First National Bank v. Drew

Mr. Justice Farmer

delivered the opinion of the court:

The only question raised in this court by appellant is the correctness of the action of the chancellor in allowing the defense of usury. It is not denied that the $1556.26 note transaction was usurious, and that instead of Drew receiving the amount of said note he only received $1236.56. The contention of appellant is, that a debtor may set apart and dedicate a certain fund or property to the payment of a usurious debt, and the person who has received the fund or property to make such payment cannot withhold it on the ground of usury; also, that the conveyance to appellee was for the purpose of vesting title in her subject to the payment of the mortgage indebtedness, and that this conveyance was an affirmance of the usurious contract, and appellee, by accepting title, is estopped from setting up the defense of usury. While there is authority to sustain these propositions, we do not think this case is within-the principles announced in such authorities, and they are therefore not applicable, for the reason that the evidence does not show a setting apart by Levi Drew of the lands for the payment of the indebtedness nor the conveyance oHhem to his wife to be used by her in paying said indebtedness, nor was the conveyance to appellee made for such purpose nor under such circumstances as that she must be held to have assumed the payment of the usurious indebtedness and be thereby precluded from setting up the defense of usury. In Crawford v. Nimmons, 180 Ill. 143, it was held to be only in cases where the grantee of a mortgagor has purchased the property on the basis of a clear, title at an agreed price and assumed to pay the mortgage debt as a part of the consideration, or where the amount of the mortgage debt has been deducted from the price of the land on the basis of a clear and complete title, that such grantee cannot question the validity of the mortgage indebtedness. It'was also there said that if the usury was a part of the consideration in the agreement between the mortgagee and his grantee it would be an affirmance of the debt by the mortgagor, and in such case, the grantee having contracted with a view to paying the encumbrance, equity requires him to pay the debt or lose the property. That case and the cases therein cited, and Union Nat. Bank v. International Bank, 123 Ill. 510, also lay down the rule that a person in privity with the mortgagor may interpose the defense of usury, and that where there is no agreement or understanding about it the grantee of the mortgagor will have the right to malee such defense.

The proof here shows Levi Drew to have been utterly incapable to intelligently and successfully manage business affairs and property. His own testimony shows him to have been a man of weak character and practically helpless in financial transactions. During the short time he had owned the property received from his father, prior to 1897, he had so managed his affairs as to involve himself largely in debt with no present ability to pay it. When some of his creditors began to press him and threaten to take his property, or a part of it, he applied to the Atwood Bank for a loan to pay some of his indebtedness. The application was made by him and refused by the bank officers, some of whom are officers of the appellant, a number of times before the loan was finally made, and while he was required to give a note for $1556.26, and secure it by a mortgage, assignment of leases on certain lands and the assignment of a life insurance policy, he was only given $1236.56. He made very little progress in the payment of this indebtedness, but this, we think, could not have been much of a disappointment to the bank officers, for they were well acquainted with him. Not only was he making poor progress in paying the bank, but he also incurred indebtedness to other creditors, who began to tdke judgments against him and levy upon and sell his interest in some of the land. It must have been apparent to everyone who knew the man and had any knowledge of his affairs, that although he had property of considerable value he had not the capacity to extricate himself from his financial entanglements. Under these circumstances the title was conveyed to his wife. She paid no consideration whatever for the conveyance. The purpose of placing the title in her was to put it out of the power of her husband to dissipate and fritter it away. Notwithstanding Levi Drew testified, in answer to questions asked him by counsel for the appellant, that appellee told him she had money appropriated and borrowed to pay the $1556.26 to the bank and that it was in that way he came to deed her the land, we cannot accept this as conclusive. I11 view of the fact that the record shows him to have been incapable of managing his property or business, and the fact that he was in 'April, 1903, by the county court of the county of Douglas adjudged a spendthrift and a conservator appointed for him, we cannot accept his statement of this matter as correct, when, talcing all the evidence together and all the circumstances shown by the testimony, it clearly appears the conveyance to appellee was made for the purposes and reasons we have above indicated. By accepting the title she assumed no burden or obligation for the payment of her husband’s debts, especially one that was illegal, nor did she do anything to estop herself from protecting the property against an invalid and unjust claim. No such thought or intention was in her mind at the time she received the title, as a matter of fact, and she neither said nor did anything out of which the law would raise an estoppel against her.

Appellee has assigned certain cross-errors. We have examined them, and are of opinion she was not prejudiced by any of the rulings or holdings of the circuit and Appellate Courts.

In our opinion the decree of the circuit court was just and is sustained by the law and the evidence. The judgment of the Appellate Court affirming said decree of the circuit court is therefore affirmed.

Judgment affirmed.