U.S. Supreme Court
Ewell Daggs, 108 U.S. 143 (1883)
Decided March 26th, 1883
108 U.S. 143
1. If an action on the debt secured by a mortgage of real estate in the State of Texas is not barred by the statute of limitations, a suit on the mortgage itself is not barred, and this whether the owner of the equity or a third person be the mortgage debtor.
2. A contract of a kind which a statute in Texas makes "void" for usury, is voidable only, and a repeal of the statute declaring such contracts void deprives the debtor of the statutory defense.
3. When the amount of the face of a note represents a principal sum and interest thereon at a rate higher than the legal rate, and nothing is said in the note itself about interest, the note after maturity will bear interest at the legal rate.
On May 27, 1856, James B. Ewell and his wife, having the legal title in fee to the premises, made and delivered to chanroblesvirtualawlibrarychanroblesvirtualawlibrary
Daggs a promissory note of that date, payable three years after date to his order, for $3,556, and to secure the same executed and delivered to Daggs a deed of mortgage upon a tract of land in Guadulupe County, Texas, containing 1,653 acres, which mortgage was duly proved and recorded on June 5, 1856.
James B. Ewell acquired the legal title to this land on April 13, 1854, but in equity it belonged to his brother, George W. Ewell, the appellant, for whom and with whose money it had been bought. The legal title was conveyed by James B. Ewell to his brother, George W. Ewell, on September 6, 1856, the latter having no knowledge of the mortgage to Daggs, and Daggs having, as we find from the evidence, no notice, actual or constructive, of the equity of George W. Ewell.
On March 9, 1872, Daggs, being a citizen of Virginia, brought his action at law against James B. Ewell and wife on the note in the Circuit Court of the United States for the Western District of Texas and recovered judgment against James B. Ewell, July 14, 1873, for $3,530.93.
The defense set up by James B. Ewell in that suit was usury, the actual amount of the loan having been $2,000, the residue of the note being interest on that amount until its maturity at the rate of twenty percent per annum, compounded annually.
A statute of Texas in force at that time on the subject of usury was as follows:
"That all contracts or instruments of writing whatsoever, which may in any way, directly or indirectly, violate the foregoing provisions of this act by stipulating for, allowing, or receiving a greater premium or rate of interest than twelve percent per annum for the loan, payment, or delivery of any money, goods, wares, or merchandise, bonds, notes of hand, or any commodity, shall be void and of no effect for the whole premium or rate of interest only; but the principal sum of money or the value of the goods, wares, merchandise, bonds, notes of hand, or commodity may be received and recovered."
Payments had been made on the note prior to the commencement chanroblesvirtualawlibrarychanroblesvirtualawlibrary
of the suit to the amount of $1,745, which were allowed; but the usurious interest was not deducted on the ground that the Constitution of Texas, which went into effect in 1870, and continued in force till after the recovery of the judgment, repealed all usury laws and prevented any defense on that account.
The judgment not being paid, Daggs filed the present bill in equity, January 14, 1875, to foreclose the mortgage and sell the mortgaged premises, to which James B. Ewell and his wife, George W. Ewell, and the heirs of James B. Wilson were made defendants. The heirs of Wilson claimed title to a portion of the land under George W. Ewell, by virtue of a sale and actual possession prior to the date of the mortgage to Daggs. The claim established their title, and from that there is no appeal.
As against George W. Ewell, however, it adjudges a foreclosure of the equity of redemption and sale of the remainder of the premises in default of payment by him of the amount found due upon the judgment against James B. Ewell, and interest thereon at the rate of twelve percent per annum. From this decree George W. Ewell prosecutes this appeal. chanroblesvirtualawlibrarychanroblesvirtualawlibrary