Stuckey v. Middle States Loan, Building & Construction Co.

Cox, Judge: In March, 1893, H. J. Wagoner obtained from the Middle States Loan, Building and Construction Company, a corporation under the laws of Maryland, a loan of $600.00 on stock of said corporation then held by him, For this loan Wagoner executed to the corporation his bond in the penalty of $1,200.00, dated the 11th day of March, 1893, conditioned for the payment of the loan and interest thereon, together with all dues and premiums, until the maturity of the said stock upon which the loan was obtained in accordance with the by-laws of the corporation. To secure the payment of the loan and the performance of the conditions of the bond, Wagoner and wife executed a deed of trust, also dated the 11th-day of March, 1893, conveying to Alexander Neil and C. O. Strieby, trustees, a lot of land in the town of Davis. By deed dated the 1st day of April, 1893, Wagoner and wife conveyed the lot to the plaintiff, Benjamin A. Stuckey, the deed reciting that the consideration therefor was $1,000.00 in hand paid. At February rules, 1901, • the plaintiff, Stuckey, filed his bill in the circuit court of Tucker county against the corporation, Wagoner and the trustees, alleging that as part of [75] the consideration for the purchase of the lot the plaintiff assumed the debt owing by Wagoner to the corporation; that, thereafter the corporation looked to him for, and collected from him the monthly installments on said debt until the month of March, 1900, when he refused longer to pay; that up to the time of the conveyance of the lot to him, Wagoner had paid the monthly installments on the debt; that the payments by Wagoner and plaintiff were more than sufficient to-pay the debt; and that the contract whereby Wagoner obtained .the loan was usurious; and praying an accounting as. to the debt, a release of the deed of trust, and 'for general and special relief. The answer of the corporation admits the-allegation of the bill to the effect that the plaintiff assumed the debt owing by Wagoner to. the corporation, as a part of the^ consideration for the purchase of the lot. Wagoner filed an answer in which he did not make the defense of usury or authorize the plaintiff to do so. The case was referred to a commissioner to state the account and for other purposes. On the 26th of November, 1904, counsel for all the parties, appeared in court and waived the order of reference and agreed that, if the contract in controversy be held usurious, upon calculation by partial payments at 6 per cent, interest, there would be due to the plaintiff from the corporation the-sum of $269.78, with interest from the loth day of November, 1904, and that if the contract be held not usurious, there would be due to the corporation from the plaintiff the sum of $498.56, with interest from said date. Thereupon the court held that the contract was usurious and that the plaintiff was entitled to be relieved from the usury, and entered a final decree in favor of the plaintiff against the corporation for the sum of $269.78 with interest and costs, and directed a release-of the deed of trust. From this decree the corporation obtained an appeal. Assuming that the debt is usurious, which we do not decide, the vital question in this case is: Can the plaintiff, under the circumstances stated, be relieved from the usury? The contract whereby Wagoner obtained the loan from the corporation was a building and loan association contract,, providing for the monthly payment of interest, dues and premiums until the maturity of the stock upon which the loan was obtained. Whether the contract was usurious or [76] not, the- plaintiff assumed the payment of the debt thereby created. It is not claimed that the plaintiff’s contract with Wagoner was usurious. If the plaintiff is compelled to pay 'the usurious debt .he does nothing more than he agreed with Wagoner to do in the purchase of the lot. If the plaintiff should be relieved from the payment of usury, he would pay less for the lot than he agreed to pay. The principles governing this case are well settled in this State. The defense of usury is personal to the debtor. One who-purchases land which is charged with an usurious debt, and, as part of the consideration for his purchase, assumes the payment of the debt, cannot be relieved from the usury. Spangler v. Snapp, 5 Leigh (Va.) 478; Crenshaw’s Admr. v. Clark, 5 Leigh (Va.) 65; Smith v. McMillan, 46 W. Va. 577; Lee v. Feamster, 21 W. Va. 108; Snyder v. Construction Co., 52 W. Va. 655; Harper v. Building Ass'n, 55 W. Va. 149; Chenoweth v. Building Ass'n, 53 S. E. R. (W. Va.) 559. In Harper v. Building Ass'n, the property on which the usurious debt was charged had been twice conveyed after being so charged. The original debtor, as well as both alienees, made the defense of usury, and that was held sufficient to raise the question of usury. In that case it was also held that a purchaser of real estate charged with an usurious debt cannot defend against the usury, unless the debtor unites with him in the defense, or his acquiescence and consent to such defense appear in the record. In this case the original debtor, Wag•oner, neither made the defense of usury himself nor joined with the plaintiff in so doing, nor in any way acquiesced in or consented to such defense by the plaintiff. The principles .stated leave the plaintiff without right in this case to be relieved from the usury, if the contract be usurious; and they are conclusive of the case in the absence of novation. In Chenoweth v. Building Ass'n, novation is defined to be the ■substitution of one debtor bj7 mutual agreement for another, whereby the old debt is extinguished. In order to make a novation, there must be an extinguishment of the old debt, which implies the release of the original debtor. This record ■does not disclose such a state of facts. The plaintiff does allege in the bill that the shares of stock in the corporation were transferred to him by Wagoner; and there is exhibited -with the bill a pass book purporting to show payments by [77] Stuckey to the corporation. These^ payments were entered on the pass book in the name, or initials, of H. J. Wagoner as collector for the corporation, except two which were entered in the name of Smith ás such collector. In the case of Chenoweth v. Building Ass’n, supra, which involved a building and loan association contract, there had been a transfer of the stock and a new account opened by the building and loan association with the purchaser of the property upon which the debt was charged; but, as in this case, there had been no extinguishment of the old debt and no release of the original debtor. The court properly held that there was not a novation, and we so hold in this case. The Middle States Loan, Building and Construction Company by its answer does not pray affirmative relief either by way of decree against the plaintiff or enforcement of the trust; but the plaintiff, having come into equity for an accounting and for relief against an alleged usurious debt, we think it is proper to adjudicate in this suit the amount of the debt in accordance with the agreement of record of the-parties. For the reasons stated, the decree complained of is reversed and the amount of the trust debt mentioned in the bill and exhibits and evidenced by the bond of the defendant. Wagoner to the corporation, dated th.e 11th day of March, 1893, is ascertained to be $496.56, with interest from the 15th day of November, 1904, until paid; and as to all other relief prayed for in the plaintiff’s bill the bill is dismissed. This decision is without prejudice to any right, remedy or proceeding on the part of the defendant corporation for the-collection of the debt the amount of which is here ascertained, oa for the enforcement of the trust securing the. same. Reversed and Bill Dismissed in Bart.