Irby v. Commercial Nat. Bank

• Decision Date: 22 May 1919
• Docket Number: 4 Div. 816
• Citation: 82 So. 478,203 Ala. 228
• Parties: IRBY v. COMMERCIAL NAT. BANK.
• Court: Alabama Supreme Court

82 So. 478

203 Ala. 228

IRBY v. COMMERCIAL NAT. BANK.

4 Div. 816

Supreme Court of Alabama

May 22, 1919

Rehearing Denied June 30, 1919

Appeal from Circuit Court, Barbour County; J.S. Williams, Judge.

Bill by Ray G. Irby against the Commercial National Bank. Decree sustaining demurrer to bill, and complainant appeals. Affirmed.

Sayre J., dissenting.

The original bill was filed by appellant, seeking the redemption of certain real estate described in the mortgage executed by the appellant to appellee on May 27, 1912, a copy of which mortgage is made an exhibit to the bill.

The bill charged there was usurious interest in the mortgage debt, and sought its elimination, praying for a reference to the register for an accounting, etc., and offer on the part of the complainant to do equity.

Respondent filed an answer denying there was any usurious interest charged in said mortgage indebtedness, and setting up that said mortgage was given by the complainant to the respondent to secure the purchase price of $12,340.79, paid by complainant as a purchaser at a foreclosure sale under the power contained in a certain mortgage previously executed on said property by the complainant's father, L.E. Irby, to one Stella Guice, which mortgage had been duly transferred to the respondent. Attached to the answer and cross-bill was Exhibit B, which was the foreclosure deed made to complainant at the time of the purchase under the foreclosure sale. The answer was prayed to be taken also as a cross-bill, and that said mortgage be foreclosed by decree of the court.

After the taking of considerable testimony by the parties, the complainant offered an amendment to the bill, setting up, in substance, as follows: That Ray G. Irby as administrator of the estate of L.E. Irby, deceased, be made a party complainant to the proceedings; that L.E. Irby, now deceased in October, 1909, borrowed from one Stella Guice the sum of $8,876.20, evidenced by four promissory notes, due at various times, and which were secured by a mortgage on the real estate described and set forth in Exhibit A to the original bill, which mortgage was transferred very soon thereafter to the respondent bank. It is further averred that, while in form the transaction was a loan by said Stella Guice, yet in substance it was a loan by the Commercial National Bank to said L.E. Irby, that said mortgage indebtedness of L.E. Irby to respondent bank was infected with usury, and that the usurious interest had accumulated to a large amount, and formed a substantial part of the mortgage debt at the time of the said foreclosure sale. It is then averred that the respondent bank wanted to hide the usury in such way as complainant, as administrator of the estate of L.E. Irby could not successfully assert a plea of usury against said debt, and that said bank and complainant agreed that said mortgage should be foreclosed, and complainant was to bid at said sale the sum due by said L.E. Irby on the mortgage indebtedness, and, in the event complainant bid in said property as the highest bidder at said sale, it was agreed that he was not to pay cash to said bank for the price so bid, but said bank was to take his note and mortgage on the same real estate; that said mortgage was foreclosed on May 27, 1912, and complainant, pursuant to said agreement and in accord with the information given him by the bank, bid the sum of $12,340.79, being the total amount, as he was informed, due by L.E. Irby to the bank, together with some other small items claimed to be due said bank by complainant that on the same day a deed was executed, conveying to complainant the real estate, under the purported power contained in said mortgage, the consideration named in said deed being $12,340.79; that on the same day the complainant executed the note and mortgage back to said bank for $12,574.74, being the amount bid at said foreclosure sale together with the sum of $233.95, a portion of said difference being a part of the foreclosure expenses which had been omitted from the bid price.

The bill charged that the real purpose of the proposed foreclosure of the said L.E. Irby mortgage, and agreement to resell to complainant, was to hide the usury contained in the said L.E. Irby indebtedness, and that, as a matter of fact, the debt remained the same, and was carried forward in said mortgage made by complainant, which is Exhibit A to the bill. The bill then sets up certain payments made by complainant, R.G. Irby, on the mortgage indebtedness (Exhibit A).

The prayer of the amended bill was that the court decree the foreclosure proceedings of the said L.E. Irby mortgage were but a device to hide the usury charged in L.E. Irby's indebtedness (Exhibit A to the original bill), and that in equity and substance it was a mere renewal or carrying forward of said indebtedness, and that said foreclosure proceedings be set aside and held for naught. The bill as amended sought an accounting, elimination of all interest, etc.

The respondent demurred to the amendment, and to the bill, as amended, upon numerous grounds, in substance, that the amendment constitutes a departure from the case made by the original bill; that the original bill affirmed the foreclosure sale of the L.E. Irby mortgage, and the amendment seeks to set aside said foreclosure sale; that the amendment makes the cause multifarious, and introduces a new party as the personal representative of L.E. Irby, deceased, who has no interest in common or privity with R.G. Irby individually, the original complainant. Further, that any right on the part of Irby, as personal representative, to redeem or plead usury in the said Guice mortgage was abandoned and waived by his failure to do so before said mortgage was foreclosed, and...