Case ID: va_10/html/1132-01.html
Source: Caselaw Access Project
Author: {"author": "PER CURIAM.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Jones v. Hubbard.
    [December, 1818.]
    Usury — Conditional Sale — Case at Bar. — If A. propose to B. that B. should buy Ms land, which was advertised to be sold, under a deed of trust, for the amount of the creditor’s debt, and should let A. have it again, upon payment of principal and interest, at the end of twelve months ; instead of which, they enter into an agreement, that B. should bid the creditors debt for the land; and if it was struck off to him, that he should re-sell it to A. for a sum thereafter to be agreed upon, provided it was paid within twelve months, (which sum, though never agreed on.) was understood to be such as would reimburse B. the money paid, the sacrifices he might make to obtain it, and liberally compensate him for his trouble : It is not usury.
    Same — Same—Same.—And if the money is not paid to B., &c. within the twelve months, nor the sum fixed, the purchase is absolute.
    This was an appeal from a decree of the superior court of chancery, ordering Jones to convey a tract of land to the representatives of Hubbard. The bill states, that the land being advertised for sale, under a deed of trust, to pay a debt due to Allen, it was agreed, between Jones and Hubbard, that the former should purchase the land, at the sale, by bidding the amount of Allen’s debt; and that Hubbard should redeem it, by paying the purchase money, with a premium thereafter to be agreed on. That Jones did purchase it upon those terms; but, since the death of Hubbard, has attempted, by writ of forcible entry and de-tainer, to dispossess his representatives; who prayed an injunction, and a conveyance of the land, upon payment of the purchase money and interest.
    The answer of Jones states, that, at the time of the sale, Hubbard being indebted to the defendant in £-, amply secured by personal securities, applied to him to borrow money to redeem the land; but was refused. That, in a few days afterwards, Hubbard proposed that Jones should buy the land at the sale, (which was upon the 13th of April, 1812,) for the amount of Allen’s debt, and should let Hubbard have it again upon payment of principal and interest at the end of twelve months; but Jones representing that he could not do it without a sacrifice, it was finally agreed ^between them, that Jones should bid the amount of Allen’s debt, for the land; and, if it was struck off to him, that he should re-sell it to Hubbard, for a sum thereafter to be agreed upon, provided it was paid within twelve months: which sum (though never actually agreed on) was understood to be such as would reimburse Jones the money paid, indemnify him for the sacrifices he might make to obtain it, and liberally compensate him for his trouble. That he bought the land upon those terms; took a deed from the trustees; was always willing to have executed the contract, by fixing the sum within twelve months, but Hubbard died in September 1812, and his representatives having refused to arrange the business, he, at the end of the twelve months, obtained the writ of forcible entry, and insists that the purchase is absolute, and the agreement to re-sell at an end.
    The witnesses state, that Jones refused to loan the money to Hubbard, and particularly on the day of sale, as he said he was alreadj- in advance for him four or five hundred pounds. That he determined, a short time before the sale, to accept of no proposition for a loan; but to purchase the land, and re-sell to Hubbard. That he said there was an understanding between them, that he should buy the land, and give Hubbard further time. That he was active in procuring money to purchase the land; and borrowed two sums, one $1000 and the other $500, at ten per cent., for the purpose of enabling him to do it. That, prior to the sale, he told the trustee, that he would not lend the monej; but if Hubbard would agree to his terms, he would endeavour to raise it: that he had mentioned to Hubbard that he could not lend him the money he had offered to his mother in law; but if the land was sold, he would bid Allen’s debt for it; would take the title to himself, and would allow Hubbard twelve months to pay the money. That it would put him to inconvenience to raise the amount; that money was worth more than common interest to him; that he could not withdraw it from its present application to accommodate Hubbard, without a certainty of its being returned within twelve ^months, and having an opportunity of making something by it. That, if he took a deed of trust, it would distress him to sell the land; but if he bought at the sale, and gave Hubbard an opportunity of returning the money within twelve months, and he did not do so, it would be his own fault. That, at the sale, he told the trustee he had obtained Hubbard’s consent to bid; that he and Hubbard informed him they had made a contract; and thereupon Hubbard paid ^205, leaving a balance of £2022. 9. 4. due upon the deed of trust; which sum Jones was to bid, and the land was to be cried out to him. That Jones did bid the ^2022. 9. 4., and the land was accordingly struck off to him at that price; but that it was worth, at least, $10,000. The court of chancery granted a perpetual injunction to the proceedings on the writ of forcible entry, and decreed a conveyance of the land, upon payment of principal and interest. From which decree Jones appealed to the court of appeals.
    Stanard, for the appellant.
    The appellees had no right to redeem; for it was a conditional sale, and not a mortgage. Hubbard was to have the land again if he paid Jones his advances, with a premium, to be ascertained within twelve months, sufficient to remunerate his sacrifices and trouble. But this was never done, without any fault in Jones, who was anxious to have it fixed' in the lifetime of Hubbard, and made great efforts to effect it after his death, but without success. Hubbard and his representatives were the cause why the premium was not agreed on; and consequently, as the twelve months have expired, the title of Jones has become absolute. For the sale was every way complete ; and the power to re-purchase was collateral and indefinite, depending upon terms to be afterwards agreed upon by the parties; but that not having been done, the collateral right expired at the end of the stipulated period, and could not be afterwards resuscitated. Chapman v. Turner, 1 Call, 280; Robertson v. Campbell, 2 Call, 421; Tas-burgh v. Ecklin, 2 Bro. Pari. Cas. 26S; 1 Pow. Mortg. ÍS6. These cases prove that the contract is to be considered *as a conditional sale, or a mortgage, according to the intention of the parties: and the intention, in the present case, clearly was, that it should be a conditional sale; and that Hubbard should avail himself of the right within twelve months, or not at all. Nor was there any thing unreasonable in this, as Jones was obliged to raise the money at a sacrifice, and had constantly refused to lend it to Hubbard, who was perfectly apprized of the necessity of punctuality on his part, and particularly of ascertaining the compensation to be made. The failure, therefore, was voluntary, and his representatives have no cause to complain. The objection of usury is wholly unfounded, 1. Because there was no loan in fact, nor was any intended. 2. Because no compensation was agreed upon; for, as to that, the undertaking was collateral, and the contract indefinite. But, to constitute usury, there must be a loan, and the contract so precise, that if it were not for the statute, it would support an action; which is not the case here; for, if there were no statute of usury, no action could be maintained for the premium. The enquiry, however, is unimportant; for the question cannot be gone into, as the point is not suggested in the pleadings.
    Gilmer and Call, contra.
    It is plain that the parties intended a redemption; for by the terms of the contract, the purchase was to be made for Hubbard, to prevent the estate from passing into other hands, and to enable him to get it again, upon re-payment of the money with a premium. But, independent of the words, the appellees were entitled to relief upon general principles; for the distresses of Hubbard were so great, and the inadequacy of the price so excessive, that a court of equi ty would have relieved without any express agreement to that effect. 1 Bro. Ch. 1; 6 Ves. jr. 273; 3 Wms. 131; 2 Bro. Ch. 170; 2 Call, 429 ; 4 Hen. & Munf. 103. The stipulation that the title of Hubbard should be absolute,' if Jones failed to agree upon the compensation, was in terrorem only, and intended to compel performance of the engagement ; in which view it operated *merely as a penalty, and rested in compensation. 4 Hen. & Munf. 120; 2 Wms. 66; 1 Fonbl. 199, 391. The case of Chapman v. Turner, 1 Call, 280, does not resemble this: there the property was bought from the owner himself, and the full value was paid for it; here the purchase was not made from the owner, but the estate was purchased, for him, at a reduced price by agreement: there the parties were free from restraint, and stood upon an equal footing; here Hubbard acted under a species of duress, and was not a free agent, 1 Call, 75: there the contract related to a personal chattel; here to real estate: and the doctrine of conditional sales does not apply to real estate. For every sale of lands, with a right to re-purchase, is a mortgage, according to Littleton, sect. 332: and lord Hardwicke, in Miller v. Lees, said that the doctrine of defeasible, or conditional, sales had no application to lands, 2 Atk. 494; which does not conflict with the case of Tasburgh v. Ecklin, 2 Bro. Pari. Cas. 265; for that was a mortgage, which had been foreclosed for thirty-four years; and consequently the right of redemption was gone. Under every view, then, the right to redeem, in the present case, upon payment of principal and interest, is extremely clear.
    But the appellees are not bound to pay any thing. For the contract was usurious, and void, 1. Because there was a previous communication for a loan combined with great inadequacy of price, which constitutes usury, 3 Bos. & Pull. 160; and although no money was paid into Hubbard’s hands, it amounted to the same thing, as it was applied to his use, and might have been recovered from him by a bill in equity, or by an action for money laid out and expended. 2. Because Jones was to receive more than legal interest; for he was to be reimbursed for all his sacrifices; and the evidence shews that he gave ten per cent, for part of the money: which obliged Hubbard to pay the same; for so far the contract was fixed, whether the additional premium was ever agreed upon, or not. 3. Because it is not material, that, without the premium, Jones would only get back what he paid; for still Hubbard was-to pay more than the 'legal rate; and that avoided the contract. 3 Cranch, 180; 6 Cranch, 252; 11 East. 612. 4. Because the premium was not indefinite; for it was in the power of Jones to exhaust the whole estate, as he might have refused to agree at a less price: Which differs it from indefinite contracts in general; for Hubbard was absolutely bound for the full value. 5. Because Jones run no risque of his principal, for that he was to have at all events ;■ and when he refused redemption, and look bis judgment at law, he got more, in value, than legal interest, and completed the usury. 2 Bos. & Pull. 381. Nor are the’ appellees precluded from insisting on the objection upon this record, 1. Because-the bill states that a premium was to be given; which comprehends the usury, and would be sufficient even at law. 3 Cranch, 180. 2. Because the answer states the facts, and the replication puts them in issue. 1 Ves. 583; 13 Ves. jr. 546; 16 Ves. 124.
    
      
      The principal case is cited and approved in Myers v. Williams, 85 Va. 629, 8 S. E. Rep. 483. See monographic note on "Usury” appended to Coffman & Bruffy v. Miller, 26 Gratt. 698.
    
   PER CURIAM.

The contract before us is not a loan, nor is the deed to be considered as a mortgage. In both those contracts, money has been received upon a condition to be returned. In the case of a mortgage too, it is of no importance,' that the deed-. contains no covenant for re-payment: Such a covenant results from the nature of the transaction. In the agreement before us, however, no money has been received by the appellee’s intestate, and there was no contract on his part for its re-payment. It is true the transaction was intended to have the same effect, in his favour, as a loan. It was intended to' enable him to sell his land: Not, indeed, by preventing a sale, as a loan would have done, but by enabling him to re-purchase it, on the terms to be thereafter agreed on, and within the time specified. The appellant always refused to lend, to the appéllee’s intestate, the requisite sum, even under the security of a deed of trust, giving for a reason, among others, that it would distress him to sell the land again under such deed: But he consented to put the business in such a train as would, in the event of his becoming the purchaser, leave the land absolutely his, if the meditated conditions of re-purchase should not be ^complied with. If the contract had been consummated, as it related to the terms of re-purchase, and they had been unimpeachable in the eye of a court of equity, we can see no objection to the contract; and, if in that case, the conditions of re-purchase had not been duly complied with, the estate would have become absolute in the appellant: It would have been discharged from the privilege of repurchasing. So if the transaction could be considered in a separate and insulatéd point of view: If we could consider the appellant as the absolute owner of the land, the failure to agree on the price of re-purcháse would leave the land his, as well as a failure to comply with the terms when agreed on. The case of Smallwood v. Mercer, is a direct authority to shew this: In that case the contract was vacated, because the price of the land could not be fixed in the manner agreed on by the parties. But we cannot consider the transaction in this insulated point of view: The appellant was not the absolute owner of the land: He was, by the agreement, , only to become so on certain conditions; one of which was, that the terms of re-purchase should be fixed on by the parties. That has not been done in the present instance; nor was the intestate in default' in not doing it: And therefore it affects the contract in all its parts. Without this privilege of re-purchasing, the intestate would never have parted with his land for less than its value: And when this privilege is taken from him, the ' original purchase cannot stand. A purchase is not to be favoured, in a court of equity, when the consideration therefor has failed.

The contract is therefore tó be rescinded, on making just compensation. The measure of that compensation is the principal money with interest. We cannot go'into the foreign and speculative enquiry as to what sacrifices the appellant may have encountered in raising the money. We cannot vary our decree, under like circumstances, with the greater or lesser degree of prudence used by one of the contending parties.

On these grounds the decree is to be affirmed.