Perdue v. Brooks

• Citation: 5 So. 126,85 Ala. 459
• Parties: PERDUE v. BROOKS ET AL.
• Decision Date: 10 December 1888
• Court: Supreme Court of Alabama

5 So. 126

85 Ala. 459

PERDUE v. BROOKS ET AL.

Supreme Court of Alabama

December 10, 1888

Appeal from chancery court, Lowndes county; S. K. MCSPADDEN, Judge.

Bill by Thomas Perdue against A. F. Brooks and others, to have an absolute deed declared a mortgage, and to redeem. Reference to register to state the accounts, and from the statement made complainant appeals.

Watts & Son, for appellant.

Richardson & Steiner, for appellees.

CLOPTON J.

The questions arising in this case, with one exception, relate to the report of the register as to the state of the account between the parties, and the amounts due on the mortgages. On January 20, 1883, appellant executed to appellees a deed absolute on its face, to the land in controversy, in consideration of $538, which they loaned or advanced to him to pay a prior mortgage on the premises to J. M. Carr, and made to appellant an instrument in writing by which they agreed to reconvey the land to him on payment of the money advanced. In February, 1883, appellant gave to J. J. Crenshaw a mortgage on personal property to secure a debt of $400. In February, 1884, appellees, at request of appellant, paid Crenshaw the full amount due on his mortgage, and took a transfer of the same. At the same time the instrument of January 20, 1883, was surrendered to appellees, and they gave another instrument, obligating themselves to reconvey the land on the payment of $1,164.44, and also any additional amount which appellant might owe them for supplies during 1884. The bill is filed by appellant to have the deed declared a mortgage, and to be let in to redeem, and to have the Crenshaw mortgage satisfied and canceled. On the hearing, the chancellor decreed that the deed was intended as a security for the money advanced at the time of its execution, and that the instrument of February, 1884, does not operate to create an additional incumbrance. It was referred to the register to state an account of the amount due on each mortgage. It being shown that usurious interest was charged in the Crenshaw mortgage, appellant insists that the sum originally loaned should be taken as the principal, and legal interest counted thereon, in ascertaining the amount due on account of this mortgage. It clearly appears that appellees paid Crenshaw, by request of appellant, the full amount of the mortgage, including the usurious interest, and it is not satisfactorily shown that they had notice of the usury. The general rule is that, to cut off the defense of usury against commercial paper in the hands of a transferee, there must be a renewal of the debt by giving a new security payable to the transferee. Mere taking a transfer of the paper in good faith, and without notice of the usury, is insufficient; but, though no new security is given, the debtor may by his conduct estop himself to set up the defense. McCullough v. Mitchell, 64 Ala. 250. When the maker promises an innocent holder of usurious paper to pay it in consideration of delay, the promise may be enforced; and usury in an original contract, which has been changed by a new contract founded on it, cannot be set up against an innocent party to the new contract. Palmer v. Severance, 8 Ala. 53; Jackson v. Henry, 10 Johns. 185; Gee v. Bacon, 9 Ala. 699. The payment of the full amount due on the Crenshaw mortgage by appellees, at the instance and request of appellant, was an equivalent of the payment of the usury charged therein by appellant, which he could not recover back from Crenshaw. Having induced appellees, for his accommodation, and to obtain indulgence, to advance the money to pay the mortgage, and to hold it as security for the advance, appellant cannot set up against them the usury in the mortgage originally.

The chancellor having decreed that the deed to the land is a mortgage, and there being no complaint of his decree in this respect, we must regard it as such...