Noland v. . Osborne

BeowN, J. The plaintiff, in his complaint, claims the absolute ownership of all the property described in Exhibit A, and the conditional ownership of that described in Exhibit B, which is in form an ordinary statutory chattel mortgage with the usual power of sale. The defendant, answering, avers that Exhibit A was executed to secure a note and was intended by the parties to be a mortgage, and not to convey the absolute title to the property. The defendant also sets up the plea of usury, and alleges that the note described in Exhibits A and B is usurious, and avers that if the usury is eliminated there will be nothing due on the debt. It is useless to discuss the many exceptions to evidence relating to the attempt of the defendant to prove by parol evidence that Exhibit A was intended as a mortgage securing a debt, for in our opinion the instrument upon its face is a mortgage. Courts of equity began at an early date to look with disfavor upon the strict doctrine of the common law as to the absolute forfeiture of *17 the mortgaged property upon nonpayment of the mortgage debt. Accordingly, the rule has become firmly established that the debtor has a right to redeem after breach of the condition and at any time before actual foreclosure of his equity of redemption. It is patent upon the face of Exhibit A that it is a security for a debt, and whenever a transaction is substantially a security for a debt it is a mortgage and the debtor has a right to redeem, although he failed to meet the condition and pay the debt at maturity (Watkins v. Williams, 123 N. C., 171; Robinson v. Willoughby, 65 N. C., 520; Adams Eq., 112) ; consequently the judge erred’in his instruction to the jury. This erroneous instruction renders a trial de novo necessary, as the effect of such ruling was to deprive the defendant entirely of the benefit of his defense of usury, which he was entitled to have submitted to the jury upon appropriate issues and instructions. This is not a case where the debtor comes into court charging usury and seeks its aid to prevent a foreclosure or asks other equitable relief against a mortgagor. Therefore the principle laid down in Cook v. Patterson, 103 N. C., 130; Gore v. Lewis, 109 N. C., 540; Corey v. Hooker, 171 N. C., 229, and other similar cases, has no application. In this case the creditor seeks to enforce by the aid of the court the collection of his alleged usurious debt. In such case the defendant, if he alleges usury as matter of defense in proper and sufficient manner, and establishes it, is entitled to have the full measure of it as allowed by the statute. Gore v. Lewis, supra; Riley v. Sears, 154 N. C., 509. New trial.