Lowe v. Walker

McCulloch, J., (after stating the facts.) There can be no doubt that the chancellor was right in rendering a personal decree against appellant W. H. Lowe for the amount of appellee’s claim. According to his own testimony, appellee advanced him the money as an independent loan to pay off the mortgage debt to Mrs. Rice. Appellee was not affected by usury in the contract between Lowe and Mrs. Rice. Conceding that the debt was tainted with usury, Lowe elected to pay it, and procured its payment by appellee. He cannot defeat his liability to appellee for the money because the original debt to Mrs. Rice which it extinguished was tainted with usury. Nor can W. H. Lowe complain at the decree declaring the debt to be a lien on the land. His own conduct estops him. Rogers v. Galloway College, 64 Ark. 639; Harrison v. Luce, 64 Ark. 583. It is true that, as the original debt and mortgage to Mrs. Rice were void on account of usury, no vitality could be infused into that contract. ' Nor does the fact that it has passed into the hands of an innocent purchaser for value give life to it. German Bank v. Deshon, 41 Ark. 331. But this mortgage must, under the facts of this case, be regarded the same as a new one executed to appellee at the time of the assignment to him. The effect of the assignment to him, was, under the circumstances, equivalent in equity to the execution of a new mortgage to secure the loan made by appellee, following the maxim that “equity, regards substance rather than form.” Martin v. Schichtl, 60 Ark. 595. “By force of this principle,” it is said, “equity goes behind the form of a transaction in order to give effect to the intention of the parties, either to aid an act abortive at law because formally defective, or to impose a liability as against an evasion by a formal concealment of its true character.” 16 Cyc. p. 134. It is conceded that appellee paid the money to Mrs. Rice, and took an assignment of the note and mortgage at the request of appellant W. H. Rowe as a temporary security until the. new mortgage could be executed by Rowe and wife. Appellee testified that he had no notice of the usury, and, notwithstanding Rowe’s testimony to the contrary, the chancellor found this to be true, and, as the finding is not against the preponderance of the evidence, we cannot disturb it. The decree against W. H. Rowe declaring a lien on the land must be sustained upon still another ground. He promised to execute a new mortgage as soon as his wife could come to town, and appellee paid Mrs. Rice’s debt on the faith of this promise. “Equity regards as done that which ought to be done,” and a court of equity will, under those circumstances, require a performance of the agreement. Richardson v. Hamlett, 33 Ark. 237; Sims v. Thompson, 39 Ark. 304; Turner v. Davis, 41 Ark. 282; Beck v. Bridgman, 40 Ark. 382. It is urged here that the land in question is the homestead of appellants, and that the lien cannot be enforced thereon for the reason that the wife was not a party to the agreement with appellee, and did not join in a mortgage to him, the old mortgage to Mrs. Rice which she signed being void. It is not shown in the pleading or proof that the land is the homestead, and the lien is enforcible against W. H. Rowe. What we have said applies only to appellant W. H. Lowe; and it. follows that the decree must be affirmed as to him. The fact that his wife may not be barred of her inchoate dower right does not render the mortgage .lien invalid as to him. The lien is enforcible except as against the dower right. The wife, Roxie Lowe, also appeals from the decree, and thereby' challenges its correctness as against her. As the original mortgáge to Mrs. Rice was void on account of usury, the rights of Roxie Lowe were not affected by the subsequent conduct pf her husband and his agreement with appellee Walker. She could relinquish her dower only in the manner provided by the statute, and, not having done so, she is not barred of her inchoate dower right. Appellee’s lien can therefore be enforced, subject only .to that right. It is true that she did not file an answer to the cross-complaint of appellee, but the plea of usury made by her husband and co-defendant in the cross-complaint inured to her benefit, notwithstanding her failure to plead, as it was a defense common to them both. Fletcher v. Bank of Lonoke, 71 Ark. 1. The decree is therefore in all things affirmed as to appellant W. H. Lowe, but reversed and remanded as to appellant Roxie Lowe, with directions to dismiss the cross-complaint as to her.