Penny v. Cook

Dillon, J.

x. pleadabieae?mt" ejectment. Under section 2880 of the Revision, the defendants were authorized “ to set forth in their answers as many causes of defense, legal or equitable, as they had.” Rosierz v. Van Dam, 16 Iowa, 175 : Van Orman v. Stafford, Clark & Co., Id., 186 . The affirmative defenses of Cook and wife were equitable in their nature, and are to be viewed in the same manner as to sub* stance, as if the same facts had been made the basis of a petition in chancery to set aside the trustee’s sale.

Thus regarded, they were undoubtedly sufficient to require the court to set aside the sale, and consequently the court erred in sustaining the demurrer to the answers.

We briefly state a few principles of law applicable to the subject, and which will at once show the correctness of the conclusion just announced, and serve as a guide to the court below in the further progress of the cause.

„ aSer p:alSle ment‘ One allegation in the answer is, that the debt secured by the deed of trust had been fully paid prior to the. sale by the trustee. The demurrer admitted the truth of this allegation. If true, the sale by the trustee was wholly void; certainly so as between trustee and beneficiary when the latter purchases. The reason may be briefly stated: The trustee derived his sole power to sell from the deed. It follows that a valid *542 subsisting power is necessary, and lies at tbe very foundation of the purchaser’s title. Payment in full of the debt renders the trust deed functus officio, and ipso facto extinguishes the power of sale. Cameron v. Irwin, 5 Hill (N. Y.), 272; Id., 246; 2 Id., 566; 21 Mo., 320 ; Ledyard v. Chapin, 3 Port. (Ind.), 320; Sherman v. Sherman, 3 Id., 337; Wade v. Harper, 8 Yerg., 383 ; 2 Am. Law Reg. (N. S.), 715 , § 23, and authorities cited.

No reason is perceived why this, if true, would not be a good defense even at law. Indisputably it is ground to set aside and annul the sale. Most manifestly so where, as in the case at bar, no intervening right of third persons have attached.

II. Where the statute declares a note tainted by usury to be wholly void, a sale under the power contained in a trust deed securing-such note, will confer no title where, as in this case, the beneficiary becomes the purchaser. 2 Am. Law Reg., N. S., 717, § 24, and cases there collected. See also, Code, 1851, § 2081; Grimes v. Shorieve, 6 Mon., 547 , 553; Slapp v. Phelps, 7 Dana, 296 ; Jackson v. Dominick, 14 Johns., 435 ; Richardson v. Field, 6 Me., 35; Halter v. Burton, 6 Conn., 436 ; Hyland v. Stafford, 10 Barb., 558 ; Cook v. Colyer, 2 B. Monr., 71.

3. — effect of sale. But in our State a note, although usurious, is not wholly void. It is valid for- the sum actually due thereon, and may be enforced accordingly. -This case arises . J , , . -, , . between the beneficiary and the grantor in the deed of trust, and as between them (however it might be if the contest was between the trustee and a bona fide purchaser without notice), the sale by the trustee to the beneficiary is not to be assimilated to a sale under a decree in court, cutting off and necessarily concluding all antecedent rights and equities.

*543

_when reSítoí due'

*542 If there remains something due on the deed of trust, if *543 the debt has not been fully paid, the power of sale is not fully extinguished; and under such eircumstances, • if the trustee sells and conveys the property, a title will pass to the purchaser. The title may or may not be absolute and indefeasible. Assuming the facts alleged in the answer to be true, we think the title acquired by the plaintiff at the trustee’s sale is, in equity, a defeasible one, even though there was some amount legally due him upon the trust deed. In other words, upon those facts being established, the trustor was entitled to have the sale set aside, and if there should be anything due, to redeem the property upon paying the amount.

Among the reasons which may be mentioned as entitling the defendants to this relief, are the following:

1. This application was not unreasonably delayed, being made before the property had changed possession, or any rights of third persons had attached.

2. The property, which was the homestead, was sold in the absence of the debtor, and without his knowledge, and against the written protest and notice of his wife.

3. It is alleged to have been sold for an inadequate price, arid there is no showing or claim that the trustee, by an adjournment of the sale or otherwise, endeavored to procure a larger or better bid.

4. Of the $2,000 borrowed, there is alleged to have been paid, in money and by the sale of other property over $1,600, leaving, aside from usurious interest, less than $400 of principal due the plaintiff at the date of the trustee’s sale. Yet the plaintiff bid it in for $1,799, claiming that sum to be due him.

6. _saie3 watched^ Some of these circumstances singly, would not, it is admitted, be sufficient to set aside a sale otherwise regular and fair. 2 Am. Law. Reg. (N. S.), 715, et seq., arid cases stated and cited. ■ But this harsh *544 and summary mode of disposing of the equity of redemption, is jealously watched by the courts, and when the power has been fraudulently or oppressively and unfairly or irregularly exercised, the owner will be allowed to come in and impugn the sale and redeem the property, especially where the application is not stale, and the property has not passed into the hands of bona fide purchasers. 2 Am. Law. Reg. (N. S.), 726; “Sales and Titles under Deeds of Trust,” and authorities cited; Sears v. Livermore, 17 Iowa, 297 ; Langworthy v. Campbell, infra; Sypher v. McHenry, 18 Iowa, 233 ; Perkins v. Conant, 29 Ill., 184 , referred to by the plaintiff’s counsel, is not necessarily in conflict with the foregoing views. It was there held that a mortgagor could not maintain an ordinary action for money had and received, to recover back usurious interest, collected by a sale of the mortgaged premises, under a power of sale contained in the mortgage deed. The case was one at law, and the court did not undertake to declare or decide what would have been the plaintiff’s right in equity, on an application to set aside the sale.

Eeversed and remanded.