69 Miss. 770 | Miss. | 1892
delivered the opinion of the court.
The appellees exhibited their bill in the chancery court of Coahoma county against the American Freehold Land & Mortgage Company and J. II. Watson, trustee, in a deed of trust executed by them to secure certain notes to said company. The purpose of the hill is to perpetually enjoin said defendants from causing sale to be made, in compliance with the powers contained in said deed, for the payment of the notes, and also to have such security canceled.
The bill charges that* the appellees, in March, 1886, were residents of the city of Memphis, Tennessee, and the defendant company was a corporation incorporated by the state of New York, and having its domicile there; that on said date appellees executed their note to said company for the sum of |25,000, payable at the office of the Corbin Banking Company,
The' defendant demurred to the bill, upon the ground, among others, that the complainants sought relief without offering to do equity by paying the money received by them upon the faith of the security sought to be canceled. From a decree overruling the demurrer, an appeal has been granted to settle the principles of the cause.
We cannot assent to the proposition advanced by counsel for appellant that the contact of these parties was a Mississippi contract, and is to be governed by our laws. The authorities cited by him can have no influence, under the circumstances of this case. The presumption of law is always in favor of the legality of purpose and motive of contracting parties; and where a contract is made in one state, to be executed in another, and, under the laws of one would be illegal and under those of the other legal, it is reasonable to presume that the parties inteuded their contract to be controlled by the laws of the state in which it would be valid, and so the courts will, in furtherance of a presumed lawful •intention, assign it to that state by which its validity will be upheld. So, too, there may be cases in which the law of the domicile of the debtor and situs of the security may be applied to a contract made in another state and to be performed in yet a third. We decline to enter this field of investigation, for the reason that the manifest and only purpose of the stipulation in the deed of trust that the contract should be governed bj^ the laws of this state, -was, that the creditor might have the advantage of our usury laws, which are less stringent than are those of the state of Tennessee or New York. This is not a case for the application of the rule of favoring a lawful purpose by presumption, but it is one in
It is unnecessary to determine whether the contract involved is to be governed by the laws of Tennessee or by those of New York. It is conceded by the appellant that it is usurious under either, and that in neither could any action be brought and recovery had on the note or interest coupons.
This may be conceded to the complainants, and it may also be admitted that, in an action by the creditors, either at law or in equity, nothing could be recovered in the courts of this state. All this may be con ceded, -and yet the question remains whether the complainants, with the money of the appellant in their hands, and, without an offer to return it, can be afforded relief by a court of equity in this state under the principles which prevail here.
'It is well settled here that, though a contract be declared void by our own laws, by reason of which no action can be brought for its breach, a court of equity will decline to intervene unless the complainant will submit to do what ex cequo et bono he ought to do, regardless of the terms or invalidity of the contract. Deans v. Robinson, 64 Miss., 195.
We recognize the principles of comity which prevail, and under which a contract void where made will not support, an action in the courts of another state, even though by the laws of such state, the contract, if it had been there made, would have been a lawful one; but this principle has never been so extended as to abrogate the settled and controlling rules by which the courts of the state whose comity is invoked are guided. If the complainants and defendant were residents of this state, and had here made a contract prohibited by our laws, and the complainants had executed a security
It would be extending the rule of comity beyond all reasonable limits, if the courts of this state should afford relief against an agreement made in another state, and to a nonresident complainant, under a state of facts in which, if the controversy was between our own citizens and in relation to a transaction occurring here, relief would be denied. The complainants, appreciating the difficulty of securing a decree canceling the mortgage as security for both principal and interest, seek by their bill to. obtain an accounting of the amount of money loaned to them by the defendants, and of the payments made by them as interest on the same, and ask that on such accounting all interest reserved be forfeited, and all payments of interest heretofore made be applied to the extinguishment of the principal, or, if this be denied, then that all interest in excess of the legal rate be so forfeited and applied. They also seek relief against a stipulation in the notes and deed of trust by which they agree that, if default should be made in the payment of the notes, and a • suit at law or in equity should be instituted for their enforcement, or, if the trustee should advertise the mortgaged property for sale for the payment of the debt, an attorney’s fee of $3,750 should thereupon become due and payable, for the payment, of which the mortgage should stand as security.
It is contended by complainants that, whatever may be the rule or conditions imposed by courts of equity iu this state under which relief will be granted, as against other agreements, it is the settled doctrine here that relief will be granted as against usurious contracts which are secured by mortgages or deeds of trust with power of sale, or by other instruments enforceable in pais, without-an offer by the complainants to do equity; and that, where an accountiug is necessary to de
There is support for these propositions to be found in the argument of Judge Sharkey, in Parchman v. McKinney, 12 Smed. & M., 631, and for some of them in the decision in that ■case, and in other subsequent decisions of this court. Some things said by Judge Sharkey, in argument in that ease, have been denied to be correct, and a contrary rule established by subsequent decisions. It is important, therefore, to note what was decided in that case, and how much of what was therein said was only the argument of the judge in support of the conclusion reached by the court. To determine what was deT cisión, it is important to know what the facts averred in the pleadings and disclosed by the evidence, were. The conclu■sion of the court upon these facts constitutes its decision, but the process of reasoning by which that conclusion was reached is not necessarily decision, and, in many instances, is not. Parchman exhibited his bill against McKinney, averring that John Parchman, his intestate, had bought from McKinney, in the year 1835, a certain tract of land, at the price of $6,500, of which he then paid in cash $2,000, and for the remainder -executed his two notes, each for the sum of $2,250, one of which was to become due January, 1837, and the other, January, 1841; that both notes purported on their face to be for money loaned, and bore interest at ten per cent, per annum ; that, to secure the note due January, 1841, his intestate had executed a deed to John H. McKinney, trustee, in trust, to sell the land thereby conveyed upon the failure of the maker to pay the note ; that the defendant claimed there was •due him the note due January, 1841, and interest thereon, and also held two other notes of complainant’s intestate, one for about $900 and one for about $400; and that, to enforce
The question for determination was whether the defendant should have been allowed any interest. For the defendant it was insisted that, since the complainant had invoked the interposition of a court of'equity, he must submit to do equity, and that it was but equitable that the principal, with legal interest, should be paid.
The decision of the court was that, under our then statute against usury, upon the facts above detailed, the defendant was not entitled to any interest upon his debt. Judge Sharkey began the investigation of the question by stating that the current of authority undoubtedly was that the defendant should be paid interest at the legal rate, but inquired : “ Can the rule be adopted in the present case ? ” He then proceeded to show that the rule, as applied generally, was under statutes by which both interest and principal were forfeited, and noted that by our statute the interest only was docked, leaving the right to the principal unimpaired,, and no punishment was inflicted on the offender. He then argued to show that the debtor had had no opportunity of defending'in a suit at law, and declared that he stood “upon the same ground that a defendant does who is making his defense at law when sued on a usurious contract;” and then continued: “but, above all, the statute made to prevent usurious contracts is protected, its end and object accomplished; it is -not made the instrument of fraud. The general rule is that equity must follow the law, and they cannot depart from it without some obvious reason. For these reasons it would seem that the general rule requiring the party to pay the principal and legal interest, cannot apply in this case, and this accords with the opinion of the chancellor in Marks v. Morris, 4 Hen. & Mun., 463, which 'was a very similar case. The bill was brought for relief against deeds of trust, which the trustee was about to carry into effect, on the ground of usury, and,
The able judge evidently labored in his argument, which, though vigorous and clearly expressed, as were all his' utterances, is not marked by that adherence to well-settled principles for which'his opinions have been justly esteemed. His reference to the maxim that equity follows the law was ex-' ceedingly unfortunate, in view of the fact that but a few lines above he had conceded that the current of authority undoubtedly was that equity would not relieve, as against an usurious contract, except upon terms, and that “ the rule originated under the provisions of the statute of 12 Anne, which made all usurious contracts void, and imposed heavy penalties upon the usurer.” In other words, that the rule was announced by courts of equity in mitigation of, and opposition to, the rule of law. Nor could the learned judge have been oblivious of the fact that a favorite device of the usurers in England for evading the consequences of usury
In Fanning v. Dunham, 5 Johns. Ch., 122, Chancellor Kent reviewed many of the English eases where relief had been granted by the courts of common law in England.
In Fanning v. Dunham the complainant sought relief in equity against a judgment entered upon a power of attorney, and also against the execution of a power of sale in pais conferred by a mortgage given to secure the- debt, which was alleged to be usurious. There, as in Parchman v. McKinney, the complainant sought by his bill to have all the securities taken by the defendant and infected with usury, declared void and ordered to be canceled, without offering to pay any thing. But Chancellor Kent, after a full review of the cases, declared that, “the equity cases speak one uniform language, and Ido not know of a case in which relief has ever been afforded to a plaintiff seeking relief against' usury by bill, upon any other terms. It is the fundamental doctrine of the court. Lord Hardwicke said (1 Yesey, 820) thaf in cases of usury equity suffers the party to the illicit contract to have relief, but whoever brings a bill in eases of usury, must submit to pay principal and interest.”
Judge Sharkey was unwilling to rest his opinion upon the proposition that a coui’t of equity follows the law, and that a contract void at law will, for that reason, be relieved against in equity without terms, or upon the feature of an absence of an opportunity to defend at law; for finally he declared that the statute itself, by reason of its peculiar terms, should control courts of equity as well as of law, and also that, in furtherance of the yoliey of this state, finding expression in the
This court, in Deans v. Robinson, 64 Miss., 195, declined to accept the suggestion made in the argument of Parchman v. McKinney, that the absence of an opportunity to defend against the demand at law, because the debtor had given a mortgage with power of sale, was sufficient ground to warrant a court of equity to relieve against a contract void at law, without requiring the complainant to submit to do equity.
The case of Parchman v. McKinney has been adhered to, on the principle of stare decisis, to the extent in which it was decision. But the argument of Judge Sharkey has never been assented to as correct, beyond the rule that, in support of the public policy of this state, contracts which are obnoxious to our statute against, usury, made here or governed by our law, will be relieved against in equity, and that, whether the debtor be defendant against whom relief is sought, or complainant seeking relief, payment of the principal debt, without any interest, was all that should be required. It was not held in Parchman v. McKinney, nor has it been in any case following it, that the complainant would not be required to do equity, as a condition upon which relief would be granted. The question was, what should equity require him to do? And, in construing our statute, the court concluded that it would be equitable for him to pay only the principal of the debt. Norcum v. Lum, 33 Miss., 299; Hooker v. Austin, 41 Ib., 717, and Long v. McGregor, 65 Miss., 70, were cases in which decrees had been rendered on final hearing, as was Parchman v. McKinney, and followed the decision of Parchman v. McKinney, in so far as to declare that the complainant should only be required to pay what might have beezi recovered at law.
In Dickerson v. Thomas, 68 Miss., 156, it was held that a complainant, seeking to recover back usurious interest paid by him (the usurious contract having been fully executed),
We cannot perceive any public policy of this state which is to be conserved by applying the rule prescribed by our statute, of forfeiting all interest, to a contract made in another state. This is not a suit upon the contract, and its terms ánd conditions furnish no standards by which the court is to be guided. The conscience of the court, its appreciation of what is just and equitable, not only here, but in New York and Tennessee, and everywhere, is the sole and sufficient test as to the terms upon which it will afford relief. The complainants got the money of the defendant, by their own showing. They now repudiate the contract by which it was secured, and seek the aid of the court to annul a security given, not alone for the usurious interest, but for the principal as well. Relief will be afforded, but only upon condition that complainants shall do equity; and, by an unbroken current of authorities, it is settled that equity, in a case like this, is to refund the money with legal interest.
In none of the cases above noted, arising under our usury statutes, was the point made by demurrer that the complainants had not offered to do equity. As we have said, the questions were raised on appeal from final decrees on the merits. ' Rut in Deans v. Robinson, 64 Miss., 195, it is decided that a bill for relief is demurrable if it fails to show an offer by the complainant to do that equity without which the court will deny relief. The complainants should have tendered to the defendant the principal sum received by them, with legal interest thereon, and, the tender being refused, should have brought the money into court, or offered so to do by their bill. It may be that the defendant will accept
The case made by the complainants is not sufficient to uphold their bill as-one for an account. They know, or may know by proper diligence (so far as the bill shows to the contrary), what sum -they received; they know what sum they have paid, and it is, therefore, but a matter of calculation to determine exactly what amount they should offer to pay.
It is proper to add that the stipulation in the notes and the deed of trust relative to the payment of an attorney’s fee, falls with the contract, of which it is a part. As we have said, the contract furnishes no guide to the court in determining what sum shall be paid by complainants. It is enough that they return to the defendant its money, with legal interest thereon.
TTnder the circumstances of the case, we think it improper to make a final disposition of the case here. The appeal was manifestly brought to settle its principles, and it may be that the complainants may desire to amend their bill, and tender to the defendant the money due. In order that an opportunity to do so may be afforded them, the—
Decree will be reversed and remanded to the court beloio, with directions to sustain the demurrer.