-On January 19th, 1889, according (o the •claim of Lehman, Durr & Co., there was due on Alston’s account, which was secured by Iris mortgages. $6,572.70. On. that day Mr. Alston, in company with Mr. Goctter, a member of the firm of Lehman, Durr & Co., went to the banking house of Josiah Morris & Co., and executed his note to them for the' sum of $6,875, receiving their check for that amount. ITe immediately took the check to the house of Lehman, Durr & Co., delivered it to them, and thereupon they gave him a receipt in full of his account and paid him in money the difference between the amount of the check and the amount of the •account. On the face of this transaction it operated as an absolute payment and discharge of the claim of Lehman, Durr & Co., against Alston and the creation of anew and independent liability on his part to Josiah Morris & Oo. It appears, however, from the pleadings and the proof in the case, that the parties have not regarded or treated the transaction as having that effect. When Mr.‘Alston accepted the receipt of his account, he did not ask for the mortgages or demand their cancellation, as, it is to be supposed, he would have done if he had understood that by the delivery of the check he had fully paid and satisfied the claim of Lehman, Durr & Co. In the letters written by him to Josiah Morris & Co. within a few days after the transaction the expressions used by him are not reconcilable with the existence of an understanding on his part that the mortgage indebtedness had been extinguished by the transfer of the check. And, finally, such claim could not be made by him under the averments of his bill in this case.. The bill makes no mention of said check of Josiah Morris & Co. From the detailed statement of the usurious elements in the claim of Lehman, Durr & Co., and from the averment that the notes and mortgages have been paid after deducting the usurious
Treating the transaction as a mere assignment of their claim and mortgages by Lehman, Durr & Co., the matter next to be •considered is the contention of Morris & -Co. that there is an •estoppel in their favor against Alston to preclude him from setting up usury in order to reduce or extinguish the debt in their hands. Morris & Co. arranged with Mr. Goetter to take the mortgages before they had ever seen Mr. Alston. Alston •says he did not know what papers were in the package handed ■by Mr. Goetter to Mr. Billing, and that he knew nothing of the transfer of the mortgages. Mr. Billing does not remember that Mr. Alston said anything about those papers at all. He ■said nothing to him about the transfer of the mortgages and asked him no questions about his indebtedness to Lehman, Durr & Co. It does not appear from Mr. Billing’s version of the interview at which Mr. Alston was present, that the nature of the transaction of the bank with Lehman, Durr & Go. was made -known to Mr. Alston or that he did or said anything indicating a purpose on his part to mislead or to deceive. The talking, or most of it, at any rate, was done by Mr. Goetter and Mr. Billing. It does not satisfactorily appear by a preponderance of the evidence that Mr. Alston knew what was the arrangement made by Mr. Goetter with Lehman, Durr & Co., or that it was brought to his knowledge that the mortgages against him were to be transferred to Morris & Co.,
It does not appear from the testimony that at at the time Alston execiited the note to Morris & Co., it Avas contemplated that he should gWe a new mortgage to secure it. If,, from the attempt of Morris & Co. to get a neAV mortgage and from other circumstances in proof, it could be inferred that Morris & Co. gave the check to be applied in paying oil the old mortgages with the understanding that a neAV one aves to be substituted in their place, then, on Alston’s failure to give the neAV mortgage, the rights of Morris & Co. in reference to the old mortgages could be no greater than such as would be acquired by a subrogation to the position of Lehman, Durr & Co. — Bolman v. Lohma, 74 Ala. 507. As a subrogation is merely the substitution of one person in the place of another and giving him his rights, Morris & Co. would in that mode acquire only such •rights as Lehman, Durr & Co. had. As to the interest of Morris & Co., the result would be practically the same as is reached by treating the transaction, so far as the mortgages are concerned, as a mere transfer thereof. It has been shown, that, on the evidence, the transaction is to be so treated in order to effectuate the substantial purposes of the parties. And, as Morris & Co. are insisting upon the foreclosure of the mortgages, they are to be regarded, in this proceeding, as not relying on the unsecured note, but as accepting their position as mere transferees of the mortgages. Occupying that position, and Alston not having estopped himself -to set up the •.usury, the mortgage claim in their hands is subject to deductions to the extent as may be shoAvn to be conrposed of usurious elements. — McCollough v. Mitchell, 64 Ala. 250; Purdue v. Brooks Brothers, 85 Ala. 459.
The decree of the Chancery Court determining the equities •of the parties and ordering a reference to state the accounts is not inconsistent with the conclusions we haA^e reached. We .discover no error in it.
Affirmed.