Teague v. Russell

2 Stew. 420

Opinion

By JUDGE COLLIER.

The questions for our decisions, are these:

1. Do the facts disclosed in the plaintiff’s bill, interpose a bar to a recovery, by the defendant Moore.

2. Supposing the question to be answered affirmatively, is it competent for equity to administer relief?

• These questions are so closely blended, that for the sake of perspicuity, we will consider them together. It is no objection to the recovery of the sum expressed in the bond, that a larger per centum, by way of interest, was reserved, than the law authorized; for it will be observed, that at the time the bond was executed, the reservation of usurious interest did not operate as a forfeitüre of the principal; the recovery of the interest alone, was barred by law;

a and it was not until the statute of 1819 was passed, that usury avoided a contract in toto.

Had the plaintiff shewn usury on the trial at law, he could have avoided the payment of interest; but having failed to do so there, and not offering by his bill, any excuse for the omission, the defence cannot be entertained in equity. And even where the usury goes to avoid the contract at law, the omission to plead it, forms no ground for the interference of Chancery, b though the lender is placed in a better situation, when the defence is made in equity, than he would be if it were made at law; because usury in the one Court creates a forfeiture of the excessive interest only; in the other, of both principal and interest.

The facts disclosed by the plaintiff’s bill, do not constitute a legal release; and had they been proved, would not have sustained a plea of release. It is essential to the validity of that plea, that the discharge relied on, should be under seal, especially where the action is founded on a specialty, according to the common rule, eodem modo quo oritur, eodem modo dissoIvitur. Understanding it then as confessedly clear, that the acquittance relied on is not a sufficient release at law, it is material to inquire whether equity can perfect it. If it was founded upon a valuable consideration, Chancery, upon the rule that it decrees defective agreements to be consummated, according to the intention of the parties, where the consideration is valid, would give to the plaintiff the benefit of it. But no consideration is alleged; we must therefore suppose that the acquittance was gratuitously made, and consequently cannot give to the plaintiff its benefit.c

There is, however, another feature in the cause, which merits consideration. The parol discharge of the plaintiff by Russell, it is alleged in the bill, dissuaded the plaintiff from taking steps to have a collection of Byrd’s notes coerced, orfrom obtaining an indemnity against his liability as surety, which he might have done, had he believed that he would have been resorted to for payment. These facts are admitted by the demurrer. If the plaintiff was induced from the representations of Russell to believe that he would not be called on for the payment of Byrd’s note, (andthese representations weresuch as reasonably to induce that belief,) it is a fraud on the plaintiff, now to attempt to force him to pay it. We will not say that a plea, disclosing these facts, would not be sustained at law. That is a point, which to maintain the jurisdiction of this Court, it is unnecessary to consider. If the defence was difficult or doubtful at law, it is compatible with the principles on which Chancery interferes, to administer relief. It is believed, that by the application of this principle, the jurisdiction of equity is sustainable.

The circthns~ance of the acquittance being by parol, to~gether with the complexity of the fraud, and the proof by which it must necessarily be sustained, would greatly embarrass a defence at law.a Again, the variety of decision with regard to the causes for which sureties are discharged, and the tribunals in which they are to be made effectual, render somewhat doubtful a legal defence.

The plaintiff at law became the assignee of the bond after it fell due, and is consequently placed in the same situation as the payee; and any defence which would be available against the latter, may be made against the bond in his hands.

The decree of the Court below is reversed, and the cause remanded, that the defendants may answer the allegations of the bill.

_ By JUDGE CRENSHAW.

In this case, I am ofopi_ nion that equity has no jurisdiction, on the ground, that the matter of equity insisted on in the bill, was available in defence to the action at law.

Reversed and remanded.

Judge Perry not sitting.

Laws of Ala 1805, p. 442.

Scott v. Nes bit, 2 Bro. C. C. 641.

Minturn v. Seymour, 4 John. Ch. R. 497.

Gallatin v. Cunningham 8 Cowen 371, per Woodworth, J. 13 Vesey, 483.