Crippen v. Heermance

The Chancellor.

I think the vice chancellor erred in supposing the $300 included in the bond and mortgage in this case was not in fact an usurious premium, for the forbearance of the payment of the $710, for the term of four months, in addition to the legal interest. Although the parties agreed to call the transaction a resale of the farm, it is evident that it was a mere device to evade the usury law ; by calling that a resale which was in fact an agreement for the forbearance of payment for four months, at the enormous rate of interest of more than one hundred and twenty per cent per annum. The evidence of Isaac Crippen, as well as that of Cherry, clearly shows that the defendant applied for an extension of the credit, or the forbearance of the payment of the balance due, for a few months. The answer of the complainant, that he could not fix it so as to wait on him the desired time without making a new sale of the land, shows that a nominal resale was considered necessary to clothe the transaction in a legal garb ; instead of permitting it to appear in the form of a mere naked agreement to pay the $300, with interest thereon, as a usurious premium for the forbearance of the balance then due. The statute against usury, however, reaches indirect as well as direct agreements to obtain more than seven per cent for the loan or forbearance of money. And that statute would be worse than useless if the very thin covering, which wras attempted to be put upon this transaction, was sufficient to conceal the real features of the agreement from the searching eye of a court of justice.

Parties may so frame a contract of sale as to make time a material part of the agreement. And where, from the terms of the contract, it is evident that the parties intended *214 the purchaser should not have the land contracted for unless the purchase money was actually paid at the day specified in the contract, a court of equity will not enforce the performance of a different agreement, which neither of the parties ever intended to make. But it cannot be considered as settled law, even in cases of that kind, that where three-fourths of the purchase money has been paid, as in this case, the court of chancery will permit the vendor to enforcethe forfeiture, for the non-payment of the residue at the precise day agreed upon ; and thus to retain both the money and the lane!, where it would be unconsc.ientious for him to do so. (See Wells v. Smith, 7 Paige’s Rep. 22. Harris v. Troup and others, 8 Idem, 423.) In the present case, however, no such question can arise; as there was nothing in the terms of the contract making the punctual payment of the money at the day an essential part of the agreement. In equity, therefore, the farm was the property of the defendant; and the complainant merely held the legal title as security for the payment of the balance of the purchase money which remained unpaid. The agreement then to fix it so as to obtain the additional sum of $300 beyond the legal interest, for the forbearance of the payment of that balance for the term of four months, by reselling the farm at $1010, with interest thereon, wTas usurious; and the bond and mortgage taken in pursuance of that agreement were illegal and void.

The balance of the original purchase money, with interest, however, was a lien upon the farm, and still remained due 5 although that lien would have been merged in the bond and mortgage if the subsequent agreement had been valid. (Williams v. Allen, 7 Cowen, 316. Hughes v. Wheeler, 8 Idem, 77.) And the complainant having purchased his brother’s interest in the original contract he is, in this court, entitled to recover that balance in his own name. He has, therefore, a right to a decree for the payment of the $710,18, and interest from the 4th of May, *215 1837 ; and if the same is not paid, to have the premises sold to satisfy the debt.

The decree appealed from must be reversed without costs to either party on the, appeal. And a decree must be entered directing the defendant to pay the balance due on the original agreement, with interest as aforesaid, within thirty days; or in default of such payment, that the premises be sold, by a master, to satisfy such balance, upon the usual notice as in mortgage cases ; and directing a delivery of possession to the purchaser at the master’s sale, &c.

If the complainant had only claimed the balance of the original purchase money and interest, I should have charged the costs of the suit upon the defendant, who had neither paid, nor offered to pay, what was legally and equitably due. But as a claim is made by the bill for the usurious premium also, and upon a statement which made it necessary for the defendant to put in an answer and go into proof of the facts, both parties are in the wrong ; the complainant in claiming the usurious premium agreed to be paid for the forbearance of the purchase money, and the defendant in resisting payment of what was really due. Neither party, therefore, is entitled to the costs of the litigation thus far, as against the other. But if the $710, and interest, is not paid within thirty days after service of a copy of the decree upon the defendant, or his solicitor, the costs of enrolling the decree, and of all subsequent proceedings thereon, must be paid by the master out of the proceeds of the sale. Upon the payment of the" amount due, either by the defendant or by a sale of the premises, the usurious bond and mortgage must be delivered up and can-celled on the record, by the complainant.

No question was raised by the answer as to the payment of the $50 in the fall of 1836 ; the question, therefore, does not properly arise here whether that sum also was not received as an usurious premium for the forbearance of payment until the next spring. For that reason no deduc *216 tion is made of that $50, from the amount which the answer admits to have been due upon the contract at the time of giving the bond and mortgage.