Mapps v. Sharpe & Co.

Mr. Justice Walker delivered the opinion of the Court: At the time the note was given, a mortgage was executed to secure its payment. The mortgage embraced several tracts of land. It also- contained a power of sale if default should be made in the payment of the money. After the maturity of the note, time of payment was several times extended, from month to month, at three per cent, per month interest, and afterwards, in -the same manner, at five per cent, per month. All of the interest at these rates was paid until the 28th of October, 1858. Prior to the execution of this mortgage, Eoyal, the grantor of the plaintiff in error, had given a mortgage on the whole quarter section to one White, including the eighty acres in controversy. On the first day of February, 1859, White sold this eighty acre tract to George FT. Sharpe, for one hundred and fifty dollars,- under his mortgage, and made the conveyance to E. E. Allen, who acted in the transaction as the agent of Sharpe. Previous to this sale the defendant, .George FT. Sharpe, had procured an injunction to prevent White from selling this land under his mortgage, until he should first sell the other eighty acres of the quarter section not embraced in defendants’ mortgage. On the day of the sale, and iiñmediately before it occurred, it was agreed between White, and Allen, the agent of defendants, that he should bid off the land for one hundred and fifty dollars, and the injunction suit should be dismissed. It was still pending at the time the sale was made. Even if this arrangement between Allen and White was not fraudulent, to avoid the sale, it had the manifest effect of preventing competition in the biddings: During the pendency of the injunction, purchasers would know that the sale was liable to -be set aside. Plaintiff in error was not a party to, nor does he seem to have been aware that the sale was to be made in violation of the terms of the injunction. He did' not have the opportunity of protecting his rights by finding purchasers willing to give more than the land brought at the sale. Hor is it any answer to say that defendant in error and White, the parties to the injunction suit, had agreed that the sale might proceed. Plaintiff in error had rights in the matter that they had no power to control. This agreement was only consummated a few minutes before the land was offered for sale. It was not known in the neighborhood, and no means of competition at the sale was afforded. Again, with the injunction pending, if higher bids had been made, White could have refused to have gone on with the sale because the injunction had not been dissolved. The arrangement was for defendants’ benefit, and was made to deprive complainant of the right to set up usury and the homestead law, under the mortgage executed to Bernhard U. Sharpe. And, although fraud is disclaimed, the transaction has very much the appearance of perverting the process of the court to improper purposes. Defendants in error had, on the 13th day of January, 1858, caused this eighty acre tract to be sold under the mortgage executed to defendant, B. IT. Sharpe. At that sale, George jST. Sharpe became the purchaser, at the sum of two hundred dollars. But it is admitted that this mortgage did not release the right to insist upon the provisions of the homestead law. The purchase was made by one of the firm who held the note and mortgage. It is true, that this mortgage was given to B. H. Sharpe, but he had passed it over to the firm of which he and the other defendants were members. When the note was transferred, the mortgage, as an incident, followed it, and inured to the benefit of the holders of the note. And whether the transfer of the note was legal or equitable the effect was the same. This presents the question whether U mortgagee may become a purchaser under a sale made in pursuance of a power contained in the mortgage. It only needs a statement of the proposition, to determine that he cannot, as the law will not authorize him to act as both the vendor and vendee. In such a sale there is every temptation to promote his own interest, at the sacrifice of that of the owner. The law will neither subject nor suffer him to be so tempted to act unjustly. It is believed to be a rule of universal application, that the officer or person charged with the sale of property at auction, whether by authority of law, or under a power derived from the owner, is prohibited from becoming the purchaser. If sanctioned, it would lead to oppression, wrong and fraud, highly injurious to the owner. When such a purchase has been made, it is not necessary to show that wrong has resulted, as the law will not recognize such a bidder as capable of becoming a purchaser. This attempt to purchase wholly failed to foreclose complainant’s equity of redemption, and left the parties in the same situation as though the effort to sell had not been made. The defendants in error not having acquired any additional interest or benefit by either of these sales, the complainant has the same right to redeem, and upon the same terms, as he might have done previous to that time. Defendants admit in their answer that the contract was usurious in its inception, and that usurious interest was paid until October, 1858. The requirements of the statute are clear and explicit, that when usury is reserved, the creditor shall forfeit the whole interest • taken or reserved, and only be allowed to recover the principal sum. In equity, however, the rule has prevailed, when usury is relied upon as a defense, that it will only be allowed to the extent of the excess beyond the legal rate. In that forum, the excess above the legal rate is only allowed to be relieved against, as the party seeking equity must do equity. Ferguson v. Sutphen, 3 Gilm. 547. The decree in this case must be reversed, and the cause remanded to the court below, with instructions to permit the complainant to redeem the mortgaged premises, upon his paying the principal, with six per cent, interest from the date of the note until the rendition of the decree, and to allow all payments over and above that rate, as a credit upon the principal. Decree reversed.