Butler v. Creager

2 Ohio C.C. 542

• Court: Ohio Circuit Courts
• Decided: October 15, 1887
• Status: Published

Opinion

Shauck, J.

The evidence shows that the plaintiffs had paid Creager considerable sums of usurious interest on the prior loans which constituted the consideration for the note and mortgage in force when they sold the land to Merrick. It also shows that this suit was begun on the day the deed was signed and delivered ; that early on the day following, service of summons was made upon Merrick and Creager in Montgomery county, where they resided; that the nature of the plaintiffs’ claim was explained them by their attorney, who accompanied the sheriff for that purpose; and that it was not until a week later that Merrick delivered to Creager the notes of the third parties amounting to $3,200, and the cash necessary to make the amount due on the mortgage, according to its terms, and procured the cancellation thereof. In all other respects the averments of Merrick’s answer are fully sustained by the evidence.

The evidence does not warrant the conclusion that Merrick agreed to hold the purchase-money until the judgment of the court could be had upon the amount of the usury in the mortgage, or that he had notice when he received the deed that any suit for that purpose was contemplated by the plaintiffs; or even that he had knowledge that the mortgage was tainted with usury, or that the plaintiffs so claimed. True, the plaintiffs and their sons so testify; but we are not favorably impressed with the expansion of their knowledge in that regard, as shown in their earlier and later pleadings and depositions filed in the case. That no such notice was given by the plaintiffs, or agreement made by Merrick, is clearly shown, not only by the testimony of Merrick, but by that of six'other intelligent witnesses who were present, and who are entirely without interest in the case. The facts that the plaintiffs had the original petition in this case lying in wait for the execution of the deed, and that great haste was made to obtain service on the defendants early on the day following, are not suggestive of a reliance upon a promise by Merrick to retain the money until a judgment could be had determining the amount of the usury.

For the defendants something is claimed from the fact that Merrick actually paid to Creager the money, and delivered to him the notes previously agreed upon, and thus secured a cancellation of the mortgage; and on behalf of the plaintiffs it is insisted that their claim is supported by the fact that when the mouey was paid and the notes delivered, Creager indemnified Merrick against the results of this suit previously brought. Neither of these facts has legal significance. The rights of the parties are to be determined according to the facts as they existed when service was had. If the plaintiffs then had the right to maintain the action, Merrick could not defeat it by subsequently delivering to Creager the notes and money previously agreed upon. If upon the other hand, he had the right to procure the cancellation of the mortgage according to the previous contract, no waiver of that right can be inferred from the fact that he chose to exact, and Creager to give, the indemnity.

The attempt of the plaintiffs is to assert a vendor’s lien upon the premises, for the difference between the amount of the Creager mortgage which the grantee had agreed to pay as a part of the consideration of the purchase, and the amount which they would have been compelled to pay had suit been instituted against them upon the note, or had the mortgage been foreclosed while they owned the premises. The lien exists, if at all, independently of any contract between the vendor and the purchaser for the payment of the purchase money by him to them, since at the time of the execution of the deed, the difference between the amount due upon the mortgage according to its terms, and the price of the land as agreed upon, was paid by him and accepted by them, as the entire amount payable to them on account of the purchase. According to the terms of the contract, he owed them no.further duty, except to save them from liability to the holder of the note and mortgage. No breach of that duty is alleged.

The vendor’s lien is purely the creature of equity. It finds no authority in positive law. It is founded upon the reason that it is not according to conscience that the vendee should retain the land without performing the obligations which induced the vendor to make the sale. It is worked out upon the theory that to the extent of such obligations, the purchaser becomes the trustee of the legal title for the benefit of the vendor. While it may exist without any stipulation of the parties to that end, a vendor will not be permitted to assert it contrary to the intention of the parties as shown by their stipulations or conduct. To this, as to other modes of relief in equity, it is indispensable to the favorable judgment of the court, that the plaintiff himself has acted in good faith and without disguise or concealment.

Whatever may have been the secret intention of theplaintifis at the time .of the execution of this deed, the attempted assertion of the lien is not consistent with any disclosed intention, or with the stipulations or conduct of the parties. The purchaser as the consideration for the deed agreed to pay to Creager the amount of his mortgage, and to the plaintiffs the sum agreed upon as the excess. Both of these obligations he has performed. Upon the consideration thus paid and assumed, he bargained in'good faith to become the absolute owner of the land, and it would be inequitable to hold that he may, by cunning or artifice, be placed in the position of a trustee. 7

Moreover, the right to plead the usury in the Creager mortgage was personal to the Butlers from whom it had been exacted, and they must be deemed to have waived it so far as the lien upon the real estate is concerned by the conve3'-ance of their entire interest therein without reservation. Whatever may have been the form of the transaction, it concerned only an equity of redemption, for within the knowledge of both parties the Butlers owned nothing more. If this had been the form of the transaction, the presumption would have been that the purchaser took subject to the mortgage and upon corresponding abatement of the price, and he would not be permitted to plead usury against the mortgage thus assumed. In this case, the stipulations of the parties were in accord with this presumption; for Merrick retained out of the purchase price the face of the. mortgage, and his agreement to pay it to the mortgagee was accepted as pro tanto a payment of the consideration. For more obvious reasons, he would not have been permitted to assert that the mortgage was tainted with usury. Bank v. Bell et al., 14 Ohio St. 200; Cramer v. Lepper et al., 26 Ohio St. 59 ; Jones on Mortgages 736.

The rights and liabilities of the parties were thus irrevocably fixed by'the delivery and acceptance of the deed, under the circumstances and-upon the stipulations stated. The Butlers having without reserve conveyed their interest in the premises, were no longer proper parties to a suit to foreclose the mortgage, and could not plead the usury as against the lien upon the land. Nor could Merrick plead the usury, for it was not his privilege, and he had received a credit for the full amount of the mortgage by an abatement of the purchase price. Creager had become entitled to assert his lien upon tlie land for the full amount of his mortgage, notwithstanding the usury. That right becoming fixed, the moment the deed was accepted could not be revoked by the mortgagor or the mortgagee. Hartley v. Harrison, 24 N. Y. 170.

F. P. Cunningham and Little & Spencer, for plaintiffs. A. A. Winters, E. H. Hunger, and Charles Darlington, for defendants.

The subsequent act of Merrick, in discharging the mortgage according to an agreement made with the mortgagee prior to the sale of the lands, was simply the performance of an obligation against which he could allege no defense, and which the mortgagor could not defeat by this suit, or otherwise.

The petition will be dismissed.

Follett, J., dissented.