Ewell v. Daggs

Decision Date26 March 1883
Citation108 U.S. 143,27 L.Ed. 682,2 S.Ct. 408
CourtU.S. Supreme Court

On May 27, 1856, James B. Ewell and his wife, having the legal title in fee to the premises, made and delivered to Daggs a promissory note of that date, payable three years after date to his order, for $3,556, and to secure the same executed and delivered to Daggs a deed of mortgage upon a tract of land in Guadulupe county, Texas, containing 1,653 acres, which mortgage was duly proved and recorded on June 5, 1856. James B. Ewell acquired the legal title to this land on April 13, 1854; but, in equity, it belonged to his brother, George W. Ewell, the appellant, for whom and with whose money it had been bought. The legal title was conveyed by James B. Ewell to his brother, George W. Ewell, on September 6, 1856, the latter having no knowledge of the mortgage to Daggs, and Dagge having, as we find from the evidence, no notice, actual or constructive, of the equity of George W. Ewell. On March 9, 1872, Daggs, being a citizen of Virginia, brought his action at law against James B. Ewell and wife, on the note, in the circuit court of the United States for the western district of Texas, and recovered judgment against James B. Ewell, July 14, 1873, for $3,530.93. The defense set up by James B. Ewell in that suit was usury, the actual amount of the loan having been $2,000, the residue of the note being interest on that amount until its maturity, at the rate of 20 per cent. per annum, compounded annually. A statute of Texas in force at that time on the subject of usury was as follows:

'That all contracts or instruments of writing whatsoever, which may in any way, directly or indirectly, violate the foregoing provisions of this act by stipulating for, allowing, or receiving a greater premium or rate of interest than 12 per cent. per annum for the loan, payment, or delivery of any money, goods, wares, or merchandise, bonds, notes of hand, or any commodity, shall be void and of no effect for the whole premium or rate of interest only; but the principal sum of money or the value of the goods, wares, merchandise, bonds, notes of hand, or commodity, may be received and recovered.' Paschal, Dig. § 3942.

Payments had been made on the note prior to the commence- ment of the suit to the amount of $1,745, which were allowed; but the usurious interest was not deducted on the ground that the constitution of Texas, which went into effect in 1870, and continued in force till after the recovery of the judgment, repealed all usury laws and prevented any defense on that account. The judgment not being paid, Daggs filed the present bill in equity, January 14, 1875, to foreclose the mortgage and sell the mortgaged premises, to which James B. Ewell and his wife, George W. Ewell, and the heirs of James B. Wilson were made defendants. The heirs of Wilson claimed title to a portion of the land under George W. Ewell, by virtue of a sale and actual possession prior to the date of the mortgage to Daggs. The claim established their title, and from that there is no appeal. As against George W. Ewell, however, it adjudges a foreclosure of the equity of redemption and sale of the remainder of the premises in default of payment by him of the amount found due upon the judgment against James B. Ewell, and interest thereon at the rate of 12 per cent. per annum. From this decree George W. Ewell prosecutes this appeal.

Wm. Reynolds and Chas. A. West, for appellant.

J. R. Tucker, for appellee.


Several defenses were made in the court below, the overruling of which are assigned for error, and which we proceed now to state and consider in their order.

1. The first defense is the statute of limitations, as contained in article 4604, Paschal, Dig., as follows: 'All actions of debt grounded upon any contract in writing shall be commenced and sued within four years next after the cause of such action or suit, and not after.'

It is admitted that the cause of action upon the note was not barred when the action upon it was commenced, the period of limitation not expiring till July 29, 1872, excluding from the computation the interval between January 28, 1861, and March 30, 1870, as required by article 12, § 43, of the constitution of Texas of 1870. But the statute quoted does not apply to suits for the foreclosure of a mortgage and sale of the mortgaged property, such as the present. Such suits are not actions of debt grounded upon a contract in writing. They are suits to enforce the lien of the mortgage for the satisfaction of the debt secured by it. If that debt is barred by the statute of limitations, then, according to the law in Texas, the foreclosure suit is barred, but not otherwise, for the mortgage is a mere incident to the debt. It was so held by the supreme court of Texas in Eborn v. Cannon's Adm'r, 32 Tex. 244, where it says:

'If the notes were a subsisting debt at the time of the institution of the suit, not barred by the statute of limitations, the mortgage executed contemporaneously to secure their payment was still valid as long as the debt remained unsatisfied. No matter at what time the power of the court was invoked for its collection and foreclosure and for a decree to subject the mortgaged property to the satisfaction of the debt, it was opportune if the jurisdiction of the court over the debt itself was not ousted. The mortgage was but an incident of the debt, and the incident in law, as in logic, must abide the fate of the principal.'

See, also, Parkins v. Sterne, 23 Tex. 561; Duty v. Graham, 12 Tex. 427; Flanigan v. Cushman, 48 Tex. 241.

There is no force in the suggestion that, although the defense of the statute of limitations would not avail James B. Ewell, because judgment had been rendered against him before the bar took effect, it nevertheless is a protection to George W. Ewell, because he is a stranger to the judgment and mortgage, and the suit now pending was not brought till after the time limited for an action to recover the debt. For the present suit is not to recover the debt, nor is it a suit against George W. Ewell. He is a party defendant because he has an interest by a subsequent conveyance in the lands sought to be sold under the mortgage. He has an equity of redemption, which entitles him to prevent a foreclosure and sale by payment of the mortgage debt; but the debt he has to pay is not his own, but that of James B. Ewell. If he can show that that debt no longer exists, because it has been barred by the statute of limitations, he is entitled to do so; but he must do it by showing that it is barred as between the parties to it. If not, the land is still subject to the pledge, because the condition has not been performed. It is not to the purpose for the appellant to show that he owes the debt no longer, for in fact he never owed it at all; but his land is subject to its payment as long as it exists as a debt against the mortgagor, for that was its condition when his title accrued.

2. The second defense is that of usury. The statute of Texas on that subject has already been quoted. A contract of loan at a stipulated rate of interest greater than 12 per cent. per annum, is declared to 'be void and of no effect for the whole premium or rate of interest only;' but the principal sum may be received and recovered. The provision of the constitution of Texas, § 44, art. 12, repealing this and all existing usury laws, is as follows:

'All usury laws are abolished in this state, and the legislature is forbidden from making laws limiting the parties to contracts in the amount of interest they may agree upon for loans of money or other property; provided, this section is not intended to change the provisions of law fixing the rate of interest in contracts where the rate is not specified.' 2 Paschal, Dig. 1132.

It is claimed by the appellant that, notwithstanding this repeal of the usury laws, the rights of the parties are to be determined according to the law in force at the time the transaction took place; thay by the terms of that law the contract between Daggs and James B. Ewell was void as to the entire interest reserved and paid; that no subsequent law could make valid a contract originally void; and that the appellant is not bound by the judgment rendered against James B. Ewell in favor of Daggs, and is entitled in the present suit to make the defense.

It is quite true that the usury statute referred to declares the contract of loan, so far as the whole interest is concerned, to be void 'and of no effect.' But these words are often used in statutes and legal documents, such as deeds, leases, bonds, mortgages, and others, in the sense of voidable merely, that is, capable of being avoided, and not as meaning that the act or transaction is absolutely a nullity, as if it had never existed, incapable of giving rise to any rights or obligations under any circumstances. Thus we speak of conveyances void as to creditors, meaning that creditors may avoid them, but not others. Leases which contain a forfeiture of the lessee's estate for non-payment of rent, or breach of other condition, declare that on the happening of the contingency the demise shall thereupon become null and void, meaning that the forfeiture may be enforced by re-entry, at the option of the lessor. It is sometimes said that a deed obtained...

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