203 Mich. 455 | Mich. | 1918
Plaintiffs, who are husband and wife, and who reside in Detroit, executed a mortgage upon real estate in the city of Detroit to the Detroit Fire & Marine Insurance Company to secure the payment of a note for $18,000, made by Robert M. Dalton to said mortgagee, with interest at the rate of six per cent, per annum. On the same day, which was January 21, 1911, they executed a second mortgage upon the same real estate to J. Cotter Weber, of Chicago, Illinois, as mortgagee, to secure the payment of a note, made by both of the plaintiffs, for $10,000 and interest at the rate of six per cent., payable quarterly. Each mortgage contains the covenant that the mortgagor, within 40 days after the same become due and payable, will pay all taxes and assessments levied upon the lands or upon or on account of the mortgage or the indebtedness secured thereby, whether levied against the mortgagor or otherwise. Interest was paid upon these mortgages until and to October 1, 1913. October 23, 1912, $1,500 was paid on the principal of the first
“your orators hereby offer to do equity and to pay, within such time as may be fixed by the court, the amount of principal and lawful interest which shall be determined by this court, on such accounting, to be due as aforesaid.”
It is charged in the bill of complaint that the property in question i$ worth $60,000 and more, plaintiffs deriving rents therefrom amounting to more than $5,-000 a year; that in 1910 it was sold upon a chancery
J. Cotter Weber made a separate answer to the bill, in which he avers that he, through Frank J. Weber, his attorney in fact, lent Robert M. Dalton $10,000,
Joseph F. and Frank J. Weber filed’a joint answer to the bill, denying all charges of wrongdoing. Sarah A. Warner answered the bill and claimed affirmative relief, charging that her deed from the plaintiffs of the property in question was. executed to secure the payment of certain moneys for which Robert M. Dalton was indebted to. her. She asks that her lien be decreed to be a first lien upon the premises and that the mortgages hereinbefore described be declared to be usurious and of no force or effect against her, and if the court refuses that relief that the defendants Weber be ordered to account for all sums of money received by them usuriously, and she offers to do equity and to pay the amount of principal and lawful interest that shall be determined to be due upon said mortgages. The Webers answered the cross-bill of Sarah A. Warner, and so did the plaintiffs, the latter denying that Robert M. Dalton is indebted to Sarah A. Warner in any such sum as she claims in her cross-bill.
The cause, being at issue, came on for hearing in open court. Testimony was introduced, none of the Webers being called as witnesses. The learned trial judge was of opinion that the $18,000 mortgage, the first one hereinbefore referred to, was not affected, originally or in the hands of Weber, with any infirmity on account of usury; that the second mortgage included a bonus of $3,000, which made the mortgage usurious. A computation was made according to which he found the principal of the second mortgage to be $6,-678.19, the amount of the taxes paid $486.96, total $7,-165.15, finding the sum due upon both mortgages to be $26,668.25.
“and it appearing to the court now herein that Franklin E. Bushman is a necessary party to said cause,”
—that under the authority of the provision of the judicature act (3 Comp. Laws 1915, § 12364) reading:
“No action at law or in equity shall be defeated by the nonjoinder or misjoinder of parties. New parties may be added and parties misjoined may be dropped, by order of the court, at any stage of the cause, as the ends of justice may require,”
—the court had power to add parties, and it was ordered that Franklin E. Bushman be made a party defendant, and that the order be entered nunc pro tunc as of May 21, 1917. Under the oral permission of the court, on May 21, 1917, the bill of complaint was amended by adding certain allegations thereto and
“to the end that the same may be dealt with and extinguished by the final decree of this court in said cause.”
The decree, which purports to have been made on the 15th of September, 1917, contains the findings that on the 15th of September, 1917, there was due on the two mortgages $26,496.66, and that J. Cotter Weber is entitled to five per cent, interest on that amount from and after the date of signing the decree; that Sarah A. Warner has a claim against the property of $16,-167.36, subject to the said two mortgages.
“The court doth further find that J. Cotter Weber is purely nominal in the subject-matter of this litigation, and that the parties to be considered are Joseph F. Weber and Frank J. Weber, with whom all negotiations were carried on and completed.”
It was further found that the Bushman tax lease was procured in the interest of Joseph F. and Frank J. Weber and should be canceled upon the payment of $650, with six per cent, interest from April 14, 1915. It is ordered that Bushman cancel his tax lease’ accordingly; that upon the payment of the sum found to be due thereon as stated, with interest, the sheriff’s deeds referred to be canceled and removed as a cloud on the title of plaintiffs, and the time is fixed within which payment is to be made, and the rights of the defendant Sarah A. Warner as subsequent incumbrancer are declared.
The plaintiffs, appellants, claim that the first or $18,000 mortgage was usurious as between plaintiffs and defendants (1) because it must be viewed as part of a single transaction, namely, the purchase of the property from the Detroit Fire & Marine Insurance Company, in which the defendants Weber participated, the alleged usurious exaction of $3,000 being a part of the whole transaction, (2) because the said mortgage in fact exacted more than seven per cent, interest, it having appeared that the Detroit Fire & Marine Insurance Company paid taxes on its personal estate at a rate of over two per cent.; that the second mortgage was usurious because given for $10,000, when as matter of fact $7,000, more or less, was the amount of money actually advanced by the Webers to the plaintiffs, and, both mortgages being usurious, no interest should have been allowed on either to the date of the decree.
We are of opinion that the evidence requires the conclusion that both mortgages are usurious, the first one upon the authority of Union Trust Co. v. Radford, 176 Mich. 50, the second one because it calls for a sum largely in excess of the amount actually paid to and received by the mortgagors. The contention of the
Plaintiffs should be permitted to rédeem their property upon equitable terms. They have offered to pay the sums, principal and interest, which the court shall determine to be due. They contend that no interest should be paid, but only the amount of the money actually paid to and received by them. In making this contention, they are asking a court of equity to enforce a penalty, a forfeiture. It is clear, however, that the usurious lender is not in this case, nor in any other judicial proceeding, seeking to enforce usury. Upon the authority of Vandervelde v. Wilson, 176 Mich. 185, plaintiffs, having had the use of a certain sum of money for a certain period of time, ought to pay the legal rate of interest therefor for the time. This conclusion requires a modification of the decree in plaintiffs’ favor.
But as to defendant Bushman the decree must be reversed. Assuming that he is nominal holder only of the tax lease, for the benefit of J. Cotter Weber, and is therefore a proper party to a bill filed to redeem the property from the liens of Weber, Mr. Bushman was not served with the process of the court, has had no opportunity to answer the bill of complaint, and has not been heard, as a party, in a proceeding to adjudicate his right.
We find no occasion for disturbing the decree as to defendant Sarah A. Warner.
A decree will be entered in this court permitting
Plaintiffs will recover costs of this appeal as against the defendants J. Cotter Weber and Frank J. Weber.