Case Name: Bank of Washington v. Arthur & als.
Court: Supreme Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1846-07
Citations: 3 Gratt. 173
Docket Number: 
Parties: *Bank of Washington v. Arthur & als.
Judges: (Absent ALLEN, J.)
Reporter: Virginia Reports
Volume: 44
Pages: 601–606

Head Matter:
*Bank of Washington v. Arthur & als.
July Term, 1846,
Lewisburg.
(Absent ALLEN, J.)
Usury — Bond, Deed of Trust Consideration Assignment. -A.executes to 8, a bond for 40.000 dollars, and a deed of trust to secure it; the consideration of which bond is in part a debt due from A. to 8.; in part debts of A. which 8. undertook to pay; and for the balance, bank and railroad stocks, at prices greatly aboye their then market value. 8. being largely indebted to B. assigns the bond and deed of trust to £. as a collateral security for his debt; and about the same time fails, and is in fact insolvent. B. gives notice to A. of the assignment; and A. then, without stating any thing to B. of the nature of the consideration of the bond, says it is a valid bond, and promises to pay it. Afterwards, the bond not being paid, B. directs the trustees in the deed, of trust to sell; and then A. goes into a Court of Equity; and disclaiming all benefit of discovery from the defendant, asks that the trustees may be enjoined from selling under the deed until B. shall establish his claim at law. flisi.D:
1. Same — Same.—The bond and deed of trust is usurious and void.
2. Same — Same—Consideration—Pre-existing Debt— Effect. — Though the bond and deed of trust is usurious and void, yet as part of the consideration of the bond was a pre-existing valid debt, which continues to be a valid debt, a Court of Equity will not compel the obligee to establish his claim at law before proceeding to enforce his security.
3. Same — Equity Practice — Relief. — Though the bill is framed for the purpose of staying proceedings on the deed, and compelling the creditor to establish his claim at law, yet as the facts disclosed entitle the debtor to relief upon equitable terms, the Court will not dismiss the bill; but will give the relief to which, upon principles of equity, the debtor is entitled.
4. Same — Consideration — Pre-existing Debt — Case Distinguished. — The fact that a part of the consideration of the bond was a pre-existing valid debt, distinguishes this case from that of Marks v. Morris, 2 Munf. 407; and forbids the relief given in that case. ,
5. Same — Assignment—Promise to Pay — Consideration. — The promise of A. made after the assignment to B. haying been without consideration, created no new contract.
6. Same — Same—Same—Same—Fraudulent Intent.— The failure of A. to inform B. of the nature of the consideration of the bond, and his promise to pay it, not having proceeded from any fraudulent intent, and having in fact operated no injury to B., cannot be treated as fraudulent, so as to forbid A to set up the charge of usury against the bond.
*James S. Arthur, George F. Hupp and Philip A. Machir, filed their hill in the Superior Court for the county of Shenandoah, in which they charged, that Arthur, on the 6th of February 1840, had executed a deed by which he conveyed sundry tracts of land and other property in trust to secure certain debts due to Hupp, Machir and others. That Arthur had, in March 1839, executed a deed by which he conveyed the same property in trust to secure a debt of 40,000 dollars, due by bond to John B. Steenbergen, who had assigned the same to the Bank of Washing-ton. That this bond was given on a usurious consideration : and they set out the usury. That the plaintiffs had abundant testimony to establish the usury, and disclaimed all benefit of discovery which the defendants might make; but that the security being in the form of a deed of trust, the trustees might offer the property for sale, as they had advertised they would do, without giving the complainants an opportunity to have an enquiry into the character of the transaction. They, therefore, prayed that John B. Steenbergen, The Bank of Washington, and the trustee in the deed, mighl be made defendants to the bill, and answer thereto on oath: the benefit of which answers, as to the usury charged in the bill, they disclaimed. That the Court would enjoin the defendants from all proceedings on the deed of trust, until the plaintiff Arthur could have a day in Court to prove the usury. That the testimony might be taken and perpetuated; and that the Court would direct a suit to be brought in which the question of usury might be tried. And they prayed for all proper relief, not inconsistent with the purpose of the bill, which was to procure a fair trial of the usury charged. The injunction was granted.
Steenbergen and the Bank of Washington answered the bill. Steenbergen denied that he intended or expected to receive more than the legal rate of interest. *The bank denied all knowledge of usury in the transaction, if there was such; and insisted that if the bond was usurious, Arthur could not avail himself of the objection to the deed in the hands of the bank; because after the bond and deed of trust had been transferred to the bank, Arthur had given to its officers every assurance that the said security was valid for the full amount named in it; and expressly promised to pay the full amount of the same to the bank. And that in consequence of these assurances and promises, the bank had relied upon the bond and deed of trust as covering 40,000 dollars of Steenbergen’s indebtedness, and had made no effort to obtain any further or other security for said portion of its claim.
Upon the proofs in the cause, it appears that previous to the 12th of March 1839, Arthur was indebted to Steenbergen about 8000 dollars; and being embarrassed in his circumstances, though in possession of a large property, he desired to obtain a loan of money. Under this state of things, an agreement was entered into between Arthur and Steenbergen, by which the latter agreed to lend to Arthur, the sum of 40,000 dollars, to be made up by the debt Arthur owed Steenbergen, by certain debts which Steen-bergen was to pay for Arthur, and.by stock of the Citizens Bank and Western Bank of Baltimore, and of the Winchester and Potomac Railroad Company. And Arthur was to execute his bond for 40,000 dollars, payable in six annual instalments, commencing on the 1st of April 1840, the five first of 6000 dollars each, and the last of 10,000 dollars, the interest to be paid semi-annually; and to execute a deed conveying- his property to trustees to secure the payment of the money.
In pursuance of this agreement, Arthur, on the 12th day of March 1839, executed his bond to Steenbergen, payable as aforesaid; and on the same day, he executed a deed, by which he conveyed to Philip Williams jr. *and Mark Bird, sundry tracts of land and other property in trust, to secure the payment of the bond.
The stocks transferred by Steenbergen to Arthur were sixty-five shares of the stock of the Winchester and Potomac Railroad Company, at 21 dollars per share, when the market value thereof was from seven to eleven dollars; stock of the Citizens, and Western Bank of Baltimore, to the amount of 15,000 dollars at par value. The par value of the Western Bank stock was 25 dollars, and its value in the market, about the time of the transfer, was 22 dollars 25 cents. The par value of the stock of the Citizens Bank was 10 dollars; and its market value, when transferred, was about 7 dollars 76 cents. These stocks, as Steen-bergen alleged, were transferred to Arthur at the prices which he gave for them; and the banks were making dividends of six per cent.
Some time in the summer of 1839, Steen-bergen deposited Arthur’s bond with the Bank of Washington, as a collateral security for the discounts afforded him by the bank; and on the 30th of December 1839, he regularly assigned to the bank the said bond, and the deed of trust given by Arthur to secure it, as collateral security for his liabilities, which at that time amounted to 75,000 dollars. These liabilities were upon bills or notes which had been discounted for him, and which had then come to maturity, and had been protested ; and on all of which there were endorsers. About this time, Steenbergen failed in business.
About the last of January 1840, the bank gave notice to Arthur of the assignment ox his bond to the bank; and at the same time, at an interview which took place between some of the officers of the bank and Arthur, he stated that there was no objection to his payment of the bond; that the security was ample; and that he would make the payment at any of the banks in Baltimore that the officers of the Bank of Washington might ^designate. These assurances having satisfied the bank that Arthur’s bond was a good security for Steenbergen’s liabilities, to the amount of the bond, and Steenbergen having transferred to the bank a certificate of stock of the State of Virginia, to the amount of 20,000 dollars, and placed them in another deed of trust which he executed, as creditor to the amount of 23,000 dollars, the bank took no farther steps to obtain any additional security ; which they alleged they would have done, if Arthur had advised them that his debt was on a usurious consideration : though, as Steenbergen had then failed, and was insolvent, the probability of his giving other security was at least very doubtful.
On the 5th of April 1843, the cause came on to be heard, when the Court made a decree that the injunction awarded the plaintiffs should be continued in force until the question of usury should be decided by a Court of Law, in some regular proceeding upon said bond or deed, instituted by the defendants or any of them, and until the farther order of the Court on certificate of such decision. Prom this decree the Bank of Washington applied for and obtained an appeal to this Court.
The cause was most elaborately argued here, by G. N. Johnson and Robinson, for the appellant, and Patton, Cooke, Stuart and Samuels, for the appellees.
Por the appellant, it was argued, that there was no evidence of usury. But if the usury was proved, then that the relief afforded by the decree was improper. On this point a reference was made to the principles of the English Courts of Equity; and it was insisted the rule was universal, that the plaintiff who comes into equity to set aside a usurious security must pay what is bona fide due. And for this, was cited, Lamplugh v. Smith, 2 Vera. R. 77; Witley v. Price, Id. 78; Smith v.' *Loader, Prec. in Ch. 80; Kelly on Usury 95; Taylor v. Bell, 2 Vern. R. 171; Chesterfield v. Janssen, 1 Atk. R. 301 ; Lawley v. Hooper, 3 Atk. R. 278; Scott v. Nisbit, 2 Bro. Ch. R. 641; 2 Cox’s Cas. 183; Bosanquett v. Dashwood, Cas. Temp. Talbot 38; Dalbiac v. Dalbiac, 16 Ves. R. 110; Mason v. Gardiner, 4 Bro. Ch. R. 436; Whitmore v. Prancis, 8 Price’s R. 616; Pitz-roy v. Guillam, 1 T. R. 150. These principles, it was farther insisted, were acted on in New York; Rogers v. Rathbun, 1 John. Ch. R. 367; Tupper, &c. v. Powell, &c. Id. 439; Dunham v. Dey, 15 John. R. 555; and in the Supreme Court of the United States, Cathcart v. Robinson, 5 Peters’ R. 263; Pennock, &c. v. Dialogue, 2 Peters’ R. 1.
The counsel then examined the case of Marks v. Morris, 2 Munf. 407, and insisted, that it was inconsistent not only with the well established principles of the English Courts, but opposed to the principle often recognized in our Courts, that he who asks equity must do equity: and they referred to, Payne’s ex’or v. Dudley, 1 Wash. 196; Lipscomb’s adm’x v. Littlepage’s adm’r, 1 H. & M. 454; Skipwith v. Strother, &c. 3 Rand. 214; Gordon v. Jefferey, 2 Leigh 410. They farther insisted, that Marks v. Morris should not be considered a binding authority by any Judge who considers it to have been decided on unsound principles ; because it had never been acquiesced in by either the bench or the bar: and to shew this, they cited and commented on the cases of Stone v. Ware, 6 Munf. 541; M’Pherrin v. King, 1 Rand. 172; Martin v. Lindsay’s adm’rs, 1 Leigh 499; Pitzhugh v. Gordon, 2 Leigh 626; Turpin v. Povall, &c. 8 Leigh 93; Campbells v. Patterson, 11 Leigh 113; Gilliam v. Clay, 3 Leigh 590; and Thornton v. Gordon, 2 Rob. R. 719. And as cases directly opposed to Marks v. Morris, they referred to Eagleson v. Shot-well, 1 John. Ch. R. S36; Fanning v. Dun-ham, 5 John. Ch. R. 122; Fulton *Bank v. Beach, 1 Paige’s R. 429; 3 Wend. R. 573; Stanley v. Gadsby, 10 Peters’ R. 521.
The counsel insisted farther, that if Marks v. Morris was to be considered as law, there was a material distinction between that case and the case before the Court.
1st. In Marks v. Morris, if the contract to secure the performance whereof, the deed of trust was made, was vacated, the creditor could have recovered nothing either at law or in equity. In the present case, though the bond and deed of trust to secure the 40,000 dollars be adjudged void at law for usurj, the pre-existing valid debts are nowise impaired by the subsequent usurious contract, but remain in full force even in a Court of Daw. Pollard v. Scholy, Cro. Eliz. 20; Ferrall v. Shaen, 1 Saund. R. 427; Robinson v. Bland, 2 Burr. R. 1077; Nichols v. Eee, 3 Anstr. R. 940; Gray v. Fowler, &c. 1 H. Bl. R. 462; Phillips v. Cockayne, 3 Camp. R. 119; Gardner v. Flagg, 8 Mass. R. 101; Bush v. Eiving-ston, 2 Caines’ Cas. 66; Johnson v. Johnson, 11 Mass. R. 359; Pollard v. Baylor, 6 Munf. 433; Gaither v. Farm. & Mech. Bank, 1 Peters’ R. 37. To the extent of the valid debts, it was insisted, the securities should be allowed to stand ; Parker v. Ramsbottom, 10 Eng. C. E. R. 69; Rankin’s ex’or v. Rankin’s adm’r, 1 Gratt. 153: and the bill should have contained an offer to pay them; and not containing such an offer, it should have been dismissed. Mason v. Gardiner, 4 Bro. Ch. R. 436; Whit-more v. Francis, 8 Price’s R. 616; Fulton Bank v. Beach, 1 Paige’s R. 429 ; 3 Wend. R. 573.
2d. This is not a contest between Arthur and Steenbergen, but between Arthur and Steenbergen’s innocent assignee, the Bank of Washington, which was lulled into security by the statements and promises of Arthur. On this point the counsel cited and commented on, Chitty on Cont. 497; Clarksons v. Garland, 1 Eeigh 147; Spengler v. Snapp, 5 Eeigh 478; Campbells v. Patterson, 11 Eeigh 113; Denn v. Dodds, 1 John. Cas. *158; Parr v. Eliason, &c. 1 East’s R. 92; Jackson v. Henry, 10 John. R. 185; Ellis v. Warnes, Cro. Jac. 33; Bearce v. Barstow, 9 Mass. R. 45; Stone v. Ware, 6 Munf. 541; Cuth-bart v. Hally, 8 T. R. 390; Buckner, &c. v. Smith, &c. 1 Wash. 296; Hoomes’ ex’or, &c. v. Smock, Id. 389; Davis’ adm’r v. Thomas, &c. 5 Eeigh 1; Elliott v. Callan, 1 Penr. & Watts 29; Cleaton v. Chambliss, 6 Rand. 86; Engle v. Burns, 5 Call 463; Green v. Price, 1 Munf. 449; Taylor v. Cole, 4 Munf. 351; Dickenson v. Davis, &c. 2 Eeigh 401; Wendell v. Van Rense-laer, 1 John. Ch. R. 344; Storrs v. Barker, 6 John. Ch. R. 166; Pettit v. Jennings, 2 Rob. R. 676; Decker v. Isenhauer, 1 Penr. & Watts 478; Bosanquet v. Dudman, 2 Eng. C. E. R. 267; Ex parte Bloxham, 8 Ves. R. 531; Heywood, &c. v. Watson, 15 Eng. C. L. R. 55; Swift v. Tyson, 16 Peters’ R. 1; Davison v. Franklin, 20 Eng. C. L. R. 363; Harrington’s Case, Eofft’s R. 755; George v. Stanley, 4 Taunt. R. 683; Feazle v. Dillard, 5 Eeigh 30; Barnes v. Hedley, 2 Taunt. R. 184; 1 Story’s Equ. 64 c; Pil-laus v. Van Mierop, 3 Burr. R. 1663; Pul-lin v. Stokes, 2 H. Bl. R. 312; Williamson v. Clements, 1 Taunt. R. 523.
The counsel for the appellees went into an examination of the evidence to shew that there was usury in the contract between Arthur and Steenbergen. They then came to the question, whether the usury being proved, the decree in the cause afforded the proper relief. On this point, they referred to Marks v. Morris, 2 Munf. 407, upon the principle of which case, the decree in the present case was founded. This decision, made in 1812,' they urged, did not stand alone; but though it had been frequently assailed, it was reaffirmed in Martin v. Eindsay’s adm’rs, 1 Eeigh 499; had been acted on again in Fitzhugh v. Gordon, 2 Eeigh 266; and approved in Turpin v. Povall, &c. 8 Eeigh 93. Having *thus been recognized and acted on as law, for thirty-four years, and acquiesced in during all that time by the Legislature, they insisted that the doctrine of stare decisis must apply with conclusive force, and the question could no longer be considered open for discussion.
Marks v. Morris being taken to be law, the counsel then took up the question, whether the doctrine of that case was applicable to the case of an assignee from the usurious creditor. On this point, assuming what was conceded by the other side, that the assignee takes the obligation subject to all the equities of the obligor; and that the statute avoids all usurious securities; it was argued upon principle, that the securities must be void as against the assignee, if void as against the obligee : and that this was so upon authority. Orde on Usury 105-6; Ex parte Skipp, 2 Ves. sen. R. 489; Eowe v. Waller, Doug. R. 736; Ex parte Thompson, 1 Atk. R. 125; Bowyer v. Brampton, 2 Strange’s R. 1155; Woodson, &c. v. Barrett & Co., 2 H. & M. 80; Ackland v. Pearce, 2 Camp. R. 599; Eloyd v. Scott, 4 Peters’ R. 205.
The counsel for the appellees then examined the evidence, to shew that statements and promises made by Arthur to the bank did not bind him, either on the ground of fraud, or on the ground of contract. As to fraud, the evidence shewed no ground for the imputation, or for the supposition that Arthur did not state precisely what he then believed. As to the promise, the interview between Arthur and the officers of the bank took place after the assignment by Steen-bergen to the bank; and after his insolvency. It is not pretended the bank was induced to take the assignment by Arthur. There is no proof that they have sustained any injury by his statements; and certainly no consideration moved to him for any promise which he made to the bank. Such promise was therefore nudum pactum, and is not obligatory. Comyn on Cont. p. 13, in note; 2 Saund. R. 137 b. ; Barber v. Pox, in note; Clarke v. *Cocke, 4 Past’s R. 57; Jones v. Ashburnham & wife, Id. 455.
He was interested In the subject-matter of the suit.
Usury — Deeds of Trust to Secure Debts--Measure of Relief. — In the case oC Marks v. Morris, 2 Munf. 407, it was decided that a borrower of money at • usurious interest secured by deed of trust contain- ] ing a power of sale, might come into a court of i equity and have the sale enjoined, until, by some i proper proceeding to be instituted by the creditor, he should establish the validity of his contract; in which case the injunction was to be dissolved, and in the contrary event perpetuated. This case was subsequently overruled by Bank of Washington Arthur, 3 Gratt. 173, and Bell v. Calhoun, 8 Gratt. 22. The principal case is cited in this connection in Brockenbrough v. Spindle. 17 Gratt. 26, and Davis v. Demming, 12 W. Va, 270, 272, 274, 276, 278. See footnote to Bell v. Calhoun, 8 Gratt. 22, and monographic note on “ usury” appended to Coffman & Bruffy v. Miller, 26 Gratt. 698.
Same — Consideration — Pre-existing Debt. — The principal case is cited in White y. Freeman, 79 Va. 599, for the proposition that though the notes be usurious and null, yet if part of their consideration was a pre-existing valid debt, which continues to be a valid debt, the decree should be for the principal of the new notes, with interest on the pre-exist-ing debt from the time it was entitled to bear interest. The principal case is cited for this point in Bank of washington y. Hupp, 10 Gratt. 57.
Equlty Practice — Relief.—The principal case is cited in Hall v. Pierce, 4 W. Va. 114, for the proposition that, whenever the object of a bill is to recover money for any debt, or on the breach of any contract, or on account of any other matter, and, it is shown that the complainant is entitled to any sum on account of the particular matters and transactions alleged in the bill, though it may be on other grounds, and for different reasons, and for a less amount than is alleged and claimed in the bill, the amount to which the claimant may be so entitled, may be decreed to him under the prayer for relief, if there be such prayer in the bill. The principal case is cited in this connection in Rust v. Rust, 17 W. Va. 907 ; Nagle v. Newton, 22 Gratt. 825, and Davis v. Demming, 12 W. Va. 278. See foot-note to Martin v. Hall, 9 Gratt. 8.
Usury — Assignment—Promise to Pay — Consideration. — For the statement in the fifth headnote, the principal case is cited m Hopkins v. Richardson, 9 Gratt. 490.
In Stebbins v. Bruce, 80 Va. 400, it is said : “ In the Bank of Washington Arthur, 3 Gratt. 173, it was held, that notwithstanding the obligor, in a bond tainted with usury, had acknowledged the debt, after notice of the assignment, and promised the assignee to pay it, he was not thereby estopped from afterwards setting up the defence of usury. And this was so, said the court, because, first, the promise to pay the assignee could not be treated as a new contract, the same being without a valuable consideration ; and, secondly, because under the circumstances of the case, the assertion of the defence could not operate as a fraud upon the assignee, inasmuch as the representations of the obligor were not made with fraudulent intent, and no loss was occasioned thereby to the assignee. The case was therefore unlike the case of Pettit v. Jennings, 2 Rob. Rep. 676, in which it was held, that where the assignee is induced to take the assignment of the debt by the assurances of the debtor that the same is just, and will be duly paid, the latter is estopped from setting up any defence he may have against the assignor, even though the debt be for a gaming consideration, and therefore” void in its inception, provided the assignee before he accepted the assignment had no knowledge as to the consideration of the instrument assigned.”
• See monographic note on “Assignments” appended to Ragsdale v. Hagy, 9 Gratt. 409. -
Bank of Washington v. Hupp, 10 Gratt. 23, is the sequel to the principal case.

Opinion:
BALDWIN, J.,
delivered the opinion of the Court.
It appears to the Court, that by the contract between James S. Arthur and John B. Steenbergen, in the proceedings mentioned, Arthur agreed to pay to Steenbergen the sum of forty thousand dollars, in certain deferred instalments, with interest thereon from a period shortly subsequent to the date of the contract, in consideration of certain advancements to the like amount to be made by Steenbergen to Arthur, as follows, to wit: a certain portion of said amount in certain pre-existing debts due from Arthur to Steenbergen, which Steen-bergen agreed to surrender, and another portion thereof in certain other debts which Arthur owed to other persons, and which Steenbergen agreed to pay, and the remaining portion thereof in certain bank and railroad stocks which Steenbergen agreed to transfer to Arthur, which stocks it was agreed should be taken by Arthur at prices greatly above their then market value; which sum of 40,000 dollars so to be paid by Arthur to Steenbergen it was agreed should be secured by Arthur's bond and deed of trust in the proceedings mentioned; and which stipulations in relation to pre-exist-ing debts due from Arthur to Steenbergen, and to the payment by Steenbergen of other debts due from Arthur to other persons, and for the transfer of stocks from Steenbergen to Arthur, formed connected, inseparable and mutually dependent parts of one entire contract, made upon a negotiation for the forbearance and loan of money, and for the purpose of enabling Arthur to raise money to relieve him from then existing pecuniary difficulties. The Court is therefore of opinion, that the said contract between Arthur and Steenbergen, and the said bond and deed of trust executed by Arthur in pursuance thereof, were usurious and void.
*And it further appears to the Court, that after the execution of said bond and deed of trust by Arthur, Steen-bergen assigned the same absolutely to the Bank of Washington, but in order that the same should enure as collateral security to the bank for certain debts due from Steen-bergen, and without notice on the part of the bank that said bond and deed of trust were in any wise tainted with usury; of which absolute assignment notice was shortly thereafter, but when it was publicly known that Steenbergen had become insolvent in his circumstances, given by the bank to Arthur; who thereupon, without disclosing the usurious character of said contract, made no objection thereto, and consented to the performance thereof on his part. But the Court is of opinion that this conduct of Arthur cannot be treated as a new contract between him and the bank for the payment of money secured by the said bond and deed of trust; inasmuch as there was no consideration therefor moving from the bank, nor any change in the terms of the contract between Arthur and Steenber-gen, nor any agreement of the bank to do or forbear to do any act in regard either to Arthur or Steenbergen. Nor can the said conduct of Arthur, in regard to the bank, nor his subsequent conduct in impeaching said securities in the hands of the bank as usurious and void, be treated as fraudulent; the former not appearing to have proceeded from any fraudulent intent, and the latter not appearing to have occasioned any substantial loss to the bank; inasmuch as the loss to the bank has been merely of the chance to obtain from its insolvent debtor the substitution of other collateral security, in lieu of the usurious and void securities aforesaid, for a debtor already secured to the bank by bills accepted and endorsed; and there being no proof, or even allegation, on the part of the bank, that the acceptors and endorsers are not perfectly solvent and responsible therefor, or that from any cause the bank has been or will be prevented from '^obtaining payment of the said debt, or any part thereof. The Courtis therefore of opinion, that Arthur, and those claiming under him, are in no wise estopped from impeaching the said bond and deed of trust as usurious and void in the hands of the bank, and obtaining all proper relief against the same.
And the Court is further of opinion, that it is unnecessary to decide whether the doctrine held in Marks v. Morris, 2 Munf. 407, ought to prevail in cases of the same character with that, inasmuch as in the opinion of the Court the doctrine of that case is not properly applicable to this. In the case of Marks v. Morris, the usury alleged having been proved by the evidence, the trustee on the deed of trust given by the borrower to secure the usurious debt was enjoined from selling the property thereby conveyed, until by some proceeding, to be instituted by the lender, he should establish the validity of his contract. The principles of that decision were that the usurious contract being avoided by the statute, no part of the debt could be recovered at law, and the proceeding of the lender under the deed of trust to enforce payment being in pais, the borrower had no day in Court for the purpose of making his defence, and was entitled to the aid of a Court of Equity to enable a Court of Law to avoid the usurious contract altogether, and so prevent the borrower from being subjected to the loss of the principal money. But in that case, the whole debt was created by the usurious contract, which embraced no pre-existing bona fide debt; whereas in the present case, the usurious contract did embrace a pre-exist-ing bona fide debt, which might have been recovered in an action at law, to which its having been embraced in the subsequent usurious contract would have been no de- fence. The tendency of the decision in Marks v. Morris, was, by an abrogation of the usurious security, to defeat a recovery of the usurious debt, there .being no remedy at law upon the usurious contract, *which contract created the entire debt. The application of that authority to the present case would be to defeat the recover}' of the pre-existing bona fide debt, by abrogating entirely the usurious security, and leaving the creditor to an unproductive remedy at law upon the pre-ex-isting valid contract. The Court in Marks v. Morris, thought it proper that a Court of Equity should give its aid to defeat indirectly the recovery of the usurious principal, as well as the usurious interest; but its decision does not indicate an opinion that it would be proper for a Court of Equity to give its aid in any form to defeat, by rendering unavailing, the recovery of a preexisting bona fide debt.
The Court is further of opinion that though the bill in the present case is founded upon the doctrine of Marks v. Morris, and looks entirely to the measure of relief thereby indicated, yet inasmuch as it presents a case which upon the facts disclosed entitles the debtor and those claiming under him to relief against the usurious contract and securities, upon equitable terms; it is proper, instead of dismissing the bill to decree such relief as the general principles which govern Courts of Equity indicate and require.
The Court is therefore of opinion, that the Circuit Court erred in decreeing the injunction which had been awarded in the cause, to restrain the sale under said deed of trust, to be continued in force until the question of usury should be decided by a Court of Eaw, upon some regular proceeding upon said bond or deed, to be instituted by the defendants or any of them, and until the further order of the said Circuit Court, upon a certificate of such decision; instead of proceeding to ascertain the amount justly due from Arthur to Steenbergen, by debiting the former with all bona fide debts due from him to the latter prior to the execution of said bond and deed of trust, and with .all advances made by Steenbergen to Arthur, or made for him in payment of debts *due by the latter, and with lawful interest from the proper periods on such pre-existing debts and on such advances; and where such advances were made by the transfer of stocks charging only the market value of such stocks at the time of the transfer; and by allowing Arthur all proper credits to which he is entitled against such debits; and after so ascertaining the amount of the principal and the interest thereon so due from Arthur to Steenbergen, or to the Bank of Washington as his assignee, decreeing the said bond and deed of trust to stand as securities for that amount of principal and the interest thereon, and for no more, and payment thereof to be enforced, if necessary, by a sale under the direction of the Court of the property conveyed by the said deed of trust. It is therefore adjudged, ordered and decreed, that the decree of the Circuit Court be reversed and annulled, and that the appellant recover against the appellees Arthur and Hupp, the costs expended by the appellant in the prosecution of this appeal: and the cause is remanded to the Circuit Court to be further proceeded in according to the principles of the foregoing opinion and decree.
BROOKE, J.
I am sorry to differ with my brother Judges, in this case. I think the decree of the Court below entirely correct, on the principle of Marks v. Morris, which was explained by myself in delivering the opinion of the whole Court in Martin v. Eindsay's adm'rs, 1 Leigh 499. As a compromise, I was willing in this case to reverse the decree, dissolve the injunction as to the good debt, and direct the trustees to sell as much of the property as would pay that debt; leaving the balance of the decree to remain; and sending the supposed usurious debt to the Court of Law on the principle of Marks v. Morris: though I cannot see why the general principles of a Court of Equity should *contravene the provisions of a statute, or disregard the rules of law, which would subject the good and usurious debt to the same fate, when included in the same bond and deed of trust, as in the case before us.
The case of Marks v. Morris has been understood as the law in cases similar, for more than twenty-five years, by bar and bench ; and by many members of the Legislature ; and never objected to, that I know of; and if overruled, would repeal the act against usury, in all cases of deeds of trust: to subject which to a trial at law, was the object of that decision.
If by blending a good with a usurious debt, in a bond and deed of trust, as in the case before us, the good debt is to protect that which is usurious from a trial at law, then the act against usury is repealed as to such deeds of trust; and all such cases are brought within the principles of a Court of Equity.
The plaintiff Arthur did not come into a Court of Equity for relief on the merits; but to get his relief in a Court of Law; according to the principle of Marks v. Morris. So the Court below understood his bill, and sent the case to a Court of Law. Hence, the principle that he who comes into equity for relief must do equity does not apply. The plaintiff comes with a different intent. His bill is not framed for relief on the merits, but on the principles of the case of Marks v. Morris; and ought to be so treated by this Court.