Howe v. Carpenter

Taylor, J.

There is a dispute between the appellant and respondent as to the nature of the final transaction above *701 described. The respondent claims that he sold the farm to the appellant at a price named, $3,733; that this sum was paid by the respondent assuming the payment of the incumbrances and releasing him from the payment of the said sum of $463.69, and the interest, and from the payment of these usurious notes; and that the incumbrances, with the amount due on the loan of $463.69, and the usurious notes, amounted to said sum of $3,733. The appellant claims that there was no price set upon the farm, but that the respondent, having declared himself unable to pay off the incumbrances, proposed that he should take the place and assume the payment of the incumbrances, and release the appellant from his bond, and that nothing was said about the payment of the usurious notes. TJnder the instructions of the court the jury must have found that the transaction was as stated by the respondent; and as there is evidence to support their finding, it is conclusive upon this appeal. This is the view of the case taken by the learned counsel for the appellant, and, admitting that the transaction was as claimed by the respondent, he insists that it does not show a payment of the usurious notes by the respondent, either in money or land, and that the action cannot, therefore, be maintained.

The action is brought upon section 1691, R. S. 1878, which reads as follows: “ Every person who, for any such loan or forbearance, shall have paid or delivered any greater sum or value than is above allowed to be received, may, by himself or his personal representative, recover in an action against the person who shall have taken or received the same, or his personal representative, treble the amount of money so paid, or value delivered, above the rate aforesaid, if such action shall be brought within one year after such payment or delivery.”

It is insisted by the respondent that he sold his farm to the appellant, and paid these usurious notes by allowing the appellant credit for the amount of the same as a part of the purchase price agreed to be paid therefor by him. The learned *702 counsel for the appellant claims that, as the action given by the statute is penal in its nature, the statute should receive a strict construction, and nothing short of actual payment of the money or delivery of the property in such manner as to pass the title to the party receiving the same upon such usurious contract, will entitle the plaintiff to recover. Stevens v. Lin coln, 7 Met., 525 ; Thomes v. Cleaves, 7 Mass., 361 ; Smith v. Robinson, 10 Allen, 130 ; Heath v. Page, 48 Pa. St., 130.

Admitting the transaction to have, been as the respondent claims it, it is insisted by the learned counsel for the appellant that he has failed to show a delivery to the appellant, within the meaning of such statute;, of any property in payment of these usurious notes. We think the learned counsel for the appellant is right in his conclusion. The whole evidence shows that the original transaction between the parties on January 3, 1878, was a loan of money by the appellant to the respondent, and that the absolute deed was, in fact, a mortgage given for securing the payment thereof, with interest. The respondent so understood it; he did not understand it as a conditional sale, lie treated the farm as his until January 25th, 1879; and occupied it as his own up to that date, and says he then sold it to the appellant for the sum of $3,733, and delivered the possession to him; but he fails to show that he conveyed to the appellant any title to the same.

Under the repeated decisions of this court, and especially the decision in the case of Brinkman v. Jones, 44 Wis., 498 , it is held that the legal title to real estate does not pass to the mortgagee, no matter what the nature of the conveyance may be, which is given to him as security for his loan; and that when the evidence, either written or parol, establishes the fact that the relation of mortgagor and mortgagee exists between the parties, then the legal title to the real estate remains in the mortgagor, and such title can only bo divested by foreclosure and sale, or by some subsequent conveyance founded upon a sufficient consideration, and sufficient in the law to transfer *703 tbe title to realty from the mortgagor to the mortgagee. The evidence in this case shows that nothing has been clone by the parties to this action which could operate to pass the legal title of the farm to the appellant. No conveyance of any kind has been made. Taking the respondent’s statement to be the true one, it amounts to an agreement on the part of the respondent to sell his farm to the appellant on condition that the latter assumes the payment of the incumbrances and releases him from the payment of the money loaned and the usurious notes; and in pursuance of such agreement the appellant has obligated himself in writing to pay the incumbrances, and has released the respondent from his debts to him, including the usurious notes, and the respondent has delivered the possession of the farm to the appellant; but no conveyance of the title of the farm has been made by the respondent to the appellant. The legal title to the farm still remains in the respondent. It cannot, therefore, be said that he has delivered any property to the appellant in payment of- the usurious notes. The word “ delivered,” as used in the statute, means such a delivery as passes the title to the party receiving the same. A delivery of the possession of real estate, under an agreement to transfer the title, is not a sufficient delivery to authorize the maintenance of an action under this statute. This view of the rights of the parties, under the statute, we think is fully sustained by the authorities above cited. The learned counsel for the respondent argues that, the fact appearing that the respondent had surrendered and destroyed his bond for a deed, taken at the time the original conveyance was made to the appellant, and had delivered the possession of the farm to him under the agreement made January 25, 1879, the respondent, and all persons claiming under him, are estopped from showing that the legal title is not in the appellant; that in consequence of such estoppel the parties are in the same situation they would be in had a conveyance of the title been made to the appellant; and that, as a consequence, it should be held that the respondent has delivered the farm in payment of the usurious *704 interest. We do not think the plaintiff is estopped by the destruction of the bond for a deed, and the delivery of the possession of the farm to the appellant, from showing the legal title in himself; and it is probable that a court of equity would still permit him to redeem the property from the original mortgage debt, if it appeared that the agreement to convey the legal title was tainted with usury.

The mere destruction of the bond for a.deed given by the appellant to the respondent would not estop him from showing that the original deed was a mortgage. There is no evidence in this case which shows that the bond for a deed contained written evidence showing that the original deed was given as a mortgage security. On the other hand, such a bond for a deed, standing alone and unexplained, would tend to prove the relation of vendor and vendee between the parties, rather that that of mortgagor and mortgagee. If the contract made between the parties at the time the original deed was given, had been embodied in a written defeasance, showing that the deed was given to secure a loan of money from the grantee to the grantor named therein, and reciting the terms of such loan.and the conditions upon which the deed should become void, and the grantor had afterwards voluntarily destroyed such written contract and surrendered the possession of the mortgaged premises to the grantee named therein, he might be estopped from giving parol proof of such contract for the purpose of defeating the title of the mortgagee in possession, under the rule of evidence which prevents a party from giving parol evidence of a contract which has been reduced to writing by the parties thereto; and the party offering such parol "'’evidence would not be relieved from the application of the rule if it appeared that he had voluntarily destroyed the written evidence of such contract. This is the estoppel spoken of by Chief Justice Shaw in the case of Trull v. Skinner, 17 Pick., 213 . The estoppel invoked in that case is not shown to exist in this case. The destruction of the bond for a deed does not destroy any written contract of the parties showing that the *705 deed of January 3, 1875, was in fact a mortgage. The bond, if in existence, would not show that fact. The evidence of it rested in parol, and it may therefore be proved by the appellant notwithstanding the bond is destroyed.

We must treat the case, therefore, as stated by the respondent, as an agreement on his part to sell to the appellant the farm in question for the sum of $3,733; that the appellant has paid all the purchase money and entered into the possession of the lands under his contract of purchase; and, if the respondent should not object on the ground that the contract was tainted with usury, a court of equity would order the respondent to convey the legal title to the appellant; bnt, the respondent not having conveyed such legal title at the time this action was commenced, he cannot maintain it. The court below erred in holding that the transaction between the parties was a payment of the usurious notes by the respondent; and for that reason the judgment must be reversed. It will be unnecessary, therefore, to consider the question whether the court erred in permitting the deed given by the respondent to the appellant to be read in evidence upon the question of the value of the farm.

If we adopt the view of the transaction stated by the respondent himself, there would be no reason for inquiring as to the actual value of the farm. If the appellant agreed to pay the sum of $3,733, as the respondent says he did, and the respondent agreed to accept that sum in full satisfaction therefor, then the question as to its real value would not be in the case, as the parties had fixed the value as between themselves; and the only question would be, whether, in making the payment of this sum of $3,733, it was agreed that the appellant should take a credit to himself for the amount of these usurious notes, or for any part thereof. But, in the view we have taken of the case, it is unnecessary to inquire further as to this matter.

By the Court.— The judgment of the circuit court is reversed, and the cause remanded for a new trial.