Ludington v. Harris

Downer, J. We do not deem it necessary for us to review the authorities cited by the appellant and respondent on the question [240] whether the appellant could avail himself of the defense of usury in this case. We have carefully read and considered them, as well as others, and are of opinion, both upon principle and authority, that a general conveyance of land on which there is a mortgage made by the grantor, void for usury, gives to the grantee the right to set up the defense of usury; and that a quit-claim deed for the consideration of one dollar gives the same right to the grantee to avail himself of the defense of usury as any other could. The right to set up the defense by the grantee cannot be defeated by inadequacy of consideration, but only by showing an agreement on the part of the grantee, either to assume and pay the debt secured by the usurious mortgage, or that it should be paid out of the land. If the deed on its face conveys only the equity of redemption, or the land subject to the mortgage, then the grantee, by accepting the deed, agrees that the mortgage debt shall be paid out of the land. And if it appeared by competent evidence, that the land was sold to the grantee for a consideration exceeding the amount mentioned in the mortgage, and the mortgage debt was actually deducted from the consideration agreed to be paid by the grantee, this would, as to him, render the land liable to the payment of the usurious mortgage. But no agreement to pay or take the land subject to the usurious mortgage should be inferred from the mere inadequacy of the consideration, or from the premises being conveyed by a quit-claim deed. The authorities, we think, lead to the conclusion, that if the purchaser acquired the interest in the estafe which the mortgagor would have had if the conveyance by him to the purchaser had not been made, then the grantee is in a position to avail himself of the defense. It follows that the judgment of the circuit court must be reversed. By the Court. — Judgment reversed, and cause remanded for further proceedings.