George v. New England Mortgage Security Co.

109 Ala. 548
CourtSupreme Court of Alabama
DecidedNovember 15, 1895
StatusPublished
Cited by15 cases

This text of 109 Ala. 548 (George v. New England Mortgage Security Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
George v. New England Mortgage Security Co., 109 Ala. 548 (Ala. 1895).

Opinion

COLEMAN, J.

The bill was filed by appellants for the purpose of having a mortgage, executed by them to respondents, cancelled as a cloud on their title to certain lands conveyed in the mortgage. As originally filed, the relief prayed for was bas9d upon the avermeDbs that the New England Mortgage Security Company was a foreign corporation, and that the mortgage was taken in prosecution of business in Alabama, without having complied with the constitutional and statutory laws, which require every foreign corporation, doing business [550]*550in this State, to have “a known place of business, and an agent or agents residing thereat,” and that the mortgage-was taken in violation of law, and was therefore illegal and void. The bill was subsequently amended by making the Corbin Banking Company and James Benagh parties defendant also, to whom was executed at the. same time a second mortgage on the same lands, to secure a further stated indebtedness. The Corbin Banking Company was a firm, not a corporation, and James Benagh an individual. As such, the constitutional and. statutory provisions as to foreign corporations have no application .to these parties. The bill avers, however, that the Corbin Banking Company, for whose benefit the second mortgage was taken, was in fact the agent of the New England Mortgage Security Company in procuring the loan, and substantially avers that the debt secured by the second mortgage constituted a part of the consideration of the first mortgage, and rendered it usurious, illegal and void.

The complainants in the bill as amended offer to do equity, and submit themselves to the jurisdiction of the court, "and pray that, for the satisfaction of whatever may be found to be legally due on both of these mortgages, a sale of the land be made by this court, and that both of these mortgages be foreclosed according to the practice of this court, to the full extent of all that may be legally due on either or both.” It is a maxim of equity, of almost universal application, that he who seeks equity, must do equity. — 6th Am. & Eng. Ency. Law, 707; 1 Story Eq. § 64c: In 1 Pom. Eq. Jur., section 391, it is said, that “the rule extends to all cases where a party seeks to have a contract set aside and can-celled, on the ground of its illegality in violating the provisions of some statute ; the court will require him, as a condition to its granting relief, to pay what is really due on the agreement, unless the illegality is. a malum in se, or the statute itself prevents the imposition of such terms.” The rule has been applied in this State to contracts for securing loans from foreigu corporations doing business without having complied with the statute, the court using this strong language : "We can not assent to the proposition that a person can obtain another’s money, upon the faith and assurance of a mortgage security, and, the next moment after securing and ap[551]*551propriating it, go into a court of conscience, and ask that court to cancel the security as a cloud on his title, still retaining the money,' and making no offer to repay the money he has received, with lawful interest.” — Grider v. Amer. Freehold L. Mort. Co., 99 Ala. 281; New England Mortgage Security Co. v. Powell, 97 Ala. 483; Ross v. New England Mortgage Security Co., 101 Ala. 362; Hartly v. Matthews, 96 Ala. 224; Amer. Freehold Land Mortgage Security Co. v. Sewell, 92 Ala. 163.

The respondents answered the amended bill, in which they deny that the Corbin Banking • Company and Benagh, or either of them, were the agents of the New England Mortgage Security Company in procuring or negotiating the loan, deny that the Security Company ever had any interest in the second mortgage, aver that the Corbin Company did an independent brokerage business, wholly disconnected from the business of the Security Company, and that the Corbin Company acted for and represented the borrower, solely, throughout the entire transaction, for an agreed price, to secure the payment of which the second mortgage was executed. They deny all usury, and deny the facts upon which the allegations of usury were based. The New England Mortgage Security Company by its answer accepts the offer of the complainant to do equity, by paying the amount of money borrowed, with legal interest, and demands no more.

The pleadings narrow the issues down to the single one of usury, and this issue depends upon the determination of the question as to whether the consideration of the second mortgage mad. for the benefit of the Cor-bin Banking Company constitutited any portion of the consideration for the first mortgage, or enured to the benefit of the lender with its knowledge and consent, and whether the Corbin Banking Company or James Benagh in negotiating the loan acted for and represented the New England Mortgage Security Company, or the borrowers, the complainants. This question has been before this court many times.

In the case of Ginn v. New England Mortgage Security Company, 92 Ala. 135; the loan was procured from the identical defendant, by the negotiation of the Corbin Banking Company, in all respects similar to the present case, and the conclusion was, on the facts found in the [552]*552record, “that the corporation did no more than lend a sum of money to the defendant,- pay it to his agent for him, and secure its repayment, with only lawful interest thereon, by the mortgage and notes, now sought to be foreclosed and collected’. The reservation of commissions by Skaggs [Benagh in the present case] does not taint the transaction with usury.” The same conclusion was reached in the American Freehold Land Mortgage Company v. Sewell, 92 Ala. 164.

In the case of Allen v. McCullough et al., 99 Ala. 613, it was insisted with great earnestness that the facts showed that the Corbin Banking Company and Collier and Pinkard were in fact the agents of the New England Security Company in procuring the loan, and the testimony on this point was very full. After a careful consideration of all the evidence our conclusion was, “that the evidence was of such a character as to leave no doubt in the mind of the court, that,as to the loan by the New England Mortgage Security Company, that neither the Corbin Banking Company nor Collier & Pinkard, whether acting separately or together, were the agents of the lender.”

In the case of the Edinburg American Land Mortgage Co. v. Peoples, 102 Ala. 241, the direct question arose, and, in passing upon the evidence and in construing the contract of employment entered into between the borrower and the agent who prepared the abstracts and procured the loan for the borrower, the court held that such person was not the agent of the lender. So in the case of American Mortgage Co. of Scotland v. King, 105 Ala. 358, the loan had been procured through the Loan Company of Alabama and one Manghen, acting in the same capacity in that case as the Corbin Company and Benagh in the present case, and the bill averred that the Alabama Loan Company or Manghen were the agents of the lender. The fact averred was the material issue of the case, and it was held that Manghen was the agent of the borrower to receive the money.

Other cases might be cited. Each of the cited cases were decided upon the facts in evidence in the particular case, and to this extent only are decisive of the question in the present case. While in some respects the facts in evidence in the case at bar are fuller, we are unable to find any fact to change our conclusion. The [553]

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Related

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Windisch v. Mortgage Security Corp. of America
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Hampton v. Counts
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Robertson Banking Co. v. Brasfield
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Thompson v. Atchley
78 So. 196 (Supreme Court of Alabama, 1917)
Interstate Trust & Banking Co. v. National Stockyards Nat. Bank
76 So. 356 (Supreme Court of Alabama, 1917)
Donaldson v. Thousand Springs Power Co.
162 P. 334 (Idaho Supreme Court, 1916)
Douglass v. Standard Real Estate Loan Co.
66 So. 614 (Supreme Court of Alabama, 1914)
Title Guarantee & Trust Co. v. Wheatfield
91 A. 757 (Court of Appeals of Maryland, 1914)
Mitchell v. Baldwin
45 So. 715 (Supreme Court of Alabama, 1908)
Hamil v. American Freehold Land Mortgage Co.
127 Ala. 90 (Supreme Court of Alabama, 1899)
Ashurst v. Ashurst
119 Ala. 219 (Supreme Court of Alabama, 1898)

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Bluebook (online)
109 Ala. 548, Counsel Stack Legal Research, https://law.counselstack.com/opinion/george-v-new-england-mortgage-security-co-ala-1895.