Nassau County
2011 N.Y.Misc.Lexis 4642 (2011)
R. & R. Mohring Enterprises (the company) (defendant) mortgaged its property to Ron King Corp. (King) (plaintiff) for a one-year commercial loan carrying an 18-percent interest rate, a 2-point origination fee, and a 24-percent default rate. The company never made its monthly payments, and King declared default and began foreclosure. The company argued the loan was void because the 24-percent default rate combined with the origination fee produced an effective rate of 26 percent -- above New York's 25-percent usury cap.
Whether usury is the criminal practice of lending money at an interest rate effectively above the statutory limit, and whether that defense is available to a defaulting commercial borrower who could have avoided the higher rate.