Case ID: ohio-st_26/html/0059-01.html
Source: Caselaw Access Project
Author: {"author": "Br the Court.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Philip Cramer v. Peter Lepper et al.
    1. Where one purchases land subject to a mortgage lien, and, as part of the consideration, agrees to pay the mortgage debt, he can not defend against the mortgage on the ground of usury.
    2. Under a contract for the payment of interest at a specified rate annually, upon default of payment, interest on the interest will be computed at six per cent.
    . Motion for leave to file a petition in error to the District Court of Summit comity.
    On the 25th day of February, 1868, Philip Cramer executed his note to Samuel C. Taylor for $2,500, payable-five years after date, with interest at the rate of ten .per cent, per annum, payable annually; and,to secure payment of the note, executed a mortgage on certain real estate situate in Summit county.
    Afterward, on the 2d day of February, 1869, Cramer, by contract in writing, sold the mortgaged premises to Peter Lepper, and agreed to convey the same in fee-simple on or before the 2d day of April, 1869; and, in consideration therefor, Lepper agreed to pay $23,850, as follows : By the conveyance of a certain other tract of land to Cramer, $9,000; by the transfer of certain notes, $9,200; by hia own notes bearing interest, $3,150; and the balance of the purchase-money was provided for in these words: “ There is a lien on said Cramer’s farm of twenty-five hundred dollars, held by a Mr. Taylor, which Peter Lepper agrees to pay.”
    On the 1st of April, 1869, Cramer executed and delivered to Lepper a deed in pursuance of the contract, in which the grantor covenanted that the premises were free .aud clear of all incumbrances, “ except a mortgage claim •of a Mr. Taylor for $2,500, which Peter Lepper is to pay to ■said Taylor.”
    From time to time between the delivery of the deed and the 12th of March, 1874, Lepper paid to Taylor on his mortgage divers sums, amounting to $2,675.73.
    On the 25th of April, 1874, Taylor brought his action in the Court of Common Pleas of Summit county, against Cramer and Lepper, to enforce his mortgage lien for the balance due on the note, including interest at the rate therein specified.
    On the final hearing, at the May term, 1874, Cramer admitted the right of the plaintiff to recover according to the prayer of his petition, but Lepper resisted so much of the claim as was usurious. Thereupon, the court found the balance due on the mortgage in favor of the plaintiff, computing interest at the rate of ten per cent., payable annually, to be $1,402.50, and decreed, upon failure of payment at a short day, the sale of the mortgaged premises.
    Thereupon, the court proceeded to determine the rights of the defendants as between themselves, proper pleadings having been interposed for that purpose, in which Cramer •claimed that Lepper was bound by the contract to pay the whole amount of the decree. Lepper, on the other haud, claimed that, under the contract, he was bound to pay auy balance that might be unpaid of the sum of $2,500, and interest thereon from the 1st of April, 1869, at the rate of six per centum per annum and no more.
    Upon this issue there was introduced in evidence the •contract of February 2, 1869, and the deed of April 1, 1869, above named, together with an agreed statement that Taylor’s mortgage had been duly recorded, and that Lepper, at the date of the contract, had knowledge of the contents of the note and mortgage.
    Thereupon, the court decreed that, as between themselves, Cramer was bound to pay of the balance due to Taylor on his decree, the sum of $275.20, and Lepper the balance—to wit, $1,126.80.
    On petition in error to the District Court by Lepper, it was alleged that the Common Pleas erred: 1. In holding that Lepper was bound by his contract to pay to Taylor a greater sum than $2,500, and interest thereon at the rate-of six per cent, from and after April 1, 1869; 2. In not holding that Cramer was liable for interest on said sum of $275.20 from and after the 1st of April, 1869.
    The judgment of the Court of Common Pleas was reversed by the District Court, and this proceeding is to obtain a reversal of the judgment of the District Court.
    
      II. W. Ingersoll, for the motion:
    Usury is a defense personal to the debtor. It is not transferable or assignable. No one but a party to a usurious loan, or his heirs, devisees, or personal representative, can avoid a usurious contract on account of usury. It can not be set up by a stranger to the original transaction. Ohio- and Mississippi JR. JR. Co. v. JKasson, 37 N. Y. 218; Bullard v. Raynor, 30 lb. 206 ; Chamberlain v. Dempsey, 36 lb. 149 ; 10 Johns. 185 ; 9 Paige, 137 ; 10 lb. 326 ; 2 Denio, 621.
    The usurious mortgage was as much a part of the consideration as was all the purchase in excess of the mortgage. It entered into the contract as part and parcel thereof. The principal and interest, or amount represented by the mortgage, together with the further price or value of the land, both make up the purchase by Lepper.
    Usury, when made the consideration for another contract, is neither an Illegal nor void consideration. Bearce v. Barstow, 9 Mass. 44; Busby v. Finn, 1 Ohio St. 409 ; DeWolf v. Johnson, 10 Wheat. 392.
    
      A purchaser of laud who takes by the terms of his conveyance, subject to a mortgage, can not set up usury in the mortgage to avoid it. Post v. Dart, 8 Paige, 689; Cole v. Savage, 10 lb. 583; Levett v. Diamond, 4 Edw. 22 ; Wells v. Chapman, 13 Barb. 561; Sands v. Church, 6 N. Y. 347; Belmont v. Coman, 22 lb. 438 ; 24 lb. 170; Minor v. Terry, ■6 IIow. Pr. 211; Union Bank of Massillon v. Bell, 14 Ohio St. 200 ; Burr v. Beers, 24 N. Y. 178 ; Brooks v. Avery, 4 lb. 225 ; Lawrence v. Fox, lb. 268; Thompson v. Thompson, 4 Ohio St. 333.
    
      Fdgerton, Kohler § Campbell, contra:
    Usury, in the mortgage assumed by Lepper, is good as a 'defense by him to that extent. Ord on Usury, 131; Post v. Dart, 8 Paige, 639 ; 4 Comst. 225.
    Lepper, by his purchase, acquired the same right to contest the validity of Taylor’s mortgage, or the usury in it, that Cramer had. The fact that Cramer allowed a judgment to be taken against him for the usurious claim, does not in any manner deprive Lepper from defending on his part against it. 9 Paige, 137; 13 Mass. 516; 15 lb. 515 ; 1 Hilliard on Mortgages, 555 ; 14 Ohio St. 200; 17 ■Ohio, 339.
   Br the Court.

As between Taylor, the mortgagee, and Lepper, the grantee of the mortgagor, the latter must be regarded as the purchaser of the equity of redemption merely, and, as such, he had no right to set up by way of defense that the note secured by the mortgage was usurious. The defense of usury in such case is personal to the mortgagor, and if waived by him, can not be set up by his •grantee, who assumes, in consideration of the grant, to pay the claim of the mortgagee. Union Bank v. Bell, 14 Ohio St. 201; Green v. Kemp, 13 Mass. 515; Shufelt v. Shufelt, 9 Paige, 137; Morris v. Floyd, 5 Barb. 130.

As between Cramer and Lepper, the vendor and pur•chaser of the equity of redemption, we think the Court of •Common Pleas rightly construed their contract in holding Cramer to the payment of the. interest which had accrued on the note and mortgage prior to April 1,1869, the date of the conveyance. This construction is sustained in view of the fact that the amount of the mortgage debt assumed by Lepper is stated in the contract at $2,500, the principal of the note only; and especially as the principal debt, excluding interest fully and exactly, when added to other specific ■sums agreed to be paid, amounts to the sum agreed as the price to be paid for the mortgaged premises.

And as between the same parties, it is clearly shown by the terms of their contract when considered in the light of the known facts, that Lepper’s undertaking was to pay the principal of the note, with interest, after the date of the conveyance, at the rate therein specified, as part consideration for his purchase.

But we think the Court of Common Pleas erred in not charging Cramer with the interest which accrued on the sum decreed against him from April 1, 1869, until the date of the decree. This sum, as we understand, was the interest which had accrued on the note before the date of the conveyance, and, as against Cramer, Lepper should have been released from interest accruing thereon. The rate of such accruing interest was six per cent., there being no agreement as to the rate of interest upon accrued interest. This being the rate to which Taylor was entitled, the same rate must be computed as between Cramer and Lepper.

Eor this error the judgment of the Court of Common Pleas was rightly reversed, and hence this motion must be overruled.