Broach v. Smith

Blandford, Justice. This was a bill filed by Kelly against Broach to foreclose as an equitable mortgage deed made by Broach to Kelly, which deed is void as title by reason of usury. The deed was made as security for money advanced by Kelly to Broach, and a bond for title was given to Broach by Kelly, conditioned to make titles to the land when Broach should pay the money loaned. Broach gave his note for the money borrowed from Kelly. After this, Broach was adjudged a bankrupt and received his discharge in bankruptcy. The question m this case is, can a conveyance made under section 1969 of the Code, to secure a debt, and which is void as title for usury, be foreclosed as an equitable mortgage? This court has never decided that this can be done. In Bullard vs. Long et ux., 68 Ga., 821, Hillyer, Judge, [163] presiding in the place of Jackson, Chief Justice, announced that a deed made as part of a usurious contract, though void as title,' may in equity be treated as a mortgage and the lien enforced for what may be legally due. This dictum is entirely obiter. There was no such question made by the record in that case. That record shows that a deed was foreclosed as an equitable mortgage; upon amotion for new trial, the court granted a new trial, alone upon the ground that the money loaned, which was not used in discharging liens on the homestead property, should constitute no part of the judgment of foreclosure; and this grant of a new trial on this ground alone was excepted to, and was the only ground of error in that case, and this ruling of the court below was affirmed. So we are left entirely free and untrammelled to consider and decide this case. Section 1969 of the Code, which authorizes deeds to be made, with bond for titles back, as security for money, declares that such conveyances shall be held by the courts as absolute conveyances and not mortgages. The creditor, when he takes a deed like this, takes it as an absolute conveyance, not as a mortgage; this is for his benefit, to make his security better, and the courts are required by the act so to hold. If the deed be tainted with usury, it fails as a conveyance of title; but how does it thereby, by the illegal conduct of the vendee, become a mortgage ? Can the illegal act of the vendee change a security which the law declares the courts shall hold to be an absolute conveyance into an equitable mortgage ? We know of no law or rule in equity which authorizes this to be done. The creditor must stand on the security which he bargained for; if the same becomes ineffectual by his own illegal contract, let him abide his bargain. His illegal and wrongful conduct, which destroyed'his security, will not authorize a court of equity to change the security into a mortgage and thus to help one who is thus guilty of illegal and wrongful conduct to avoid He consequences of such acts and conduct. So we hold in [164] this case, as the deed taken by the defendant in error from the plaintiff in error is void, because tainted with usury, it cannot be foreclosed as an equitable mortgage, and is not a lien on the property thereby conveyed. If what we have said be correct, then when Broach was discharged in bankruptcy, it was a discharge of the debt due Kelly. It is insisted that the deed may be foreclosed for unpaid purchase money. The vendor’s equitable lien for unpaid purchase money is expressly abolished by the Code of 1863 (Code, §1997), and the courts have no power to reestablish the same. Whatever may have heretofore been said by this court conflicting with this decision, is hereby overruled. We do not mean to hold that, when it may be necessary for a defendant to resort to equity under similar circumstances with this case, a court of equity may not compel him to do equity by paying the money and lawful interest thereon. Judgment reversed.