Farmers' & Merchants' State Bank of Ballinger v. Cameron

HARPER, C. J. This is a suit to recover the statutory penalty for collecting usurious interest, based upon the following allegations: D. A. Cameron, Sr., and D. A. Cameron, Jr., and S. M. Cameron executed their joint note for $10,530, with 10 per cent, interest, payable to the Farmers’ & Merchants’ State Bank of Ballinger, dated March 31, 1914, payable January 1, 1915, secured by deed of trust of even date, upon certain lands, containing provisions for sale in case of failure to pay the note and interest; that thereafter the note became due and unpaid, and defendant bank requested the trustee to sell the lands. After advertisement, the trustee sold for the purpose of paying the balance due, which was alleged to be the full amount of the note, less credits to the amount of $1,-106.60; that all of the lands were sold and bid in by the defendant bank for $8,750, being the highest bid, and deed was executed. Said amount was credited upon the note. That said note ($10,530) was made up of money loaned as hereafter stated, and usurious interest thereon carried forward into it from previous renewal notes, and interest carried into them in advance from date of maturity. Here follows a complete description and history of each note, overdrafts, etc., giving its date and amount, the amount of usury in each note, overdraft, etc., showing how the totals make up the $10,530 note. And further allege that at the time of the execution of the latter note there was .in fact due only $5,007.35, and that the balance was usurious. Appellees represent that by the sale of said property, on April -6, 1915, the appellants collected from the appellees and D. A. Cameron, Jr., $5,007.35, principal money actually due, and the further sum of $3,742.65, usurious interest, to wit, $7,485.30; and, in the alternative, if the court should hold that they were not entitled to recover said penalties, sought to recover the difference between the amount of said bid, $8,750, and the amount of actual indebtedness due, to wit, said sum of $3,742.05. The defendant pleaded general demurrer and numerous special exceptions, and by cross-action asked for judgment for note, and interest which was prior lien upon certain tracts of the land sold and purchased by appellants. By many assignments and propositions appellant charges error in overruling its general demurrer and special exceptions to plaintiff’s petitions, original and supplemental. The petition clearly sets up the facts which constitute usurious interest, and the amount of such interest, and the amount of unpaid principal of other notes and overdrafts incorporated in the latter note. [1] The question then arises, Does the petition charge a payment? The statute (artide 4982, Vernon’s Sayles’), provides for a recovery of double the amount of usurious interest paid, and no penalty is fixed for a charge of such. Clayton v. Ingram, 107 S. W. 880. The allegation is that, the appellant having a mortgage upon certain lands to secure the payment of the $10,530 note, caused the trustee to make sale thereof in accordance with the provisions of the mortgage, and of law, and that, appellants being the highest bidder, having hid $8,750, their bid was accepted, and deed to the land executed by the trustee to it, and the amount credited upon the note, and that this constituted payment of usurious interest to the amount of the difference between $5,007.35 lawfully due and the amount of the hid. Appellant contends that, this being an involuntary payment, by reason of the fact that it was a sale under mortgage, the debt- or may not thereafter elect to set up that the proceeds of the sale was applied to the usurious portion of the debt, in order to place himself in a position to sue for the penalty, because the title passes by virtue of the val *1168 id portion of the debt, and not the invalid portion, and that the bid is equivalent to no bid at all, to the extent of the usury. It is true that purchaser obtains title by virtue of the valid portion of the debt, and to maintain a suit to set aside the sale the debtor must have tendered the amount of the valid portion of the debt (Hemphill v. Watson, 60 Tex. 679), hut we have no such case here, but, to the contrary, have a sale of $15,000 worth of property purchased at trustee’s sale by the creditor for a valid debt of only $5,-007.35, with a credit of the amount of the bid upon the note, which constitutes a taking of property for the usurious portion of the note; and it seems to us that, if, where property is voluntarily taken in payment of a usurious debt, it is the basis for a suit for the statutory penalty (Stewart v. Briggs, 190 S. W. 221), surely the statute must apply to a taking under sale by virtue of a mortgage in satisfaction of the usurious portion of the debt Eor had the trustee been instructed to sell sufficient land to satisfy the lawful portion of the note, evidently a much less acreage should have been sold. [2] Certain assignments charge error in admitting evidence over the objection of appellant; are overruled because the bills of exceptions do not disclose what the evidence objected to was. The twentieth, twenty-first, and twenty-second urge that'the court should have rendered judgment for it upon the cross-action as an offset. [3] R. A. Terry and wife, being the owner of certain of the tracts of land sold by the trustee above noted, April 8, 1908, executed a deed of trust upon them to the British American Mortgage Company for $3,000. In January, 1910, said Terry and wife conveyed said tracts to appellees, who assumed the indebtedness. In July, 1912, appellees entered into a written agreement for the extension of time of payment of the note to the mortgage company. The appellant, after the sale by the trustee, and deed executed to. it to the lands, for the purpose of protecting its title, purchased the entire indebtedness of the mortgage company, and the latter thereupon assigned to appellant the note, etc., and its mortgage. Upon this showing, appellant in cross-action, asked personal judgment against appellees for the amount. Under these facts, the appellants would be entitled to be subrogated to the rights of the senior lien. Bank v. Walker, 187 S. W. 725; K. & Bro. v. Willard, 191 S. W. 195. But under the case of Harris v. Masterson, 91 Tex. 171, 41 S. W. 482, the lands in question became a primary fund for the debt, and appellant’s remedy is to first foreclose his lien, and if, by sale, the lands do not satisfy the claim evidenced by the senior mortgage, it may have a personal judgment for the unsatisfied portion of the debt. Affirmed. WALTHALL, J., did not sit, being absent on committee of judges assisting the Supreme Court. Footnotes [1] <&wkey;For other eases see same topic and KEY-NUMBER in all Key-Numbered Digests, and Indexes