Jones v. Meriwether

• Decision Date: 22 May 1919
• Docket Number: 2 Div. 683
• Citation: 203 Ala. 155,82 So. 185
• Parties: JONES et al. v. MERIWETHER et al.
• Court: Alabama Supreme Court

82 So. 185

203 Ala. 155

JONES et al. v. MERIWETHER et al.

2 Div. 683

Supreme Court of Alabama

May 22, 1919

Sayre and Thomas, JJ., dissenting.

Appeal from Circuit Court, Marengo County; Robert I. Jones, Judge.

Bill by U.S. Jones and others against Alice C. Meriwether and others. From decree rendered, complainants appeal. Affirmed.

W.F Herbert, of Demopolis, and Mallory & Mallory, of Selma, for appellants.

William Cunninghame, of Linden, Henry McDaniel, of Demopolis, Pitts &amp Leva, of Selma, and Edward De Graffenried, of Tuscaloosa, for appellees.

ANDERSON C.J.

The majority are of the opinion that the decree of the trial court should be affirmed, and that the bill is wanting in equity. The bill primarily seeks a cancellation of the mortgage and foreclosure deed upon the theory that the mortgage was paid at the time of the foreclosure, and that said foreclosure was therefore abortive; or, secondly, to redeem in case said mortgage was not fully paid.

As a bill for cancellation, the only averment of payment or satisfaction that the mortgage debt was paid is, in effect that it would have been paid by the application of the usurious interest paid to the principal debt; in other words, that the interest previously paid was usurious, and, if applied to the principal, it would be "thereby paid." We do not think that the bill avers a payment of the mortgage indebtedness as the application of the usurious interest to the payment of same was only available to the mortgagor upon its appropriate and affirmative action before the contract became executed by a regular foreclosure sale under the power. We are not unmindful of a change in the statute relieving a debtor in equity as well as at law from having to do equity in order to avail himself of the plea of usury, but think that the claim should be set up and enforced before a foreclosure of the mortgage. Irby v. Commercial National Bank, 82 So. 478; Tyler v. Massachusetts Mutual Ins. Co., 108 Ill. 58; Edgell v. Ham, 93 F. 759, 35 C.C.A. 584. Jones on Mortgages, vol. 1 (17th Ed.) § 646, discusses this question and cites certain authorities, permitting the defense of usury after foreclosure, if property is bid in by the mortgagee; but it must be observed that said section purports to deal with mortgages and instruments that are made void by statute if usurious. Our statute does not make usurious instruments void except as to the interest, but, of course, where usurious interest has been paid, the debtor could upon proper and timely application, have it applied to the principal; but, as usury is available only as a personal defense to the debtor, and as our statute does not pronounce the transaction void in toto, it is but a just and salutary rule that the defense should be invoked before the contract becomes executed by virtue of a valid and regular foreclosure sale under the power.

The case of Barclift v. Fields, 145 Ala. 264, 41 So. 84, is in no sense opposed to the present holding as the bill there was filed before a regular foreclosure, and we would hold just as the court there held had the bill in this case been filed before the mortgage contract became executed.

Nor is the case of Drum & Ezekiel v. Bryan et al., 193 Ala. 395, 69 So. 483, in conflict with this holding. Neither the original opinion nor the one on rehearing expressly hold that usury could be set up to show payment or satisfaction of the mortgage debt by proceedings subsequent to a regular and valid foreclosure of the mortgage; and the only thing in either opinion which indicates such a thing is, perhaps, the statement of a movant's contention in the opinion responding to the rehearing. The court, however, did not decide this identical question, as it was not there necessary to a decision of the case against the mortgagor.

The foreclosure of a mortgage in strict compliance therewith cuts off the equity of redemption; and, as the regularity of the mortgage sale in the case at bar is not questioned by the present bill, it cannot be treated as one to enforce an equity of redemption. In the case of Liddell v. Carson, 122 Ala. 518, 26 So. 133, the bill was primarily to cancel the mortgage, but set up as secondary thereto the right to enforce the equity of redemption, because the mortgagee purchased at its own sale without power in the mortgage authorizing him to do so. This, of course, showed the irregularity in the sale out of which an equity of redemption arose. In the present case there is no averment of any irregularity in the sale, and, while the mortgagee became the purchaser, the mortgage expressly authorized her to do so.

The bill is also faulty as one for a statutory redemption, as it does not aver a compliance with the requirements of the statute (section 5746 et seq. of the Code of 1907), or any excuse for failing to do so. Burke v. Brewer, 133 Ala. 389, 32 So. 602; Henderson v. Hambrick, 129 Ala. 596, 29 So. 923; Drake v. Rhodes, 155 Ala. 498, 46 So. 769, 130 Am.St.Rep. 62.

The decree of the chancery court is affirmed.

Affirmed.

McCLELLAN, SOMERVILLE, and GARDNER, JJ., concur.

MAYFIELD, J., concurs in the result.

SAYRE and THOMAS, JJ., dissent.

SAYRE J. (dissenting).

The bill in this cause may be summarized as follows: It avers that complainants, as trustees for the African Methodist Episcopal Zion Church in America, executed a mortgage to the defendant John B. Meriwether; that the mortgage was usurious; that payments of interest have sufficed to discharge the principal debt secured; that the mortgage was assigned to the other defendant Alice C. Meriwether; that said Alice C. knew the first mortgage was usurious and continued to collect usurious interest under the new arrangement, which was a mere device to cover up usury; that about one year before the bill was filed Alice C. had foreclosed her mortgage, and, as she had a right to do under her contract, had become the purchaser at her own sale; that complainants were in possession, and had never been served with notice to deliver possession.

A majority of the court holds that the foreclosure cut off the right to have the payments of usurious interest applied in discharge of the mortgage debt--a proposition, I will say, that had not been asserted in the brief for appellees. I am of a different opinion. The Legislature found it hard to give effect to its will in the matter of usury. Lindsay v. United States Savings & Loan Co., 127 Ala. 366, 28 So. 717, 51 L.R.A. 393. But in the Code of 1907 it used this language:

"All contracts for the payment of interest upon the loan or forbearance of goods, money, things in action, or upon any contract whatever, at a higher rate than is prescribed in this chapter, are usurious, and cannot be enforced either at law or in equity, except as to the principal. Nor shall the borrower of money at a usurious rate of interest ever in any case in law or equity be required to pay more than the principal sum borrowed, and if any interest has been paid the same must be deducted from the principal and judgment rendered for the balance only." Section 4623.

And then this court said in a case involving usury:

"The contract stipulating for a greater rate of interest than 8 per cent. was tainted with an evil and wrongful intent. Hawkins v. Pearson, 96 Ala. 369, 11 So. 304. There was no contractual right to recover any interest, and that was so because the contract, to the extent of all interest, was offensive to the policy and positive mandate of the law."

And in logical conclusion the court said:

"The valid legal debt in this case was the principal sum borrowed and no more." Barclift v. Fields, 145 Ala. 264, 41 So. 84.

My judgment is that the court correctly interpreted the statute. Indeed, I am unable to see that it could have been interpreted otherwise. The court had held in a number of cases "The payment of the debt terminates the relation of the parties as mere mortgagor and mortgagee, and removes the incumbrance of the mortgage as such, and the contingency for the exercise of the power cannot thereafter arise. Payment extinguishes the power, and the mortgage becomes the same as if no such power had been included in it. If the mortgagee sells the property after the...