Kennedy v. Quigg

Opinion by

Smith, J.,

A scire facias was issued on a mortgage which admittedly included the sum of $600, as a bonus. The defendants had conveyed the mortgaged property to John Meighan, and agreed to defend against the plaintiff’s claim to the extent of the usury; but whether the conveyance was before or after the institution of this suit does not appear. The defendants filed an affidavit Betting up the defense of usury, and upon this the issue- was joined. On the trial the plaintiff filed a written release of the defendants from all personal liability for the debt, and restricted the lien of the judgment to be recovered, and all executions thereon, to the real estate bound by the mortgage. The court thereupon directed a verdict for the plaintiff for $2,231.10, subject to a point reserved “ whether or not in view of the releases filed of record, a defense can be interposed to the $600 bonus included in the verdict, the defendants having sold the properties covered by the mortgage to one John Meighan, agreeing to defend against the plaintiff’s claim to the extent of the usury. If the court shall be of opinion that the sale of the property and the releases filed debar the mortgagors and the terre-tenant from setting up that defense, the verdict to stand, otherwise the verdict to be reduced to $1,200 with interest from April 4,1894. The court also to decide whether or not in that event plaintiff is entitled to a commission of five per cent on that sum, demand for the whole principal having been made but no tender of any kind having been made to the plaintiff, and to add said amount of five per cent, if legally entitled thereto.” A motion by defendants that judgment be entered for the plaintiff non obstante veredicto for the sum of $1,200, with interest from April 4, 1894, only, on the reserved point, was dismissed, and judgment was entered on the verdict.

Evidently the releases were filed for the purpose of precluding the defense of usury, and to evade the provisions of the act of May 28, 1858. It has been held in many cases that where a debtor has been wholly released from liability for the debt in suit, without fraud or mistake, and has no interest in the action, and will neither gain nor lose by the judgment, he cannot interpose a defense of usury, which is purely personal to himself, to the prejudice of third parties -, nor can the latter do so to the prejudice of either. But the facts of this case exclude it from the doctrine of those decisions. This action is between the original parties to the mortgage, and they alone can be heard. The terre-tenant has not been joined, and could not be heard as the record stands. It is clear from the reserved question that the terre-tenant may hold the defendants to their contract notwithstanding the releases filed, and that if the judgment is allowed to stand they must reimburse him “to the extent of the usury.” If the plaintiff may resort to the land for the usurious interest, the terre-tenant in turn may have recourse to the defendants for indemnity. Practically, the interest of the defendants in the question at issue has not been lessened or affected, and unless they are permitted to make defense here, their rights under the act of 1858 will be swept away, while their liability to the terre-tenant will remain.

There is no principle of law that warrants, much less demands, this result. The defendants had a lawful right to sell the land and also preserve their right to defend against the usury included in the mortgage in the manner agreed upon. Their course involves neither fraud nor deceit. Had it been a judicial sale the situation of the parties would be substantially the same; yet it will hardly be contended that by such event a debtor loses his right of defense. The act of assembly expressly gives a borrower the right to defend against a claim for interest in excess of the legal rate; or, if paid, to recover it back by action within six months from the date of payment. Courts will not permit a creditor to defeat this right through a confusion of legal principles, in the manner attempted here. None of the cases cited on behalf of the appellee sustain his contention; they are all in harmony with the-views here expressed. This feature of the ease needs no further discussion.

The claim to attorney’s commissions under the provisions of the mortgage requires but brief notice. According to the reserved question, a demand for the whole principal was made, but there was no tender of any sum. If a demand were necessary we are unwilling to admit that the one made in this case was insufficient because it included the usury covered by the mortgage. It is not unlawful to contract for or to receive more than six per cent. The right to do so is impliedly authorized by the act of 1858. There is then no reason why it should not he embraced in the demand. Until otherwise informed, the creditor has a right to assume that the debtor will fulfill his agreement. So far as this record shows, the first notice of the defendants’ election not to pay the bonus was about two weeks after the proceedings were begun; and no tender of the sum lawfully due or of a judgment therefor, was ever made.

But this question has been settled by higher authority. In Warwick Iron Co. v. Morton, 148 Pa. 72, it was expressly held that a demand before the issuance of a scire facias sur mortgage is not necessary in order to recover attorney’s commissions : and this decision was followed and the same- ruling made in the later case of Walter v. Dickson, 175 Pa. 204. The case of Wilson v. Ott, 178 Pa. 253, upon which the appellant relies, is not inconsistent with those referred to; it holds that as the allowance of attorney’s commissions is “ within the control of the court in the exercise of its equity powers,” the refusal to allow them was not error, “ in view of the nature of the contest and the special circumstances of the case.”

The judgment of the court of common pleas is reversed, and judgment is now entered in favor of the plaintiff for the sum of fifteen hundred sixteen dollars and eighty cents.

Principal . $1,200.00

Commissions 60.00

Interest to date 256.80

$1,516.80