Jonas v. Home Mortgage Co.

OlaRksoN, J. The question involved: Was the lower court justified in directing a verdict that the plaintiffs recover nothing of the defendants? We think so. This is an action in a court of equity, brought by plaintiffs to restrain defendants from selling their land under a deed of trust. Miller v. Dunn, 188 N. C., 397; Ripple v. Mortgage Corp., 193 N. C., 422; Pugh v. Scarboro, 200 N. C., 59; Clark v. Hood System, 200 N. C., 635. Plaintiffs borrowed $7,000, made note and bond payable to bearer with 6% interest, on 15 August, 1927, and secured same by deed of trust on certain real estate. The plaintiffs made 36 payments of $80.50, beginning with 14 September, 1927, and ending with 15 November, 1930. Interest at 6% counted from 15 August, 1927, on $7,000 to 14 September, 1927, and credit of $80.50 so calculated on new principal, and $80.50 credited to 15 November, 1930. Then the balance on principal counted to 17 September, 1932, and credit of $5,174.38 and on balance interest calculated to date of judgment, 8 December, 1932. From a careful calculation, we think plaintiffs are not entitled to recover. See Bledsoe v. Nixon, 69 N. C., 89. Plaintiffs further contend that they borrowed $7,000 and only received $6,650. That the draft was payable to A. Garland Jonas, Alexandria L. Jonas and Thomas P. Pruett, attorney. That the check was made by the Home Mortgage Company as a subterfuge in an attempt to evade the usury law. Plaintiffs in their complaint allege that “although the instrument aforesaid is recited to be security to the sum of seven thousand ($7,000) dollars, in truth and in fact the defendants received from the plaintiffs about $6,650 and the remainder as set forth in said instrument was knowingly reserved, charged, collected and paid defendants by plaintiffs as usurious charges for interest, principal and incidental expenses connected therewith, as will more fully appear by reference to said deed of trust-so recorded as aforesaid.” The fact that the name of Thomas P. Pruett, attorney, was put in the check and plaintiffs could not get the money without it being handled that way, and plaintiffs’ testimony to the effect that the payment to him *92 was only $6,650, and other evidence, though circumstantial, is sufficient to have been submitted to a jury, as to the usury on this aspect of the case. From a careful reading of the deed of trust its “Items of expense”' in the deed of trust is strongly indicative of usurious evasion. In Bank v. Wysong, 177 N. C., 380, 388, is the following: “This hind of usurious agreement has been cast in various forms, but the courts have invariably stripped it of its flimsy disguise, and decided according to its substance and its necessary tendency and effect, when the purpose and intent of the lender are unmistakable. And this is the correct rule.” In this kind of action to restrain a sale, equitable in its nature, the actual money loaned with 6% interest is all that the lender can recover. The $350.00 deduction, its purpose must bo inquired into. Trust Co. v. Redwine, 204 N. C., 125; Dixon v. Smith, 204 N. C., 480. It is well settled that the penalty for usury, C. S., 2306, is not applicable in this injunction proceeding — equitable in its nature. The principle is that he who seeks equity must do equity. In Waters v. Garris, 188 N. C., 305, 308, speaking to the subject: “It is the established law of this jurisdiction, that when a debtor, who has given a mortgage to secure the payment of a loan, comes into equity, seeking to restrain a threatening foreclosure under the power of sale in his mortgage, as a deliverance from the exaction of usury, he will be granted relief and allowed to have the usurious charges eliminated from his debt only upon payment or tendering the principal sum with interest at the legal rate, the only forfeiture which he may thus enforce being the excess of the legal rate of interest.” Miller v. Dunn, 188 N. C., 397; Ripple v. Mortgage Corp., 193 N. C., 422; Pugh v. Scarboro, 200 N. C., 59; Clark v. Hood System, 200 N. C., 635. Chapter 35, Public Laws of N. C., Special Session, 1924, as amended by chapter 28, Public Laws of N. C., 1925, and other amendments, are made applicable to Caldwell County and to the counties of Buncombe, Madison, Yancey, Henderson, McDowell and Watauga. Plaintiffs contend that these acts do not apply to the instant ease. If they did, see Plott v. Ferguson, 202 N. C., 446. But taking it for granted the jury would find that the $350.00 was usurious, yet from a careful calculation, plaintiffs would be entitled to recover nothing. We have had a competent expert to make these calculations for us. The defendants in their brief say: “Assuming that the plaintiffs received only the sum of $6,650, and applying each payment as of the date paid on accrued legal interest and reduction of principal, there would have remained due and owing by the plaintiffs to the defendants on 17 September, 1932, the date of the last pmyment, the amount of $261.26.” No error.