Thurston v. Prentiss

1 Walk. Ch. 529

• Court: Michigan Court of Chancery
• Decided: March 15, 1845
• Status: Published

Opinion

The Chancellor.

I entertain no doubt in regard to the usury. The answers of the several defendants are clearly evasive on that point; especially the answer of Prentiss.

The effect of usury, under our statute, is not to avoid the contract, as is the case with many statutes on that subject; but to reduce the amount which the usurer is entitled to recover, to the money actually loaned, with legal interest. Laws 1843, p. 54.

Phelps, as surety for complainant, having paid the judgments confessed by himself and complainant to Prentiss, and stayed by Price, for the money loaned, and usury, —with full knowledge of the usury, — the question is, whether, under the mortgage to indemnify himself and Price, he can recover the excess of interest paid by him, as well as the money actually loaned by Prentiss to complainant, with interest.

If the judgments had been void, in consequence of the usury, he would have paid them in his own wrong; and, as it was, he might have filed his bill in this Court, and on paying wrhat was actually loaned, with interest, have obtained relief against the usury. But was he bound to do so? Was it not complainant’s duty to have done it, ifhe intended to object to paying the illegal interest? It belongs more properly to a principal to protect his surety, than a surety his principal. The bill charges collusion between Phelps and Prentiss, but there is no evidence of it. On the contrary, Phelps appears to have acted in good faith, in paying the judgments.

Phelps paid the judgments in August, 184 L. He was then, and not till then, damnified. The mortgage he executed to Prentiss to get his property released from the executions, was no' satisfaction of the judgments. It was not received in satisfaction, or payment, but as security merely. Phelps and Price, consequently, were not damnified when they foreclosed the mortgage from complainant to them by advertisement and sale under the statute. The statutory foreclosure amounted to nothing; and complainant has a right to redeem, on paying the amount of the two judgments, with seven per cent interest, and defendant’s costs in the present suit. The interest due when the judgments were paid, by Phelps to be added to the principal, and interest to be computed on the whole amount from that time forward. The ten per cent interest paid by Phelps on the judgments, in consideration of time, was usurious, and paid in his own wrong; and cannot be allowed to him or his assignee, Crissman, who is the party beneficially interested in the mortgage.

There must be a reference to a Master to compute, on the principles above stated, the amount due on the mortgage executed by complainant to Phelps and Price; and on the coming in of the report, a decree must be entered permitting complainant to redeem within six months, &c.