Irby v. Commercial Nat. Bank

GARDNER, J. It is first insisted on the part of counsel for appellee that, notwithstanding our liberal statutes of amendment (Gen. Acts 1915, p. 706), the amendment offered by complainant in this cause does not come within its influence, in that it is not germane, and departs from the ease as made by the original bill, introducing a new cause of action and inconsistent therewith, citing Ward v. Patton, 75 Ala. 207. It may be conceded that this insistence presents a serious question, but as this involves a matter of procedure and practice we prefer, under the circumstances here presented, to rest our conclusion upon the substantial question in the cause affecting the rights of the parties. We therefore pass from the question of pleading to a consideration of the question of prime importance on this appeal. [1,2] The original bill was filed by Ray G. Irby individually to redeem from a mortgage executed on May 27, 1912, by him to Commercial National Bank — to which as an individual he claimed title through a purchase and foreclosure deed executed to him as a purchaser at the foreclosure sale of said date of a mortgage from his father, L. E. Irby, to one Stella Guice, which mortgage had been previously transferred to the respondent. The regularity and entire validity of the foreclosure proceedings of the L. E. Irby mortgage are in no manner here attacked. The foreclosure, therefore, in strict compliance with the power of sale given in the mortgage, cut off the equity of redemption as fully as a foreclosure by decree of the court. Am. Freehold Land & Mtg. Co. v. Sowell, 92 Ala. 163, 9 South. 143, 13 L. R. A. 299. The sum bid at the foreclosure sale was the full amount due upon said mortgage indebtedness, and therefore extinguished the same (Harris v. Miller, 71 Ala. 26; Durden v. Whetstone, 92 Ala. 480, 9 South. 176), and terminated the relation of mortgagor and mortgagee (Jackson v. Tribble, 156 Ala. 480, 47 South. 310; Ramsey v. Sibert, 192 Ala. 176, 68 South. 346). The amended bill alleges that a large part of the L. E. Irby Imortgage indebtedness was usurious; but, in order that this may be set up, the complainant recognizes, of course, that the foreclosure sale must be set aside and held for naught. No irregularity or invalidity is shown in regard to the foreclosure proceedings, but it is charged that the mortgagee foreclosed for the purpose of evading the usury in the mortgage indebtedness, and agreed that should complainant, as one of the heirs of the mortgagor, purchase the property at the foreclosure sale, the bid price should equal the mortgage debt, and that said complainant should execute his note and mortgage as security for the same. [3] It is to be remembered, however, that in the foreclosure proceedings the mortgagee was in the exercise of a lawful right, and the foreclosure was proceeded with in a perfectly lawful manner. The mortgagee, under the terms of the mortgage, could have become a purchaser at the foreclosure sale. We are therefore unable to see what injury could have resulted by any secret motive on the part of the mortgagee to foreclose the mortgage in order to shut off any defense to the usury contained in the debt. No fraud or unfair dealing is charged, but, on the contrary, there is shown a perfectly regular and valid foreclosure proceeding, which is sought to be set aside upon the averment that it was had for the purpose of evading the usury. This we think is entirely insufficient. [4] The penalty for usury in this state is not a forfeiture of the principal, but only a forfeiture of all interest, the principal debt being unaffected thereby. The question in Hodges Bros. v. Coleman & Carroll, 76 Ala. 103, “Can human tribunals set aside a transaction, lawful in itself, because the actors had an evil mind in doing it?” there answered in the negative, has also application in the instant case. There was no continuation of the mortgage debt, but an extinguishment thereof, and a new note and mortgage executed by complainant, who was not a party to the L. E. Irby mortgage, but who was one of the heirs of the mortgagor. The case of Lewis v. Hickman, 77 South. 46, 1 is not at all out of harmony- with the conclusion here reached, as in that case the transactions were all between the same parties, and it was held *231 that the relation of mortgagor and mortgagee continued to exist. No such situation is disclosed by the bill in the instant case, but, in fact, the relation was terminated by a valid and regular foreclosure of the mortgage and subsequent transactions with the purchaser at the sale, who was not the mortgagor and whose only relation was that of heir of the deceased mortgagor. We do not think that the above insistence is supported by authority or good reasoning, and we are therefore of the opinion that the demurrer was properly sustained to. the bill as amended. The bill shows the foreclosure was had and the purchase made by the complainant, the deed executed by him, and his note and mortgage given for the purchase price, all with his full acquiescence, and in compliance with his agreement; and, as previously shown, the purchase price being the sum due, the foreclosure of the mortgage satisfied the mortgage debt. It has been held in some jurisdictions that under such circumstances the complainant would be precluded from insisting on usury to defeat the foreclosure sale. Tyler v. Mass. Mut. Ins. co., 108 Ill. 58; Edgell v. Ham, 93 Fed. 759, 35 C. C. A. 584; Jones on Mortgages, vol. 1 (17th Ed.) § 646. But we need not enter into a consideration of this phase of the case, as what we have previously said sufficiently discloses our conclusion that the demurrer was properly sustained for the reasons above stated. We are of the opinion, therefore, that the decree of the court below sustaining the demurrer to the bill as amended is correct, and should be affirmed. Affirmed. All the Justices concur, except SAYRE, J., who dissents. Footnotes [1] 200 Ala. 672.