Miller v. . Dunn

Connor, J. The interests of Clark Miller and H. Abdallah, in the subject-matter of both these actions, upon the facts alleged in each complaint, are identical; they seek the same relief, both praying for an accounting with Charles E. Dunn in order that the amount due on the note held by him as assignee of Copeland Brothers may be ascertained, and that, upon the payment of said amount, the mortgage securing same shall be ordered canceled. Charles E. Dunn denies the material allegations in both complaints; his interest is adverse to the interest of both Miller and Abdallah. The consideration of the appellant’s chief assignment of error, upon its merits, will be facilitated by treating Miller and Abdallah as plaintiffs and Dunn as defendant. This was done upon the trial in the Superior Court, after the order of consolidation had been made by the judge. Technical difficulties due to irregularities in the record which do not affect the substantial rights of the parties are thus obviated. We have, then, an action in which Miller as mortgagor, and Abdallah as the owner of the equity of redemption in the land conveyed by the mortgage, pray for an accounting with Dunn, assignee of the note and transferee of the mortgage, in order that plaintiffs may redeem the land from the mortgage by the payment of the amount ascertained to be due on the note. Both Miller and Abdallah are proper parties plaintiff and may jointly maintain the action. Rogers v. Piland, 178 N. C., 70. Plaintiffs allege that defendant has charged the plaintiff Miller interest at a greater rate than six per centum per annum on the indebtedness evidenced by the note and that, therefore, all interest on the note has been forfeited. They further allege that plaintiff has paid defendant $100 in excess of interest at six per centum per annum on said note, and that therefore the note should be credited with $200, twice the amount of interest paid. C. S., 2306. The jury having *401 found upon an issue submitted to them that the defendant did usuriously charge and collect $100 bonus, as alleged in the complaint, his Honor in his judgment disallowed interest on the note, holding that same had been forfeited, and allowed a credit of $200, the penalty prescribed by statute. The defendant Dunn- excepted to the judgment and assigns this as error. We must sustain this assignment of error. Justice Stacy, writing for a unanimous Court in his opinion in Waters v. Garris, ante, 305, says: “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 threatened 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 his paying 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. Corey v. Hooker, 171 N. C., 229; Owens v. Wright, 161 N. C., 127. This ruling is based upon the principle that he who seeks equity must do equity.” Justice Stacy in his opinion, defendant’s appeal, after a careful review of the authorities applicable to the proposition discussed by him, calls attention to the remedies provided by C. S., 2306, for the enforcement of the penalties for usury under the law of North Carolina. He cites the provision in the statute that “in any action brought in any court of competent jurisdiction to recover upon any such note or other evidence of debt, it is lawful for the party against whom the action is brought to plead as a counterclaim the penalty above provided for, to wit, twice- the amount of interest paid as aforesaid, and also the forfeiture of the entire interest.” It may be well to call attention to the opinion of the late Justice Walker in Bank v. Wysong and Miles Co., 177 N. C., p. 389, in which it is held that in an action brought by a national bank upon an indebtedness on which usury has been paid, the defendant cannot counterclaim for twice the amount of interest actually paid. This proposition is discussed fully and with great learning by Justice Walker, who cites many authorities sustaining it. This Court adopts and follows the construction of the U. S. Supreme Court, ch. 5198 of the Revised Statutes (U. S. Comp. Stat., 1901, p. 3493), in which it is held that where usurious interest has been paid to a national bank the remedy is confined to an independent action to recover such usurious payments. In this action the plaintiffs have come into equity seeking an accounting with the creditor and demanding judgment that upon the payment *402 of tbe amount found by tbe court to be due upon tbe indebtedness, tbe land may be redeemed from tbe mortgage. Having tbus invoked tbe equitable jurisdiction of tbe court in.order to secure tbe relief for wbicb they pray, they must pay or tender tbe amount found to be due with tbe legal rate of interest thereon. Tbe penalty prescribed by statute, C. S., 2306, cannot be enforced in favor of tbe plaintiffs in tbis action, and there was error in tbe judgment disallowing interest at tbe legal rate and allowing as a credit on tbe indebtedness twice tbe amount of interest paid. Tbe issue between tbe plaintiffs and tbe defendant as. to wbat amount was due on tbe Copeland Brothers’ note at the time it was assigned by them to Dunn, has not been determined. Plaintiffs allege that tbis amount was $334.45; defendant alleges that it was $384.45. Tbe judgment assuin.es that the plaintiffs’ contention is correct, but no issue was submitted to tbe jury clearly presenting tbis controversy. There was error in rendering tbe judgment upon tbe assumption that plaintiffs’ contention was correct. An issue clearly presenting tbis contention should be submitted to a jury at tbe next trial. Defendant Dunn in bis answer admits payments by Miller amounting to $19. He also admits tbe payment by Miller of tbe note for $100; be denies, however, that tbe consideration for tbis note was usury charged by him for advancing money with wbicb to take up tbe Copeland note. Tbis presents an issue wbicb should be submitted to tbe jury in order that it may be ascertained whether tbe $100 paid .should be credited upon tbe said note. We do not deem it necessary to discuss tbe other assignments of error appearing in tbe record. We are of tbe opinion that tbe order by wbicb these two actions were consolidated for trial was proper. We suggest that tbe matters in controversy between tbe parties may be more clearly presented to tbe jury if an order is obtained in tbe Superior Court for leave to reform tbe pleadings. Tbe defendant Dunn in tbis action is entitled to recover judgment of tbe plaintiff Miller for .the amount found to be due on tbe Copeland Brothers’ note at tbe time tbe same was transferred to him with interest at tbe rate of 6 per cent per annum, subject to payments made by Miller since tbe transfer. If it shall be found that tbe consideration for tbe $100 note was as alleged by tbe plaintiff Miller, then tbe payments on tbe said note should be applied as credits on tbe Copeland Brothers’ note. Let tbe costs of tbis Court as taxed under tbe rules be paid by tbe appellees. It is ordered that there be a New trial.