Citizens' Bank v. Cook

Warner, Chief. Justice.

This was a bill filed- by the complainants against the defendants with a prayer for an injunction and the appointment, of a receiver, on the. allegations contained therein. When the. application for an injunction came on to be. heard,, the chancellor, after considering the, allegations contained in complainants’ bill, the. defendants’ answer thereto, and the affidavits offered and read by the respective parties, refused to appoint a. receiver • and grant, an injunction as prayed for,, except as to the sum of $975.00 due on the mortgage fi.fa., but to restrain the collection of that amount of the mortgag & fi.fa. the injunction was granted. Whereupon complainants and defendants excepted.,

There was no abuse of the discretion of the chancellor in refusing the injunction and. appointment of a receiver as. complained of by the complainants in their bill of exceptions, but on. what principle of equity the chancellor enjoined the collection of the $975.00 due on the mortgage fi.fa., we. are at a loss to ascertain, in view of the. facts contained in the record. It appears from the record that McNeal, in June 1871, purchased of Cook,- a citizen of New York, certain described lands, situate in this state, for the sum of $30,000, for which he gave to Cook his twelve promissory notes, for the, sum, of $2,500 each,, payable at Havannah, New York, secured by a mortgage on the lands purchased. The notes were; made payable in such manner that one, fell due each year. The first four notes bore interest at the rate of ten per- cent., per annum,, which have been paid. The other eight notes- bore interest, at the rate of seven per cent, per a/rmum-¡ and as to the notes drawing seven per cent, interest remaining unpaid, Cook foreclosed his mortgage on the land, and is seeking to collect the amount due thereon by due process of law. It also appears that McNeal sold the lands purchased from Cook to the Bartow Iron Company, and that afterwards the Bartow Iron Company mortgaged said lands to the complainants to secure the payment of certain bonds, but it was expressly stipulated in the latter mortgage that the lands so mortgaged were subject to Cook’s mortgage lien thereon for the balance of the unpaid notes given for the purchase money, with interest at seven per cent, per annum. There is no usury in the notes for which Cook’s mortgage was foreclosed to enforce payment, and if McNeal has paid any usury to Cook on the first four notes, it is no concern of the complainants ; they are not creditors of McNeal.

Assuming, as the complainants do, that the Bartow Iron Company has paid $975.00 usurious interest to Cook, and that the company is insolvent, how have they been injured if it has not paid any more than it had stipulated to pay when they took the mortgage; in other words, if their security in and to the mortgaged property has not been diminished by the payment of usury by the Bartow Iron Company, but remains just the same as it did when they took their mortgage, what equitable right have they to interfere and have Cook restrained from enforcing his mortgage lien on the property, when they have got all they contracted for in their mortgage. They took their mortgage lien on the property, subject to Cook’s prior lien thereon for the purchase money. What the Bartow Company paid McNeal for the property is not alleged in the bill, or otherwise made to appear. The presumption is that the whole debt from McNeal to Cook, including the usury, was deducted from the price at which McNeal sold the property to the Bartow Company, and if such was the fact, the Bartow Company could not avail itself of the usury on principles of equity. Lilienthal vs. Champion, 58 Ga., 158, and authorities therein cited. The complainants, as mortgagees under the Bartow Company, could have no better equity than that company had, inasmuch as they took their lien with actual notice of the mortgage to Cook from McNeal, in subordination to which the conveyance from McNeal to the Bartow Company was made.

In our judgment the chancellor erred in granting the injunction to restrain the collection of the sum of $975.00 as set forth in the record, therefore, let so much of the judgment of the court below refusing the injunction and appointment of a receiver complained of by the complainants be affirmed, and so much of the judgment of the court complained of by the defendants be reversed.