Case Name: Martin v. Hall & als.
Court: Supreme Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1852-07
Citations: 9 Gratt. 8
Docket Number: 
Parties: *Martin v. Hall & als.
Judges: (Absent Daniel and Lee, Js.)
Reporter: Virginia Reports
Volume: 50
Pages: 20–21

Head Matter:
*Martin v. Hall & als.
July Term, 1852,
Lewisburg.
(Absent Daniel and Lee, Js.)
Deeds of Trust — Usury—Subsequent Bond with Usury Expunged — Case at Bar. — A deed of trust upon land is executed tosecure a usurious debt. Afterwards a new bond is executed from which all the usurious premium is excluded, and it is agreed between the parties that the deed of trust shall stand as a security for the new bond. Subsequent to the execution of the new bond and this agreement a third party recovers a judgment against the grantor upon a bond executed before the deed of trust was executed, and files a bill to set aside the deed of trust as usurious: Held:
1st. Same — Same—Same—Extent of Relief. — If the usury had not been expunged by the parties by their second agreement, the plaintiff coming into equity for relief could only obtain it to the extent of the usurious premium.
2d. Same — Same—Same—Same.—The parties having by their second agreement done all that a court of equity would have done, and having agreed that the deed of trust should stand as a security for the second bond, that agreement is valid, and the deed will be held as a security for the bond.
3d. Chancery Practice — Equity Gives Complete Relief, — The court having possession of the case, will decree the sale of the lands and the application of the proceeds according to the priorities of the parties having liens upon it.
This was a bill filed in the Circuit court of Harrison county, by Sandford B. Hall and Josiah Chamberlin, to set aside a deed of trust executed by John Chamberlin conveying a tract of land to secure a debt alleged to be due to William Martin, on the ground that the debt was usurious. Hall and Josiah Chamberlin held a judgment against John Chamberlin upon which an execution had been issued and returned “no effects;” and they thereupon filed this bill. There was no doubt that the bond executed by John Chamberlin to Martin, and which the deed of trust was intended to secure, *was usurious: That bond and deed were executed in December 1839. In December 1841 the parties entered into an agreement in pursuance of which the first bond was surrendered, and Chamberlin executed another bond to Martin, from which all the usurious premium was excluded; and the agreement provided that the deed of trust should stand as a security for this second bond as if it was the original note. The judgment of the plaintiffs was recovered in the fall of 1842, subsequent to this agreement ; though it was founded on a bond executed in 1838.
The cause came on to be heard in November 1844, when the court held that the deed of trust was void as a security for the debt due to Martin, and appointed a commissioner to sell the property for the purpose, first, of satisfying other valid liens upon the land; and then of paying the debt of the plaintiffs. From this decree Martin applied to this court for an appeal, which was allowed.
Fry, for the appellant.
There was no counsel for the appellee.
Judge Lee had been counsel in the cause.
Usurious Contracts — Extent of Relief. — In Brockenbrough v. Brockenbrough, 31 Gratt. 595, it is said, the extent of the relief, if usnry had been proved, would have been the abatement of the usurious premiums, citing Martin v. Hall, 9 Gratt. 8. See monographic note on “Usury” appended to Coffman v. Miller, 26 Gratt. 698.

Opinion:
ALLEN, J.,
delivered the opinion of the court.
It is one of the settled and most cherished principles of a court of equity that he who seeks equity must do equity. It will not relieve against a judgment obtained by the fraud of the creditor but on the terms of paying what is justly due. And so in cases of gross extortion and oppression, where security has been given for the payment of money for goods sold, when the security has been decreed to be surrendered, it has always been upon the terms of paying what was really due. The same course of decision has prevailed in cases arising under the statutes against usury. The Court of chancery in England had invariably held under their statutes, that if it be necessary to go into ^chancery to displace a judgment, it could be done only upon the equitable terms of paying the principal money really due, with lawful interest. And as this doctrine was familiar to our legislature, we are bound to presume that in adopting the statute they adopted it as it had been construed. This principle, uniformly followed where the debtor himself was the party impeaching the transaction, was in the leading case of Scott v. Nesbitt, 2 Bro. Ch. R. 641, applied to the creditors of the debtor.
In that case there was a judgment on a bond of the testator against his executors, and a bill filed for an account oí assets: The other creditors objected to the debt as usurious, an objection which they had no opportunity of making before; but it was held that the judgment should stand for the money actually due, and the interest. The authority of this case was recognized and followed in this court in Rankin's ex'or v. Rankin's adm'r, 1 Gratt. 153. In that case the original bond was tainted with usury; and if that defence had been relied on in the action upon the bond, it would have avoided the obligation entirely. But as a judgment had been obtained upon the bond, the usury could not have been used as a defence to an action at law upon the judgment ; and this court determined that the relief in equity, whether sought by a bill for relief against the judgment, or made the ground of defence to a bill by the judgment creditor for an account of assets, must be limited to the rejection from the claim of the usurious excess. The foregoing principles must rule this case. On the 24th of December 1839, John Chamberlin executed his bond to William Martin for the sum of 385 dollars; and on the same day gave a deed of trust to secure the payment. The transaction was confessedly usurious; and at law both the bond and the deed of trust might have been avoided in toto by the defence of usury. Subsequently the parties agreed to cancel *the bond; the debtor executed a new bond for the sum really advanced and justly due; and covenanted and agreed that the deed of trust should remain a good security for the amount of the new bond. After these transactions, the appellees recovered a judgment against the debtor for a debt contracted prior to the execution of the deed of trust; and thereupon filed this bill to remove the deed of trust out of the way of their judgment lien. Without deciding in this case, whether it is competent for a judgment creditor to set up the defence of usury for his debtor, it is sufficient to say that if he is let in, it must be on the terms of a court of equity. Although the deed of trust was void at law; and, being void in its inception, even although the debtor could have defeated a recovery in an action of ejectment by the defence of usury, notwithstanding the subsequent agreement; yet when he seeks relief in equity, he can obtain it only upon the principles of that forum. The judgment creditor had no day in a court of law, he was compelled to resort to equity; and according to the case of Scott v. Nesbit, ubi supra, the measure of relief to which he was entitled, was to purge from the amount of the claim the usurious excess.
In this case the parties themselves have done what a court of equity would have required them to do. As this is not a proceeding under the 3d section of the statute, it must be conceded on all hands that if the parties had made no attempt to purge the claim of the usury, equity would only relieve upon the terms of paying the debt really due with interest; and their doing what they could to remove the taint of usury, should not in a court of equity place the creditor in a worse condition than if he had done nothing. They never canceled the deed of trust. In contemplation of both and by their express agreement, it was to continue as a security for the money actually loaned. The agreement, *if regarded at all, should be taken altogether. If it be disregarded, the parties are thrown back upon the original transaction, and then the measure of relief in equity is clear from doubt. Or if it is to have any influence on the case, its terms should be adhered to, unless some rule of law or principle of equity be thereby violated.
The fact that the debt of the appellee was contracted before the execution of the deed cannot affect the case. There is no allegation of fraud, and until he obtained his judgment the appellee was a creditor at large.
The court is therefore of opinion, that so much of the decree of the Circuit court is erroneous as held that the deed of trust of the 24th December 1839 should not be treated as a security for the sum actually loaned, with legal interest, as against the appellee's judgment creditors seeking the aid of a court of equity to remove the same out of their way.
Reversed with costs; and cause remanded with instructions to direct a sale of the land, and to apply the proceeds, first, to the payment of the sum of 272 dollars, with interest from the 31st December 1839 until paid, and his costs, to the said William Martin or his representative; and the residue to the several claims in the said interlocutory decree of the 19th November 1844 mentioned, according to their priorities as therein ascertained.
Decree reversed.
Chancery Practice — Equity Gives Complete Relief. —In Nagge v. Newton, 22 Gratt. 825, it is said: "In .such a ¿aáe the court having obtained possession of the subject, it will do complete justice by disposing of the whole subject at its own bar, without sending the parties to another forum. This practice has been commended and established by numerous decisions of this court. See Payne v. Graves, 5 Leigh 561; Billups v. Sears, 5 Gratt. 31; Lyons v. Miller, 6 Gratt. 427; Bank of Washington v. Arthur, 3 Gratt. 173; Martin v. Hall, 9 Id. 8."