60 W. Va. 413 | W. Va. | 1906
Thomas B. Smith and Daniel S. Smith complain of a decree of the circuit court of Harrison county, made and entered on the 23rd day of October, 1905, in the chancery cause of Marcellus B. Davisson against the appellants and the South Penn Oil Company, requiring said appellants to execute a deed re-conveying to Davisson a one-half interest in and to all the oil and gas in and under a tract of fifty acres of land situated in said county, the court having found and determined that the sole consideration for the conveyance of said interest in the oil and gas to the appellants by Davis-son was compensation for the use of money, in excess of the legal interest thereon.
Davisson, being the owner of the tract of land, obtained from the appellants, on the 5th day of May, 1899, a loan of $550.00, evidenced by his five promissory notes payable one, two, three, four and five j'ears after date, with interest thereon from date, the first four of which were for $100.00 each and the last one for $150.00, and executed a deed of trust on the land to secure the payment thereof. On the 6th day of May, 1899, Davisson and his wife executed a deed conveying to the appellants one-half of the oil and gas in and under the tract of land.
On the 19th day of February, 1900, the appellants executed to the South Penn Oil Company a lease on said land for oil and gas purposes, under which, at some time in the year 1904, said company entered upon the land and began to develop it for oil and gas, and their operations resulted, on
Meanwhile, Davisson, in June, 1901, having made a sale of the coal under the tract of land, had paid off his entire indebtedness to the appellants, including the interest thereon at the legal rate. At July Rules, 1905, he filed his bill, setting up the facts hereinbefore stated, and charging that there was no consideration for the convej^ance of the oil and gas to the appellants, other than the loan hereinbefore described, that said conveyance was made as compensation, for the use of the money borrowed, in excess of the legal interest thereon, stipulated for in the notes and secured by the deed of trust. He prayed that the deed be canceled and annulled, that the lease, executed by the appellants to the South Penn Oil Company, be canceled, that an injunction be awarded, inhibiting said company from delivering to the appellants any part of the oil produced from the premises, and that a receiver be appointed to take charge of the one-half of the royalty, or one-sixteenth of the oil produced, which was claimed by the appellants, as well as the cash rentals which might accrue from gas wells under the lease. The South Penn Company claimed protection as a bona fide purchaser for value without notice, and the appellants denied that the consideration for the conveyance ivas usurious interest, but claimed, that, if the court should be of the opinion that it was, the measure of relief to the plaintiff would be a decree for money, equal in amount to the value of the interest conveyed at the time of the conveyance thereofs with interest thereon from the date of the conveyance. The court, upon the hearing of the cause, upon its merits and with the consent of the plaintiff, held the South Penn Oil Company to be a purchaser for value without, notice, and set aside the deed as to the appellants Thomas B. Smith and Daniel S. Smith.
The denial by the appellants of the usurious character of consideration, is based upon the circumstances under which the loan was made. Davisson, having no means of his own, except a one-fifth interest in the land, desired to purchase the interests of his three brothers and a sister therein. It required about $550.00 to accomplish this and pay delinquent taxes for which it was about to be sold. Unable to obtain the money elsewhere, he applied to the appellants, who, after
The principal complaint of the appellants is predicated upon the action of the court in depriving them of the title to the oil and gas, instead of giving a decree against them for the value thereof at the date of the conveyance with interest. This objection is founded upon two different theories, one of which is that both the common law and statutory remedies contemplate a money recovery in all cases in which a debtor sues to recover usurious interest, and the other that a conveyance founded on a usurious consideration is neither void nor voidable.
For the first proposition the rule laid down by this Court in Davis v. Demming, 12 W. Va. 246, is referred to. That was a general rule applicable under the circumstances which usually attend usurious transactions. Ordinarily, usurious interest is paid in money. No expression in the opinion in
These cases, however, arose under statutes which made the entire contract void, not merely so much of it as related to the excessive interest. Though under our statute usurious contracts are void only as to the interest therein provided for in excess of the legal rate, the principle declared by the courts in those jurisdictions m which the entire contract is void seems to meet and overthrow the contention, that the property given for an usurious consideration cannot be recovered under our statute. If property so given under a contract wholly void may be recovered, it logically follows that the property parted with as compensation for .the use of money in excess of the legal rate, to which extent the contract is void under our statute, may also be recovered, and the borrower is not limited to the recovery of the value thereof at the time of its delivery.
A plausible argument of counsel for the appellants is that if the real estate conveyed is to be regarded as the equivalent of the payment on account of the interest, it was the first payment made and ought to be applied on the debt as a credit as of the date of the conveyance, and the money aftewards paid should be credited on the residue of the indebtedness to the extent necessary to satisfy it, and the legal interest thereon, and that the recovery ought, therefore, to be not of that which was first paid or given as interest, but of that which was last so given, no usurious interest having been paid, in
No authority is produced to sustain this claim, nor is it consistent with the terms in which the parties clothed their contract. That the oil and gas interest conveyed was intended to be not merely interest on the debt, but interest in excess’ of the legal rate, is perfectly apparent. It was not credited on the debt at the time. The conveyance having been made on the next day after the notes were executed, and the agreement therefor having preceded the execution of the notes, these instruments were given for the full amount of the principal and interest at the full legal rate. The conveyance therefore must have been for interest in excess of the legal rate eo nomme, which the statute declares to be void. Though the taking of a separate obligation for the excess of interest above the legal rate, does not free the entire transaction from the taint of usury, (29 Am. & Eng. Ency. Law 484), still no reason for holding that the parties cannot determine, or have not determined, what particular payment or obligation shall represent, or be regarded as made on account of, the usurious interest, is perceived, and, moreover, there are well considered decisions which assert, not only that it can be and is done, but also that the courts will recognize the binding force of such stipulations, and treat the particular payment as one of usurious interest eo nomine. In Stevens v. Fisher, 28 Vt. 272, 274, Redfield, J., speaking for the court, said: “But the defendant received the money. If he received it as interest, eo nomine, whether it was in pursuance of any corrupt previous agreement, or not, is immaterial. It is none the less usury, whether the agreement was contemporaneous with the lending, or made subsequently — whether made before the receipt of the money, or at the time — whether the money was paid in advance, or reckoned into the note and paid with the principal sum; whenever paid as usury and eo nomme, it creates an immediate right of action. The question, whether, at the time of the loan, or agreement to forbear payment, there was any agreement to pay and receive more than legal interest, was never important, except under the English statute of usury and others like it, where,
The principal and collateral transactions are plainly regarded, by all courts, as separate and distinct, except in so far as it is necessary to treat them otherwise, in order to vindicate and enforce the law for the suppression of usurious transactions. Contracts, as made are allowed to stand and are enforced to the full extent of consistency with law, and are overthrown only to such extent as the enforcement of the law necessitates. As the parties to the deed in controversy here manifestly intended and agreed that the sole consideration of the conveyance of the oil and gas should be compensation for the use of money in excess of the legal rate, and the vice in the transaction can be eliminated without, in the slightest degree, altering that agreement, or disturbing the securities given for the principal of the debt and legal interest thereon, the court will not go out of its way to do more than give relief by undoing the usurious part of the transaction. Why should it? How can it, in view of the principle above stated, plainly deducible from the authorities ?
A principle above adverted to, namely, that courts, in order to vindicate the law by uncovering and punishing usury, no matter in what form the transaction is clothed, will consider and act upon two separate contracts as one, when it is necessary to do so, would no doubt justify us in regarding the real estate conveyed as security for the debt, and, it having been paid, decreeing a re-conveyance thereof, or cancelling the deed. Though it represents nothing
To allow the appellants to retain the gas and oil and pay a sum of. money in lieu thereof as and for its supposed value at the time the conveyance was made, would give them the status of purchasers for a good and valuable consideration, contrary to the plain and emphatic denunciation of invalidity upon the contract, as made by them, pronounced, not by the court, but by a statute which all courts liberally construe and rigidly enforce. By express provision, it arms courts of equity with power to compel the lender to discover upon oath the money or thing really lent, and all bargains, contracts or shifts relative to such loan, and the interest or consideration of the same, and declares that if it appear that more than lawful interest was reserved, the lender shall recover his. principal money or other thing with six per cent, interest onlsn Here money only was lent. That with six per cent, interest is all the appellants could demand. The outside transaction was plainty such a shift and device to cover the taking of unlawful interest, as a court of equity has power to inquire into and relieve from. Its duty would be but poorly performed, if it should now undertake to allow the lenders to keep the property, by attempting to ascertain and decree against them the value thereof. That would be the adoption of an uncertain measure of restitution, without any reason or necessity for such a course. Porterfield v. Cainer, 4 Grat. 55, has no application to a case of this kind. The value of the land was put in issue in that case to determine whether more than lawful interest had been taken.
The other proposition, namely, that a deed made in consideration of an usurious debt, cannot be set aside, would
This doctrine is not recognized at all in the early Massachusetts and Maine decisions, cited as supporting the proposition asserted by counsel for the appellant, namely, Hale v. Jewell, 7 Me. 435; Richardson v. Field, 6 Me. 37; Boardman v. Rose, 13 Mass. 104, and Flint v. Sheldon, 13 Mass. 443. They proceed upon the theory that a deed absolute on its face cannot be shown by parol evidence to be in fact a mortgage, for the reason, among others stated that the effect of admitting such evidence for that purpose is to allow the terms of a written instrument to be contradicted by parol evidence. As the matter of interest could not be reached until after the ascertainment of a debt, and indebtedness could not be shown without violation of the rule against pa-rol evidence, the courts declared the matter to be beyond their reach. As the cases all arose in courts of common law, the rulings were no doubt correct. However, that may be, the equity courts of this State have never been hampered by difficulties of that sort, as will abundantly appear from an examination of the decisions above • mentioned and others of the same class, which may be readily found.
As the subject matter of this suit belongs to the exclusive jurisdiction of the equity courts, the statute of limitations is not applicable. Newman v. Kay, 57 W. Va. 98. Nor do we perceive any circumstances which will justify the application of the principle of laches. There has been an appreciation in value, and a lapse of time, but the appellants have done nothing which in any material respect has contributed
As no error in the decree is perceived, it will be affirmed.
Affirmed.