20 N.C. 91 | N.C. | 1838
who having stated the case as above, proceeded as follows : The plaintiff had no claim to recover except upon the demise of Salathiel Stone. There was no evidence of title in Bagge, and if Shober ever had any legal estate, it passed by his conveyance to Stone. The correctness of the instruction is therefore to be considered in reference to his demise.
In the argument of the case, several questions of law were discussed, which heretofore have not been decided in the Courts of this State. As well on this account, as because of their importance to the community they have been considered by us very deliberately.
On the part of the plaintiff, it was contended that, admitting the debt referred to in the deed to have been tainted with usury, and therefore the bond and the trust to sell for payment of the debt void, yet the deed passed the legal estate to Shober. In support of this position it was argued that the statute avoids “bonds, contracts and assurances for payment of any money to be lent upon usury; that a Court of Equity, which looks upon the conveyance of the legal estate as formal only and considers the trusts declared as the substance of the conveyance, and which has jurisdiction of trusts and is competent to decide on their character, might pronounce the deed, to the extent of these trusts, a mere security, and as such set it aside upon payment of what was equitably due ; but that at law the conveyance is absolute — contains no provision whereby the estate thereby granted is to return to the bargainors on payment of the money lent, and therefore it is not in the contemplation of a Court of law an assurance for the pay
It ¡s a common remark that Courts of law do not notice trusts. Certainly they do not for the purpose of administering them, for this is the peculiar function of Courts of Equity. But all Courts must notice the legislative will duly expressed, and therefore deny validity to what that will, for any cause, denies a legal existence. Suppose a conveyance made of land or goods, and upon the face of it, it is declared that the same ’s made in trust that the bargainee shall sel' the property and pay himself the sum of money therein recited to be advanced as the consideration thereof, with ten per cent, interest thereon, and return the surplus to the bargainer. Can it be possible that with this corrupt agreement staring them in the face, a Court of law must hold the conveyance good, and leave the validity of the trust to be examined by a Court of Equity ? it is immaterial how the illegal purpose is manifested, whether by way of trust or covenant, or collateral engagement; the moment that illegal purpose is judicially ascertained, the penalty of the law at- . taches to the denounced transaction. Thus conveyances made with intent to defraud creditors or purchasers are, as aSa^nst them, avoided by statute. Now if this intent appear not in the conveyance of the legal estate, but in the trusts for the grantor thereby declared, or by secret trusts for the grantor> a Court of law looks through the formal parts of the conveyance to the object intended to be accomplished; and because of these trusts, declares the conveyance itself void, and holds the property, notwithstanding that conveyance, to he the property of the grantor-^-so a capacity is given by our laws to religious societies, of holding property conveyed to them for the benefit of the society. But if a conveyance formally so made, is discovered to have been made upon a secret trust for others, a Court of law, because of that trust, pronounces the conveyance itself void. Trustees v. Dickinson, 1 Dev. 190. In ascertaining what is a “ security for the rePayment °f money” within the statute, the same great rule is to be observed which has been established for determining what is a “ loan of money” under the statute; get at the nature and the substance of the transaction, according to the
Now, independently of the parol evidence in this case, ' no one can look at the deed before us and not see that the sole object contemplated by it, was the securing of the debt therein mentioned. It recites a bond of the same date executed to secure payment of money advanced. Until and unless there shall be failure in paying that bond, the bar-gainors are to retain the possession. The possession is to be yielded only after such failure, and a demand of the creditor that the property pledged, be sold to pay the debt. If the debt be paid without a sale, the trustee. is to re-convey to the bargainors. If the land be sold, all the proceeds remaining after payment of the debt and the expenses of the sale, are to be paid over to. the bargainees. If such a deed be not in law a security, then the enactments of the statute against usurious assurances would seem to amount to but legislative trifling. Deeds of this character have been regarded with much suspicion and distrust, as a species of irredeemable securities or mortgages rendered absolute without foreclosure. If we add to this quality the privilege of exemption from the legal penalties of usury, they will become invaluable to the extortioner in enabling him to take from his needy neighbor “ all that he hath.”
It has been further insisted on the part of the plaintiff, that if the deed of trust can be regarded as a security, and therefore void or voidable if set up by Shober, yet that after a sale has been made under it, and a conveyance executed to the purchaser, it ceases to be a security, and the title of the purchaser cannot be impeached because of usury in the original transaction. To this position we are unable to give our assent. We take the rule of law to he that every contract which is founded in usury, and every security given to
Having arrived at the conclusion that the deed of trust in this case was absolutely void, if the debt for the security of which it was executed were usurious ; and that a sale under it by the trustee did not purge the usury and could not give legal operation to the deed, the only remaining inquiry is, whether his Honor’s charge on the question of usury be correct. It is to regretted that the case did not set forth the allegations of the respective parties, and the questions of law raised upon these allegations, so that we might distinctly perceive the application of the charge to the matters controverted. The case states simply the evidence given, and then, in very general terms, an instruction from the Court for the guidance of the jury in their finding upon that evidence. But it purports to set forth all the evidence, and to direct the attention of the- jury to the only questions of fact which, upon that evidence, it was material for them to consider. We are obliged therefore to understand it as tantamount to an instruction, that if Christian Hauser at the time of the loan to the defendant, was in doubtful circumstances, and the securing of his debt to Bagge constituted any part of the motive of the latter in making the loan to the defendant, then in law such loan was usurious. Thus understanding the instruction, we hold it to be erroneous. To constitute a loan usurious, it is necessary that there should be an agreement between the parties for the lender to take
Upon this view of the case, we think it our duty to reverse the judgment and remand the cause for a new trial.
Per Curiam. Judgment reversed.