[Chapman v. Fields.] Heard before the Hon. H. C. SPEAKE. HUMES & GORDON, for appellant. CABANISS & WARD, contra: STONE, J.-This is an application by Mrs. Fields to have dower allotted to her in the north-east quarter of section 34, township 5, range 1, west, lying in Morgan county, and to recover rents or mesne profits. The defense relied on is, that the lands were aliened by the husband in his lifetime, and that more than three years elapsed between the death of the husband, Jackson Fields, and the asserted right of dower, made by this bill. The facts are these: In 1872, Mr. Fields, by mortgage deed, conveyed the south-east quarter of said section 34, to secure a debt due to Reuben Chapman. In March, 1873, Fields, the mortgagor, died. Mrs. Fields survived him, and had not joined in the mortgage. There were three children, all adults, the fruit of the marriage of Mr. and Mrs. Fields. Mrs. Fields, immediately after the death of her husband, took possession of the said north-east quarter of said section 34, and claimed and received the rents and profits, until the lands were sold, as hereafter shown. In September, 1875, Reuben Chapman filed a bill to correct and reform. said .mortgage, and to foreclose it. He alleged that the lands conveyed by the mortgage were by mistake misdescribed--that it was the intention of the parties to embrace and convey in the mortgage the north-east quarter of said section, instead of the south-east quarter. He made the three heirs at law parties defendant, but did not make the widow, Mrs. Fields, a party. A decree pro confesso was taken against the defendants, on personal service; the mortgage reformed, so as to make it convey the north-east quarter instead of the south-east quarter of said section; a decree of foreclosure rendered, and the lands by the corrected numbers sold, and purchased by Reuben Chapman. This was in 1877, and Chapman then took possession of the lands. Mrs. Fields filed the present bill in February, 1878,less than three years after Chapman filed his bill to correct and foreclose the mortgage, and in less than one year after the decree was rendered, reforming the mortgage, and decreeing the sale. The mortgage sale was made in November, 1877. As between the immediate parties to a contract executed in mistake, and afterwards reformed by decree of the Chancery Court, it takes effect as of the day of its first execution, for many purposes. So, creditors at large, or purchasers with notice, can assert no rights which they could not have asserted, if there had been no mistake, and the instrument truly set forth [Chapman v. Fields.] the contract intended to be made.-Story's Eq. Jur. §§ 139, 165. This case presents a different question. It is not shown that Mrs. Field had knowledge that the north-east quarter of the section was intended to be conveyed by the mortgage. There is no testimony tending to show that. The most liberal construction of the testimony goes only to the extent, that she was informed Chapman in his bill averred that the alleged mistake had been made. She could not know that this averment could be proved; and if she had consulted the record of the mortgage, this would have given her no information of the mistake charged. We think that, as to her and her rights, the alienation must be held to have taken effect, only from the time the mortgage was reformed. That was the first time the mortgage in fact conveyed the lands in which she claimed dower. To hold, in such case, that the alienation takes effect from the date of its attempted execution, would expose the widow to the possibility and danger of being barred of her dower, before she could know it had been intended or attempted to be alienated by the husband. In the case of Blodgett v. Hobart, 18 Verm. 414, a mortgage had been so framed as to omit by mistake certain lands intended to be conveyed. Before the mistake was discovered, certain statutory proceedings in foreclosure were taken, and the mortgagor was allowed a certain time to redeem, which he suffered to expire without paying the debt; and the mortgage stood foreclosed, with the equity of redempton barred. The mistake being discovered, a bill was filed to reform the mortgage, and relief was decreed as prayed for. prayed for. It was contended for the mortgagee that, inasmuch as the mortgagor had been allowed the requisite time to redeem under the first foreclosure proceedings, and had not done so, he should not be allowed further time as to the lands made subject by the reformation of the mortgage. A tract of land known as the "home farm," and another piece of two and a half acres, were the lands which had been omitted from the mortgage by mistake; and under the decree, those lands were declared subject to the debt. The court said: The effect of this must be, to leave in the mortgagor an equity of redemption, at least in the home farm and the other piece, unless there is something in the case to show that he should be debarred from this right. It will not do to create a mortgage and foreclose the equity of redemption at one and the same breath." So, that court held that the reformation was the creation of a mortgage, as to the land which had been omitted from the mortgage as drawn. The same doctrine was declared in Provost v. Rebman, 31 Iowa, 419. See, also, Waterman on Specific Performance, § 372. We find no error in the record, and the decree is affirmed. [Masterson v. Grubbs.] ́ 70 406 100 467 70 406 110 298 70 406 111 477 70 406 d139 371 Masterson v. Grubbs. Action on Promissory Note, by Payee against Maker. 1. Usury; effect of, and how pleaded,—A usurious contract, which the statute declares can not be enforced except as to the principal" Code, § 2092), is not absolutely void, but only voidable to the extent of the interest; and the defense of usury, which is only allowed in equity on payment of the legal interest, must be specially pleaded at law." 2. Same; renewal of note.-The mere renewal of a note or other security, between the original parties to a usurious contract, does not purge the transaction of the taint of usury; but the illegal taint may be eliminated, by a renewal of the note after it has passed into the hands of a bou fide purchaser for value without notice, or by a reformation of the contract between the original parties, remitting the usury, and retaining only legal interest. APPEAL from the Circuit Court of Lawrence. This action was brought by Hartwell B. Grubbs, against Thomas Masterson and James E. Moore, as late partners doing business under the firm name of Masterson & Moore; was commenced on the 8th September, 1879, and was founded on the defendants' promissory note for $700, executed in their firm name, dated June 12th, 1878, and payable one day after date. Moore having died pending the suit, it was prosecuted to judgment against Masterson only, who pleaded specially, among other things, that the note was founded on a usurious consideration; and issue was joined on this plea, with others. On the trial, as the bill of exceptions states, it was proved that, on the 25th December, 1875, Masterson & Moore as partners, being indebted to plaintiff, executed to him their bond, or promissory note under seal, for that sum, payable twelve months after date, with interest from date at the rate of twelve and a half per cent. per annum; and that the note sued on was given in renewal of that note, or on settlement of that note and other matters of account between the parties. That settlement, it was proved, was made between the plaintiff and Moore, Masterson not being present; and the defendant adduced as evidence a memorandum in Moore's handwriting, tending to show by arithmetical calculation that one or more small payments of interest were included in the settlement. "The plaintiff offered evidence tending to show that no usurious interest was calculated upon said $600 note on said settlement; that he told Moore, at the time of the settlement, that he (Moore) [Masterson v. Grubbs.] 66 was not able to pay twelve, nor even ten per cent. interest, and that all he plaintiff) wanted was legal interest; that he did not collect any usurious interest, and none was embraced in said note sued on, and, according to his best recollection, none was in fact embraced in said note." On this evidence, the defendant asked the court to give the following charge to the jury, which was in writing: That the $600 note stating on its face that it bears interest at the rate of twelve and half per cent., makes it usurious; and if it was the consideration of the note now sued on, it would make that note usurious." The court refused to give this charge, "except with the qualification, that the jury must find, also, that such illegal or usurious interest embraced and formed a part of the consideration of the note sued on." The defendant excepted to the refusal of the charge as asked, and he here assigns its refusal as error. D. P. LEWIS, and W. P. CHITWOOD, for appellant.--The stipulation for the payment of illegal interest, in the note for $600, rendered it usurious, whether any usury was paid or not; and all payments of interest on that note are to be credited on the principal.-Tyler on Usury, 101-10; Bank &. Waggener, 9 Peters, 340, 399; Matlock e. Mallory, 19 Ala. 694; Faris v. King, 1 Stew. 255; Wright v. Elliott, 1 Stew. 391; Metcalf' e. Watkins, 1 Porter, 57; Hanrick r. Andrews, 9 Porter, 9; Bazemore v. Wilder, 10 Ala. 773; Lloyd v. Pace, 10 Ala. 637; Ely v. McClung, 4 Porter, 128; Jackson v. Jones, 13 Ala. 121; Hunt r. Acre, 28 Ala. 580. The giving of the new note, and the facts connected with the settlement as testified to by the plaintiff, did not purge the contract of the taint of usury.-Tyler on Usury, 347-50,388, 396; Dewolf v. Johnson, 10 Wheaton, 391; Pearson e. Bailey, 23 Ala. 537; Jackson e. Jones, 13 Ala. 126; 14 Ala. 186; 8 Term Rep. 390; Warren e. Crabtree, 1 Am. Decisions, 51. SOMERVILLE, J.-Usurious contracts are not absolutely void, under the statutes of this State; they are only voidable, to the extent of the interest. The language of the statute is, that they can not be enforced, except as to the principal. Code, 1876, § 2092. The plea of usury is regarded by the courts as a defense entirely personal, and can not be set up by a stranger to the contract, but only by the parties or their legal representatives. McGuire e. Van Pelt, 55 Ala. 344: Griel e. Lehman, 59 Ala. 419. It is not favored in courts of equity, so that the rule has become uniform now for these courts to require complainants, who seek relief from usurious interest, to do equity by paying the legal rate of interest, without which they are not permitted to obtain the relief sought.-Eslava v. Cramp [Masterson v. Grubbs.] ton, 61 Ala. 507; Pearson v. Bailey, 23 Ala. 537. This court has held, furthermore, that the defense of usury must be specially pleaded, and is not available under the general issue. Bradford v. Daniel, 65 Ala. 133. While these principles illustrate the general policy of our laws regulating the subject of usury, it is well settled, both in this State and elsewhere, that the mere renewal of a note or other security, between the same parties, does not purge the original transaction of the taint of usury.- King v. Perry Ins. & Trust Co., 57 Ala. 118; Eslava v. Crampton, 61 Ala. 507; Tyler on Usury, 396. The renewed instrument is considered as still vitiated by the usury of the original indebtedness.-1 Jones Mortg. § 634. The illegal taint can be purged, or eliminated, however, in either of two ways: first, by a renewal of the note or contract, after it has passed into the hands of a bona fide purchaser for value, without notice of the usury; secondly, by a reformation of the contract, by which the usurious interest is expunged by remitting the excess, and only lawful interest is retained or exacted.-McCullough e. Mitchell, 64 Ala. 250, 253, and cases cited; 2 Parsons on Bills & Notes, 420; Hammond v. Hopping, 13 Wend. 505; Dewolf v. Johnson, 10 Wheat. 367; Chadbourn v. Watts, 10 Mass. 121; Scott v. Lewis, 2 Conn. 132. The latter principle, permitting the expurgation of the usurious taint by reformation, is the one chiefly affecting this case, and is fully sustained by the authorities above cited." It, moreover, harmonizes with the doctrine, now universally recognized, that the whole question of usury is one which depends very greatly upon the intent of the parties to the contract. Uhlfelder v. Carter, 64 Ala. 527; 1 Jones Mortg. 634. The first note given by appellant in this case, which was for the sum of six hundred dollars, was confessedly usurious, the interest on it being at the rate of twelve and a half per cent, per annum. If, as the evidence tends strongly to show, this usurious note was reduced to the lawful rate of eight per cent., and the usury of the first note was expunged entirely on taking the note in suit, then the plea of usury in this action can not be sustained-— MeClure v. Williams, 2 Vt. 210; Miller v. Hull, 4 Denio, 164. The charge requested by appellant, and refused by the court, withdrew the consideration of this fact from the jury, and ig nored the evidence by which it was supported. It assumed that the usurious taint of the original transaction still adhered to the second or reformed note, and had never been removed. The charge tended to mislead the jury, therefore, and was properly refused.-Me Adory v. The State, 59 Ala. 92; Gordon v. The State, 55 Ala. 178; Wyatt e. Stewart, 34 Ala. 716. Affirmed. |