Banks v. McClellan

Weisel, J., delivered the opinion of this Court. The complainant, Eliza A. McClellan, the appellee in» this Court, claims as assignee of her brother, William W.. McClellan. The subject matters of the assignment are : 1st. All the claim, interest and benefit of the assignor-in the sum of thirty-three hundred dollars in Baltimore City stock, deposited with Messrs. Brown and Bruñe, attorneys of Henry Y. Ward, to whom the assignor sold certain real estate in Baltimore, on the corner of Baltimore- and Charles streets, on which Banks, the appellant, held a mortgage, and claimed an amount, which was disputed ;. the said stock for $3,300 being withheld by Ward, the-purchaser, to abide the determination of said dispute, and the assignee undertaking to satisfy the said claim of the mortgage as it may be legally or equitably determined. 2nd. All the claim of the assignor against said Banks for or on account of the value of a yearly rent of one hundred, dollars, conveyed by him aüd wife to said Banks by deed of the 28th of May, 1841, and all the agreements between them concerning said rent, and relating to the claim or right of the grantors to have the same reconveyed to him, the said McClellan, upon his paying a certain sum for so-much in value lent to him by Banks, for which said conveyance was meant only as a security. This property is-on Bank lane, in said city, and particularly described in the deed of said McClellan and wife to said Banks, exhibited with the bill and marked Exhibit E, No. 2. 3rd. All the right, title, claim, interest and estate, legal and equitable, of the assignor, in and to, and all his right — 79 — under an agreement with, said Banks for a reconveyance and release of the rent and reversion of a piece of ground in said city, on Baltimore street, near Green street, leased by said Banks to John T. Purcell, and to and in the rent reserved on said lease, and the reversion of and in the ground; the said assignee (the complainant) to satisfy said Banks the debt due to him for which said property was originally mortgaged by Catharine McClellan. The consideration of this assignment, besides the undertakings by said Eliza to pay said mortgage claims, was a conveyance by her to said William of certain leasehold property in the city of Baltimore, executed a short time before said assignment to her, viz: on the 9th of June, 1859, and the said assignment was made without any recourse whatever to said William W. McClellan, his heirs, executors or administrators. The Record contains written evidence that the property out of which the lease to Purcell was carved, and also the reversion in the portion covered by that lease, (which is the third subject matter of the assignment,) were to he reconveyed to William W. McClellan, upon payment of the money and interest thereon, to secure which said property was originally mortgaged by Catharine M. McClellan. The appellee, as assignee of the equity of redemption, is entitled to the aid of a Court of Chancery to redeem said property by paying the mortgage debt and simple interest thereon, or by bringing the same into Court to be paid to the said Banks. This she proffers in the bill to do, and prays for its reconveyance to her. In order to extricate the $3,300 city stock held on deposit by Messrs. Brown & Bruñe, to indemnify Ward, the appellee undertakes by the hill to litigate with Banks touching the amount due him on his mortgage on the property at the corner of Baltimore and Charles streets. As by the terms of the assignment to her, and as part of — 80 — its consideration, she engaged to pay -whatever might he found due on that mortgage, we think she can maintain her position in a Court of Equity for this purpose. That claim is a lien upon the city stock assigned to her, and its true amount was a matter of controversy. She alleges that the consideration of the mortgage was usurious, and that the sum claimed by Banks should be purged of the usury and thereby largely reduced, as well as by deductions for certain charges for taxes, for which the mortgagor was not bound. To reduce it still further, she claims an account touching the transaction which forms the second subject matter of the assignment to her, the conveyance of the property on Bank lane, which, it is alleged in the bill, was intended as a mortgage between her brother and Banks, but which the latter, in fraud of his agreement, insisted on treating as an absolute conveyance, and after-wards sold and conveyed the property to a third party. The consideration of these questions involves the exceptions by the defendant below to the competency of William W. McOlellan as a witness, and the admissibility of his proof; and also the objection urged in the argument to the ability of the complainant to maintain this suit in her own name as assignee of these subjects of contest. We regard William W. McOlellan as divested of all interest in the subjects in controversy, by the assignment to his sister and its terms, and therefore competent to be a witness for her, on the authority of Crawford vs. Brooke, 4 Gill, 217. Pegg vs. Warford, 7 Md. Rep., 603. Reynolds vs. Manning, 15 Md. Rep., 518, 522. Nat. Fire Ins. Co. vs. Crane, 16 Md. Rep., 294. We also regard these matters of the assignment as not unmixed choses in action for the payment of money, and therefore as not embraced within the terms of the Act of 1829, ch. 51. See Gordon vs. Downey, 1 Gill, 41. Crawford vs. Brooke, 4 Gill, 221, 222. — 81 — As assignee of the mortgagor’s rights in reference to the ground rent and reversion in fee in the property on Bank lane, if the transaction in relation to it between her brother and Banks was intended merely as a security for a loan, the appellee can resort to a Court of Equity for a decree declaring the conveyance a mortgage, and directing the reconveyance of the property upon payment of the amount properly due, (or if the property has passed beyond her reach, and the mortgage be overpaid,) ordering an account and repayment of the difference. Much of the controversy in this case relates to this transaction, which originated in 1841, more than eighteen years before the filing of the bill. Mr. McClellan is sufficiently distinct in stating that it was understood and agreed between himself and Banks, that the Gas Company stock received by the former was but a loan, and not a purchase, and the conveyance of the ground rent to the latter, absolute on its face, was to be regarded only as a security, and the only corroborating circumstance stated by the witness is that at the end of three years Banks, being applied to, consented that the loan might continue. But to the mind of the Court all the other circumstances militate against the idea of a loan and security. The length of time, (which may be regarded among the probabilities to be taken into consideration with the proof, although by agreement it was not to be relied upon as a defence,) the various subsequent accounts between the parties, when no reference was made to any claim on this account; the fact that the property was the estate of Mrs. McClellan, who joined lier husband in the conveyance, and to whom, and not her husband, the reconveyance, if agreed upon, should have been stipulated to be made ; and that. no notice whatever was taken of this claim by McClellan in 1858, when he tendered to Banks the sum of $2,800 in full satisfaction, and demanded a reconveyance of the Purcell property, and — 82 — a release of the mortgage of the 6th May, 1850, without any demand for a reconveyance of the Bank lane property, or any repayments on that accouut, are sufficient to satisfy the Court that whatever may have been the understandings originally between the parties, McClellan acquiesced in the absolute nature of the transaction, and waived all further claims to this property. We therefore think that the appellee is not entitled to an account of and concerning the matter and moneys alleged in reference to this branch of the assignment to her, and that the conveyance to Banks by William W. McClellan and wife of the 28th of May, 1841, being “Exhibit E, No. 2,” with the bill of complaint, should be held and treated, as it is upon its face, an absolute deed of conveyance. It is proved that the consideration of the mortgage of May 6, 1850, for §1,288.60, was usurious. Money due for interest, may by agreement be changed into principal to bear interest in future, but not otherwise. In this case-interest was not only calculated on interest for several years in arrear, but the amount so added was doubled. We consider that the charges for taxes on the mortgage, with simple interest on each item from the time it rvas paid, are allowable, Mr. McClellan having agreed to pay them, and the law authorizing such payments without incurring, usury. The statement of “Exhibit E, No. 7,” by striking-out the item of §6.45, second charge, being interest on interest, and adding in lieu of it interest at the rate of six per cent, on §1,000 from 8th January, 1850, to 6th May, 1850, and also adding the tax items in “ Exhibit E, No. 6,” with legal interest on each from the time when they were respectively paid to May 6, 1850, would present the proper sum as the consideration of that mortgage; and that sum, with six per cent, interest on it from the date of — 83 — said mortgage, May 6, 1850, to the present time, would show the amount due upon it. (Decided February 28th, 1866.) The assignee, standing in legal privity with Wm. W. McClellan, can avoid the contract for the excess of usury, (Dix vs. Van Wyck, 2 Hill, 522,) and is entitled to the' proper reduction on this mortgage, that the true lien on the $3,300 city stock, assigned to her, may be thus ascertained and determined, to enable her to perform her part of the contract with her brother in this respect, and by her payment of which to relieve the mortgaged premises from the incumbrance in favor of Ward, the purchaser. It follows from these views, that the exceptions to all the audits should have been sustained; and that the amount on both outstanding mortgages, which the assignee undertook to discharge, should be ascertained by the auditor conformably to this opinion, and that the decree should direct a reconveyance of the one to the appellee, and the release of the other to Ward, upon her paying the amounts, or bringing the same into Court, to be paid to the appellant ; and we are further of opinion that each party should pay his respective costs in both Courts. The decree below will be reversed, and the cause remanded, with instructions for ah audit, or audits, and a decree conformably to the views expressed in this opinion. Decree reversed and cause remanded, each party to pay his own costs in both Courts.