Smith v. McDonald

56 Vt. 305 | Vt. | 1883

The opinion of the court was delivered by

Ross, J.

This is a bill to compel an equitable offset of a claim which the orators own against a claim for usury which the defendant is prosecuting against the orator, J acob Smith. The only defence set up in the answer is, that the orators can have 'Guy Smith made co-defendant in the suit at law by the defendant against Jacob Smith, and as an offset in that suit avail themselves of the claim which they are seeking to enforce by the bill. Erom the allegations in the bill admitted by the answer, it appears that the orators’ loaned a sum of money to the defendant, for which they took his promissory notes secured by mortgage. The defendant paid Jacob Smith for himself and Guy Smith, $30, as usury on the loan, for four successive years. The orators then sold the notes and mortgage to I. W. Brown, executor of White’s estate, and guaranteed their collectibility. Brown brought a suit at law and recovered judgment, but obtained nothing in the way of satisfaction of the judgment. This merged the notes in a judgment in favor of I. W. Brown, executor. The orators then took back the debt, thus resting in a judgment, and the mortgage securing the same, and foreclosed the mortgage. The defendant did not redeem, and the orators took possession of the property. The defendant has sued Jacob Smith alone to recover back the usury. Guy Smith could, without doubt, be made a co-defendant in that suit. But that would not avail them to set off the claim alleged to exist in equity in their favor against the defendant. This claim is for the deficiency in the value of the mortgage premises to pay the mortgage debt at the time the foreclosure became absolute. The orators cannot assert the claim for this deficiency under the decree of foreclosure. The decree was for the premises unless redeemed by payment of the debt secured by the mortgage. It was not a personal judgment against the defendant for the sum found dire under the mortgage. The mortgage premises when taken under the decree of foreclosure prima facie satisfied the mortgage debt. The excess of the debt above the value of the mortgage premises could be recovered only in an action on the debt. Lovell v. Leland, 3 Vt. 581; Laris v. Hulett, 26 Vt. 308.

The original notes had become merged in the judgment in favor of I. W. Brown, executor, and at law, would have to be sued in his name, although in equity the excess of the mortgage, debt above the value of the. mortgage premises when the decree became absolute belonged to the orators, and in equity could be enforced in their names. An action at larv thereon must be brought iii the name of I. W. Brown. Tbe orators could not declare for it in their own names, even if Guy Smith should become a co-defendant, in offset to the defendant’s action to recover back the sums paid by Mm to Jacob Smith, for the use of both, as usury. The bill alleges that the excess of the debt above the value of the mortgage premises was more than enough to offset the defendant’s claim for usury. It also alleges that the defendent is insolvent, and that the orators’ only means of obtaining satisfaction for the excess is by offsetting it against the claim of the defendant for usury. On these facts the orators are entitled to the relief prayed for. They could not avail themselves of the excess in offset in the defendant’s suit at law.

The decree of the Court of Chancery was correct, and is affirmed, and the cause remanded.