Davis v. Cunningham, 32 N.C. 156, 10 Ired. 156 (1849)

Aug. 1849 · Supreme Court of North Carolina

32 N.C. 156, 10 Ired. 156

WILLIAM W DAVIS vs. E. H CUNNINGHAM.

Where A. contracted for a piece of land, at the price of $1000, and being •unable to comply with the terms, directed the vendors to convey the legal 'title to B. which was done, and he afterwards leased the laud to A. for about $100 per annum, agreeing that when A. should re-pay him the purchase money, he would convey the land to A ; Held, that, here, there was no usury, at least none that could be reached at law.

Appeal from the Superior Court of Law of Buncombe C'bimt'y, at a special term in July 1849, his Honor Judge Caldwell presiding.

The following is the case, sent up by the Judge : This is a suit on the single bill of the defendant for one hundred dollars, executed in October 1316, and payable the 1st of November in the said year, to avoid which, he pleaded that it was executed on an usurious consideration.

On the trial it appeared, that the defendant had contracted to purchase the land he lived on, in part at a sale made by the Clerk and Master of Buncombe County, and in part from one Murray; that he was pressed for money to pay for the land and furnish his house, with a view to entertain travellers ; that the plaintiff agreed to advance him a thousand dollars, a part of which was paid by the plaintiff to the said Clerk and Master and to Murray, in full of the purchase money, and the balance to the defendant to fix up and furnish his house, and the said Clerk and Master and Murray were thereupon directed by the defendant to execute deeds for the said lands to the plaintiff, which they did accordingly — the former on the 15th of November 1841, and the latter on the 17th of the said month. MeLure, the Clerk and Master aforesaid, testified, that the plaintiff said to him, at the time he executed the deed, that he was to re-convuy the land to the defendant on the payment of the thousand dollars and a hundred dollars a year for the rent of it, that his money was worth ten per cent to him, upon which MeLure said to the plaintiff, that he had better keep his secrets as to the dealings between him and the defendant. It also appeared, in behalf of the defendant, that the plaintiff had frequently said, that the defendant owed him for rent, and one witness testified, that the plaintiff said, if the defendant did not pay him his rent, he would sell the land. And it also appeared, that the defendant had made various payments to the plaintiff, amounting to four hundred dollars, and that a note of two hundred dollars, a part of the said sum, had been given for rent. Tbe defendant offered in evidence a covenant entered into between him and the plaintiff, bearing date the I7th of November 1841, in relation to the payment of rent and a reconveyance of the said land, and relied on it, as evidence to sustain his plea. It did not appear from any testimony adduced on the trial, that there had been any other dealings between the parties, than those herein set forth. A witness stated, that the value of the land, at the time of the contract between the parties, was a thousand dollars, and that the defendant had, on two occasions, rented the said land, with ail the improvements, furniture, &c.. for considerably over one hundred dollars per year, and, in his opinion, it was worth more than one hundred dollars per year. It appeared, that the defendant continued to live on the said land and had so lived by himself or his tenants.

It was insisted for the defendant, that the rent of one hundred dollars per year, contracted to be paid by the defendant to the plaintiff was a corrupt bargain, whereby to exact interest, at the rate of ten per cent, on the thousand dollars advanced. For the plaintiff it was insisted, unless usury was agreed to be paid by the way of rent, when the parties entered into the original contract about the purchase of the land, that the subsequent agreement between them, in relation to the rent and re-conveyance of the said land, would not make it so. And it was also insisted in his behalf, that, as the defendant was not bound in absolute terms, by the said agreement, to pay the hundred dollars per year by way of rent, but might recede from it at pleasure, it did not constitute usury. And it was further insisted for him, that there was no evidence, that the single bill sued on had been given for the rent; also, that the original contract between the parties as regards the said land, was absolute. And the Court was moved to charge the jury, according to .the views insisted on by the plaintiff

The Court declined so to charge, but told the jury, if the contract, in relation to the rent of the land, at the rate of one hundred dollars per year, was entered into between the parties, as a mere cover, so that the plaintiff should receive, and the defendant pay, ten per cent per annum on the thousand dollars advanced, or any other sum, over and beyond six per cent, that it would be a case of usury; and it made no difference, whether such bargain was made at the original treaty about the said land, or when it was conveyed to the plaintiff, or thereafter. And the Court also told the jury, though the defendant had an election, under the original agreement of the parties, to pay rent or not, yet if he executed his note to secure the payment of the said rent, under and by virtue of a contract to pay. ten per cent per annum on the said thousand dollars, or any other sum over and beyond six per cent, that it would be a case of usury. As to the quest! n raised, whether the note in question was executed for the rent of the said land, the Court thought there was evidence to be left to the jury, and accordingly left it to them, as a matter of fact for their decision. The Court left it to the jury to say, whether the original contract between the parties, about the land, was absolute, or how the matter was.

The jury found for the defendant upon the plea of usury. A new trial was moved for and refused, and from the judgment on the verdict, the plaintiff appealed.

Baxter, for the plaintiff.

Gaither, N. W. Wood fin and J, W. Woodfin, for the defendant.

Pearson, J.

If the land had ever belonged to the defendant and he had borrowed $1000 of the plaintiff’, and conveyed the land to him to secure its repayment, with an understanding that the defendant was to remain in possession, under a loase from year to year, at a rent of $100 per annum until he was able to repay the money, there would be no difficulty in dealing with this case in a Court of law, provided the jury were satisfied that it was a contrivance to cover an usurious lending. For the note now sued on would be void. The lease would also be void, and the title remain in the defendant, who would be under no obligation to pay rent for his own land. But the land never belonged to the defendant, and it is difficult, in a Court of law, to sustain the view taken of the case in the Court below. If it be a cover for usury, it is a cunning and subtle contrivance which can only be reached in a Court of Equity, and disproves the confident assertion of my Lord Coke, “that the wit of man cannot devise a mode, whereby to evade the statute of usury/* The title passed from McLure and Murray to the plaintiff, upon his paying them the balance of the purchase money, \\ Inch the defendant was unable to pay. No usury is alleged between McLure and Murray and the plaintiff'; so that deed cannot lie void, and the plaintiff has the title, subject to a right on the part of the defendant, to hold the ■ possession, at a rent of $100 per annum, and to call for 'the title wlienever he repays $1000 to the plaintiff. The plaintiff d< mands payment of the note now sued on. The ‘defendant, says the note is void, being given for rent under an usurious lease, which was contrived as a mere cover. ’Well, consider the lease void. The plaintiff is entitled to the possession of the land, being in law the owner, andean recover it in ejectment, King v. Manney. 6 Ire. Eq., and can recover mesne profits, which will be equal to and perhaps exceed the annual sum of $100. How can this be otherwise in a Court of Jaw 1 He is admitted to be the owner of the land, and must be allowed to taKe “possession, or to be paid lor the use and occupation. The "defendant t-hen, is compelled to depend upon the lease 5 there is no other ground, upon which he can stand, and, of course, if he abides by the-lease, he must pay the rent. Another feature in this case, which shows, that a Court of law cannot give redress, is, that the plaintiff has no obligation upon the defendant for the $1000. If the defendant chooses to pay it, he can, in a Court of Equity, call for the legal title ; if he does not choose to do so, the plaintiff cannot compel him, but is content to keep the land, so that the relation of debtor and creditor does not exist, and there cannot well be a foi bearance tosue, where there is no debt. By way of further illustration ; A. informs 13., that C. has a tract of land, for which he will take $1000, and agrees, that if B. will buy the land, he will lease it at an annual rent of $100, with the privilege of buying the fee simple when he is able to pay $1000, B. pays C. the price and takes a deed, and leases to A. at $100. There is'no usury between 13. and C , for it was a purchase, nor between B. and A., for it was a lease ; and yet B. is receiving 10 per cent.. Vary the case by supposing that A. had contracted to buy the land fromC, at $1500, and had paid $500. Being unable to pay the balance, B. at his instance, pays it, and takes the title, giving A. a lease at an annual rent of $100, with the privilege of calling for the fee simple, by paying B. the $1000. B. was induced to buy, for the sake of getting a safe investment at. 10 per cent. This is the case we have under consideration. Consider the lease void at law for usury’, the title is in B. and he has a right to the possession or to rent. In a Court of Equity, A. can insist, that, by reason of his original contract, on the payment of the $500, he has a part of the equitable estate, and that B, holds the title in trust, to secure the payment of the $1000 and then in trust for A. who has a right to redeem, on payment of what is bona fide due with legal interest. Thorpe v. Ricks, 1 Dev & Bat. Eq. 013. A Court of Equity can give adequate relief; but a Court, of Law cannot take notice of the interest of the original purcha* ser, because he never had the legal estate.

We are of opinion, that there was error in the Court below, because that Court could not take notice of the equitable estate of the defendant, but must look upon the plaintiff as the owner of the land, and, as such, he was entitled to a judgment for his rent; and the Court ought to have instructed the jury, that there was no evidence to sustain the plea of usury.

Pee Curiam.

Judgment reversed and a venire de novo awarded.