Spinks v. Jordan

Need, J., delivered the opinion of the court. Appellees, judgment creditors of A. H. Tate, Sr., and A. H. Tate, Jr., filed their bill in chancery to enjoin the foreclosure of deeds of trust given by Tates, senior and junior, in favor of appellant, J. P. Spinks, to secure to him certain indebtedness owing for merchandise and supplies furnished; the amount of such indebtedness being evidenced by promissory notes and open accounts. Appellees prayed in their bill for an accounting to show the correct balance due appellant, for the appointment of a receiver to take charge of the property, and for the sale of the property so that the true amount due under the deeds of trust could be paid, with the application of the balance as payment on the judgments. It is charged in the bill that there is usurious interest on the notes. It is also alleged therein that appellant charged exorbitant prices, for supplies furnished A. H. Tate, Sr.,'and A. H. Tate, Jr., and that there are large amounts which he has failed to credit on the notes. Appellees aver that they are unable to state the amount of the credits which should have been given, for the reason that they have no means of ascertaining the sum, and that such information can only be obtained from inspection of appellant’s books. They allege that if the notes were purged of all usurious interest, and the proper reduction made because of overcharges for supplies, and true application made of all credits, that only a small amount would be owing appellant on the indebtedness — not near so much as he was claiming to be due when he directed the foreclosure of the deeds'of trust. They further charged that both A. H. Tate, Sr., and A. H. Tate, Jr., were insolvent. [138] To this bill a demurrer was filed by appellant and W. A. Ellis, trustee in the deeds of trust. From the decree by the chancellor overruling the demurrer, this appeal was granted to settle the legal principles of the case. The following were assigned as grounds in the demurrer and are urged at this hearing, by appellant: (1) The plea of usury is a personal privilege, and could not be availed of by the judgment creditors; (2) appellees, admitting an amount to be due appellant, failed to tender such amount or to offer in their bill to pay whatever amount might be found to be due upon an accounting. Appellant contends that there was not sufficient privity to enable judgment creditors to exercise the privilege of pleading usury; that this privilege, which is personal to the debtors, could not be extended in this case to such creditors. It appears that in some states it is held that the pleading of usury is a privilege personal to the debtor, and that the judgment creditor cannot take advantage thereof in contracts to which he was not a party without the consent of the debtor. “In other states the lien of a judgment or execution creditor upon the property of the debtor is held to establish sufficient privity to enable such creditor to exercise the debtor’s privilege of setting up usury in defense of the claims of other creditors. The view is taken that such creditors are not strangers within the rule prohibiting strangers to the usury from taking advantage of it. ’ ’ 39 Cyc. 1073. It was held in Bachdell’s Appeal, 56 Pa. 386, that a mortgage may be impeached before an auditor for usury by subsequent judgment creditors to divert that portion of the fund arising from the sale of the mortgaged premises which i exceeds the real debt after the usury is deducted and to' appropriate it to the payment of their own debts. This question was raised in the case of Boyd v. Warmack, 62 Miss. 536, and we quote in full the headnote to that case, as follows: [139] ‘ ‘ The beneficiary in a deed of trust on land, even after a sale thereunder, he being the purchaser, has the right to show usury in the debt secured by a prior deed of trust upon the same land, and to have the security therefor limited to the satisfaction of the legal amount thereof; and this right exists, notwithstanding a sale under the senior trust deed and a purchase by the cestui q%t,e trust therein, if the usury in the debt was not then known to the beneficiary in the junior trust deed.” It is our opinion that appellees, judgment creditors, had the right to show usury in the indebtedness secured by the deed of trust to have such indebtedness reduced by the deduction 'therefrom of the interest illegally charged. We do not see that it was necessary for appellees to make a tender in this case, as contended for by appellant. There was no effort to cancel a mortgage. Appellees clearly show that they were unable to state what was the true balance owing by the . debtors. ■ This could only be ascertained from the books of appellant and perhaps after a full hearing of the- case. Their inability to state definitely the amount due was not from their fault, but, according to their averment, was by reason of the fault of appellant. "The bill does not seek to remove appellant from his place as a first lienor. The prayer specifically asks that appellant be decreed a first lien on the property, and that the amount shown to be due him be paid first out of the funds arising from the sale. An accounting in the case will be necessary to ascertain the correct amount owing- by the debtors to appellant. Under the facts as shown in this case, it was unnecessary for appellees to make a tender qf any amqunt in their bill. We consider the bill sufficient in this respect. Aust v. Rosenbaum, 74 Miss. 893, 21 So. 555; Peeples v. Yates, 88 Miss. 289, 40 So. 996. Affirmed.