Turner v. Merchants Bank

Turner v. Merchants Bank. Bill in Kquity to cancel Mortgage as a Cloud upon Title, and for an Injunction. 1. Usury by bank; what necessary for borrower to have usurious mortgage cancelled.—Although under the criminal statute as it formerly existed, (Code of 1886, § 4140), a note and the mortgage securing it, which are discounted by a hanker at a usurious rate of interest, are void in the hands of such banker, still, in order for the maker of the note and the mortgagor, or one claiming under him, to have the mortgage cancelled, it is necessary for him to pay' or to tender to the banker the money actually borrowed with the lawful interest thereon; and a bill filed for such purpose, which does not offer to do equity, by making such payment or tender, can not be maintained. The bill in this case was filed by the appellant, J. L. Turner, against the appellee, the Merchants Bank. The bill, as amended, averred the following facts: The •complainant on the 9th day of September, 1896, recovered a judgment in the circuit court of Lauderdale county against her brother, George A. Leftwich, for the sum of $5,730.92 and costs of suit. Execution was issued on said judgment and levied on certain real estate .and certain personal property in the bill described as the property of said Leftwich. At the time the said judgment was obtained,' complainant knew that the defendant held a mortgage upon said real estate and also upon said personal property, both given by said Leftwich to secure one note of $900, which note and mortgage were executed on the 23d day of September, 1894, and duly recorded; but said note and the two mortgages were ■each void because said note and jnortgages were a renewal of two notes, each for $500, one secured by a mortgage upon said real estate and the other by a mortgage xipon said personal property, which two $500 notes were •each discounted for said Leftwich by the defendant, which is a private banking corporation, on the 19th day ■of January, 1893, at an usurous rate of interest, in violation of the penal statute then existing. At the time of filing of the hill and at the time of the execution of said mortgages complainant was in possession of the said real estate b,y virtue of a deed conveying the same to her. Complainant caused said real estate and personal property to be advertised for sale under said execution, and at said sale she became the. purchaser of the said real estate, and obtained a sheriff’s deed thereto; and proceedings were pending to try the right to the personal property upon an affidavit and claim bond filed by the defendant in the cLcuit court. There was a small balance due to the defendant upon a judgment in favor of one A. J. Warren against said Leftwich, which had been transferred to the defendant, and constitutes a lien on all said property, which balance complainant offers to pay. The prayer of the bill was that the mortgage held by the defendant on real estate be cancelled and set aside as a cloud on the title of the complainant, and that the defendant be enjoined from the further prosecution of the suit for the trial of the right of property, and that the mortgage on the personal property be cancelled as being void. The defendants demurred to the bill on the following grounds: 1. That the complainant’s remedy, if any, was at law. 2d. The penal statute was repealed prior to the execution of the mortgage under which the defendant claims. 3. The complainant was not authorized to set up a plea of usury in an affirmative action on behalf of her judgment debtor. 4th. That the complainant did not offer to do equity. The 'chancellor rendered a decree overruling this demurrer. On the 13th of November, 189(5, the defendant filed its answer, in which, as amended, it admits the rendition of the judgment against Leftwich in favor of complainant and the issue and levy of the execution. It admits that it held a note for $900 secured by two mortgages, one upon the real estate and the other upon the personal property described in the bill, dated September 23d, 1894, but alleges that said note and mortgages were delivered by Leftwich and discounted by it on the 24th day of ¡September, 1894. It admits that it had held the two notes for $500 each, one secured by a mortgage on the said real estate and the other by a mortgage upon the said personal property, but it alleges that the note secured by the personal property was delivered by Leftwieh and discounted by it on the-27th day of .January, 1893, and the note secured by the-real estate mortgage was delivered by Leftwieh and discounted on the 29th day of March, 1893, and after the repeal of the penal statute. It alleges tlntt each of said notes have been fully paid and discharged, and denies, that either of them in any way entered into or constituted any part of said $900 note, and denies that said notes were discounted at an usurious rate of interest.. It admits that -at the time of the filing of the bill it ivas, proceeding by advertisement -and sale to foreclose said September, 1891, real estate mortgage, and alleges that on the 2d day of November, 189G, it purchased s-aid re-al estate at the mortgage sale at and for the sum of $750. It alleges that, even if said two $500 notes, or either of them, were void and have not been paid, and, if said $900 note is given to secure.the same loan they were given to secure, the penal statute was repealed February 23d, 1893, and the moral obligation on the-part of Leftwieh to return the money he had received constituted a sufficient consideration for the new note after the bar of the statute was removed; and further, that, if this is not true, then the statute was made for the benefit of debtors, and the avoidance -of the debt because of its violation is a personal privilege, and can not be asserted by complainant. It denies that at the time of the filing of the bill complainant was in possession of said real estate, and alleges that on or about the 10th day of October, 1897, and before the execution'sale and after the law day of its said mortgage, it went, by its agents, upon the property and notified the persons occupying the same of its rights, and demanded possession; that -said persons agreed with defendant to pay to defendant rents, if permitted to remain, provided defendant would make certain repairs; that defendant proceeded to make the necessary repairs and posted a notice on the premises, warning all persons not to trespass thereon. The answer also alleged that unlawful detainer suits Md been brought against its tenants in the justice ■court of H. D. Smith by the complainant, and that said court has rendered judgment against its said tenants. It admits the execution sale of the real estate, and that complainant 'became the purchaser, and admits the pendency of the proceedings to try the right of property with reference to the personal property. The respondent prays that its answer may be taken as a cross bill, and that the complainant may be enjoined from interfering with its possession. The other .facts of the case are sufficiently shown in the opinion. On the final submission of the cause on the pleadings .and proof, the chancellor decreed that complainant was not entitled to the relief prayed for, and ordered .the bill dismissed; and further ordered the temporary injunction issued upon the filing of the answer as a cross-bill be made perpetual. • From this decree complainant appeals, and assigns the rendition thereof as ■error. Emmet O’Neal and W. J. Wood, for appellant. "A mere renewal of the' old debt or change of securities between the same parties, will not purge the usury, and the mortgagee must make good his defense by clear and satisfactory j>roof that the second transaction was not a device to evade usury law's.”-—Jones on Mortgages, § 634; Eslava v. Crumpton., 61 Ala. 507. “A void contract can not be validated 'by -subsequent ratification.” Bhippey v. Easticood, 9 Ala. 198; Butler v. Lee, 11 Ala. 885; Petit v. Petit, 32 Ala. 288; Armstrong v. Toler, 11 Wheat. 258; 1 Story’s Equity, 306. “A contract founded on an act vdiicli a statute prohibits under a penalty is void, although the statute ■■does not expressly so provide. The subsequent repeal of the statute without any saving clause as to penalties .already incurred will not validate a contract made under the law' in existence wdien the contract w'as made.”—Woods & Co. v. Armstrong, 54 Ala. 150; May, Admr. v. Williams, 27 Ala. 268. Under the express decisions of this court the contract in this case being in violation of a criminal statute, was absolutely void, and no right or claim of any kind could be derived from it. It was incapable of ratification. Even if part of the consideration was the, old void contract,- it rendered the, entire contract void.—Pettit’s Adntr. v. Pettit, 32 Ala. 308; Robertson v. Hayes, 83 Ala. 281; Moog v. Hannon , 93 Ala. 503; Woods v. Armstrong, 54 Ala. 152; Shippeg v. Eastwood, 9 Ala. 198; Butler v. Bee, 11 Ala. 885. John T. Ashcraft, contra Usury is a personal defense, and cannot be taken advantage of by a judgment creditor; and it cannot constitute any ground for affirmative action. This is true of all contracts made in violation of penal statutes.—Baskins a. Calhoun, 45 Ala. 582; McGuire r. Boykin, 5 Ala. 349; Cain v. (Hi in on, 30 Ala. 108; Fenno v. Sayre, 3 Ala. 458 ( 479) ; McGuire v. YanPelt, 55 Ala. 344; Butts v. Broughton, 72 Ala. 294; Lee v. Stiger, 30 N. J. Eq. 010; Hooper v. Edwards, 18 Ala. 280; Bump on Fraudulent Conveyance's, p. 249; Pomeroy on Equity Jurisprudence, § 937; Green v. Kemp, 13 Mass. 510; s. c. 7 Am. Dec. 109; Thornhill v. O’Rear, 108 Ala. 301; Bong v. Ga. P. Ry. Co., 91 Ala. 521. A court of chancery will not lend its aid to enforce a penalty or a forfeiture, but will leave the complainant to his remedy or defense at law.—Cole v. Savage, 10 Paige, 553; 1 Pomeroy’s Eq. Juris., § 459; Fanning v. Dunham, 5 Johns. Olianc. Bep. 122; Post v. Dart, 8 Paige, 039; Williams v. Fit zh ugh, 37 N. Y. 3; Lea v. Cassen, 01 Ala. 312. The advance of the money, -although the contract is illegal, for usury, is a meritorious consideration, sufficient to -support a subsequent liability or promise when the positive! bar of the statute is removed. A man by express -promise may render himself liable to pay back money which he had received as a loan, though some positive rule of law or statute intervened at the time to prevent the transaction from constituting a legal debt.—Ewell v. Daggs, 108 U. S. 150; Curtiss v. Leavitt, 15 N. Y. 9 (98) ; Pettit v. Pettit, 32 Ala. 808; Planters’ Bank v. Union Bank, 10 Wall. 500; Goetter Weil & Co. v. Smith Bros., 104 Ala. 481; Giviu, v. Simes} Cl Mo. 335; Fluiuiyan v. J Iyer d> Go., 41 Ala. 132. [MAJORITY — TYSON, J.] TYSON, J. Complainant recovered a judgment against George A. Leftwieli in the circuit court of Lauderdale county on the 9th day of September, 1896,. for $5,739.92, upon which execution was issued and levied upon the real estate described in her bill and also certain personal property. At the execution sale she purchased the real estate and received from the sheriff a deed to it. The personal property was claimed by the respondent bank, and was delivered by the sheriff to the bank upon the execution by it of a bond, and was the subject matter of controversy in a cause pending in the circuit court for the trial of the right of property when this bill was filed. As to the real estate conveyed by the sheriff’s deed, it is averred in the bill to be in the possession of the complainant. The purposes of the bill and the relief sought by it are to have certain mortgages executed by George A. Leftwieli to the bank upon the land's cancelled as a cloud upon her title, and to enjoin the trial of the right of property and to cancel the mortgages and bill of sale-given by Leftwieli to the bank of the personal property. We may as well dismiss from our consideration at the outset all questions relating to the personal property for the very obvious reason that the -complainant was never in possession of it. The attack made upon the mortgages held by the-bank proceeds upon one proposition, which if unsound disposes'of the rights of the complainant to maintain the bill. The proposition contended for is that the mortgages now held by the bank are simply renewals of former ones given by Leftwieli to it when the criminal statute was in force making it -a misdemeanor for any banker to -discount any note, bill of exchange or draft at a higher rate of interest than eight per cent. per anuin, not including the difference of exchange.—■ Code of Í886, § 4140. Conceding for the purpose of •this -case, that the complainant was in ’the possession of the land prior to and at the date of the filing of this; bill, and that, the mortgages held by the bank are renewals of those executed by Leftwich to it, which were discounted by it at usurious rate of interest, does it follow that they are void in such sense as that they may be cancelled at the instance of the complainant without paying to the respondent bank the money actually borrowed by Leftwich with lawful interest thereon? It will be observed that the statute which was violated does not by its terms impose any penalty or forfeiture upon the bank in favor of the mortgagor or any other person, but simply denounces the act of discounting any note, bill of exchange, or draft, at a higher rate of interest than eight per cent, per (mmun, not including difference of exchange, as a misdemeanor, for Avhich the banker may be punished at the instance of the State, as other misdemeanors are punished. It will also be noted that there is no express prohibition in the language; of the statute against the making of usurious contracts, nor does the statute ¡expressly declare such contracts void. It is only by an implied prohibition that they are declared by the courts to be void, and the principle upon which such contracts are held to be Aitiated in loto is that they contravene a penal statute, and the enforcement by the courts of such contracts when relief is sought upon them, Avould be in derogation of a sound principle necessary to be maintained in order to uphold the supremacy of the law and the dignity of the State.—Moog v. Hannon 93 Ala. 503; Wood v. Armstrong, 54 Ala. 152; Youngblood v. Birmingham Trust & Sav. Co., 95 Ala. 521. IIoAveArer, in order to determine that such contracts, and in this case the mortgages, contravene the statute, it is indispensable that the pleadings should allege in proper form so as to raise ¡the issue, and the proof should show, that they are usurious—that the discount of the note, bill of exchange or draft which they were made to secure,’ was made by the respondent bank at ¡a higher rate of interest than eight per cent, per annum, not including the difference of exchange. This, of course, would inArolve in a measure the question as to whether the complainant stands in such relation to the mortgagee as that she can plead usury in the debt which Leftwich owes to the bank, if it were permissible for Leftwich to maintain the bill. But if Leftwich could not maintain the bill to cancel the mortgages as a cloud upon his title, because of their invalidity, then certainly this complainant cannot. For by no process of reasoning can her rights be greater than his. The violation of the statute, as we have said, confers no rights, by the terms of the statute, upon any one. The contention is, however, that the mortgages being void as to Leftwich are void as. against all the world. Conceding this to be true, how is the court to determine that they are void, and at whose instance? Certainly not at the instance of a stranger or intermeddler. But it is said that the complainant is not a stranger, hut is the owner of the lands upon which the mortgages are ostensible liens. Again we may concede this to be true, and yet, the question suggests itself, whose title did the complainant acquire at the execution sale? The answer' must of necessity be, she acquired only such interest as her debtor, Leftwich, had in the lands at the time of the sale—his title, subject to all liens or equities, of which she had notice, created by him and outstanding against it. Having purchased his in-' terest, and only his interest, she must be held to have acquired no greater rights than he had to free it of encumbrances. If she he regarded as taking his place, as standing in his shoes, with respect to the lands, she must bear his burdens. She acquired the lands cmm onere of every right, claim or equity against them, of which she had actual or constructive notice. It will be.well here to note that this is not a bill to redeem. There is not an allegation in it which in the remotest degree recognizes the validity of the mortgages owned by the bank, hut its entire superstructure is erected upon the assertion, as a basis, that the title claimed by the bank is a nullity by reason of usury in the transaction. The manifest purpose of the statute, invoked 'by the complainant in this case to have the mortgages declared void, was to protect borrowers against the greed of the lender, if a banker, and to punish the banker for its violation. But it cannot be said to be more potent in its effect upon a note discounted in violation of it, than where a note is taken in violation of a statute which expressly prohibits the charging of usury or a statute which expressly imposes as a penalty the forfeiture of the entire debt evidenced by the note, or a statute expressly declaring void all notes or contracts, tainted with usury. The fact that the statute is a penal one, does not render the contract any more infectious because taken in violation of law, than if taken in violation of a statute prohibiting the taking of it. In both cases it would be absolutely void. If void, it cannot be more void or most void. It must be either valid, voidable or void. Having shown that the complainant’s rights can in no aspect of the case under consideration be greater than those of Leftwich, how would the case stand, had the bill been filed bv him? Bearing in mind that affirmative relief is being asked of a court of equity on account of usury in the transaction, and the invalidity of the mortgages is not being set up as defensive matter, in defense of affirmative relief sought by the bank, the case falls fairly within the maxim that “he who seeks equity must do equity.” Under the usury laws as they existed in England during the reign of Elizabeth, the statutes not only-made the contracts void, but also made it a crime to-take usury. These penal statutes against the taking of usury remained in force until 1813, as also did the statutes making the contracts void.—13 Elizabeth, Oh. 8; 17 Geo. III., Oh. 26; 53 Geo. III., Oh. 141. Yiner, in his Abridgment (Yol. 22, p. 315), which was written prior to 1756, in speaking of usury and in what cases the íelief would, be given, says this: “Though the party -submits to the oppression, yet he is not partico px cnininix; but there is no reason why he should profit by it, if he recovered [received] what was really lent. But the question is, what measure a court of equity should go by in this case; and though this court will not differ with the courts of law in construction of wlrat is the law, yet in application of the rules, as well as proceedings, it will differ. The direction of the act is, that none shall take more for the loan of money than 6 l. per cent., that is the thing principally guarded against by the statute; apd the other clauses by which the contract is made void, and the party made subject to a penalty, are to enforce obedience to the law, and to prevent the practice [of taking usury], but this court is not for criminal proceedings; and as to those the party must take his remedy in a proper court; but if there be a bond or a mortgage and a suit for the recovery of the money due thereupon, the defendant may plead the usurious contract as well in this court as at iaw, and avoid the contract.” While these statutes were in force, many cases arose in the courts of England upon bills filial by the makers <of contracts seeking to have them cancelled upon the ground of illegality. It was uniformly held that the complainant in his bill should offer to pay the sum borrowed and legal interest thereon. In Henkle v. Royal Assurance Co., 1 Vesey, 320, Lord Hardwick, in an opinion rendered in 1749, in speaking of illegal contracts, said: “But one exception occurs in these cases, and in which equity differs from the common law; for generally the rule, is the same, only equity adheres a little stricter to it: and that is the case of usury, in which equity suffers the party to the illicit contract to have relief. But that depends on a distinct reason: that -whoever brings a bill in the case of usury must submit to pay principal and interest due, on which the courts lay hold and will relieve; with this further reason, that is, court considers usurious contracts in somewhat, a different light from what the law does, which considers them upon the foot of the statutes: but this court as a fraud and advantage taken on necessitous' persons.” After an interval of more than sixty years, Lord Eldon, in Ex parte Scrivener, 8 Vesey & Beames’s Rep. 14, said: “At hnv yon must make out the charge of usury; 'and in equity yon cannot conn1 for relief without offering to pay what is really due.” In Scott v. Nesbitt, 2 Brown Ch., 642, we have the strong observation of Lord Thttrlow: “1 take it to he a universal rule,” he observes, “that if it he necessary for you to come into this court you must do it Upon the •equitable terms of paying the principal money really due, with lawful interest.” See also Mason v. Gardiner, 4 Brown’s Ch. 436; Ex parte Skip, 2 Vesey Sr. 489; Benfield v. Solomons, 9 Vesey, Jr. 84. This seems also to be the universal doctrine of the American courts. In Wilson v. Hardesty, 1 Md. Ch. Dec. 66, the court said: ‘‘But, notwithstanding the language of the act of 1704 [which provided tlmt all bonds, contracts and assurances whatever which reserved a rate of interest greater than six peí* cent, shall he utterly void, and also made it a penal offense to take more than the legal rate of interest.—Dorsey’s Laws of Maryland, Yol 1, p. 6] is so strong, it is very certain, that contracts within its provisions are not, under all circumstances, treated as merely void—for it is settled that, if a party goes into a court of equity, asking relief against an usurious mortgage or contract, he must do equity by paying, or offering to pay, the principal sum and legal interest.—Trumbo v. Blizzard, 5 Gill & Johnson, 18. Nay, he is not even entitled to a discovery as to the usury, unless he offers to pay the principal debt, and legal interest.—Jordan v. Trumbo, 6 G. & J. 103. Courts of equity have, therefore, undertaken, upon a principle which seems to have met the approbation of the community, for it is one long since established, to give a reasonable sanction to contracts affected by usury, by refusing to relieve a party against them, unless Ire would himself do that, which the moral obligation arising from the receipt and appropriation to his own use of the money of another required him to do.” Au examination of the 3 Ttev. Ktat. of New York, p. 72, published in 1858, and also 3 'Rev. St., p. 2253, published in 1882, whidi were enacted in 1837, will disclose a most rigid prohibition against the taking of usury. The act contains twenty sections. It not only declares void all contracts in which usury is reserved, hut it requires the lender, upon bill filed by the borrower, to make d'scwery as to usury, and makes it a misdemeanor, to he punished by a fine not exceeding one thousand dollars, or imprisonment not exceeding six months, or both, for the taking of usury; and also punishes him in the event he swears falsely, under the pains and penalties of willful and corrupt perjury, and makes it the duty of the court to charge the grand jury especially to inquire into any violation of the provisions of the act. In 1868 the Supreme Court of New York, in the case of Williams v. Fitzhugh, 37 N. Y. 444, upon bill filed to cancel a mortgage which secured six notes, aggregating the sum of $31,000, a portion of which indebtedness was usurious, the court said: “I think the right of the plaintiff to its surrender and cancellation is to he determined by our laws, and not by the laws of Ohio; and if the transaction, through which it was to become an operative security, gave to the defendant’s testator no title to hold it as security by the law of the.place where the contract was made and was to be performed, then the courts of this State should decree its surrender and discharge, upon such terms ('if any) as they may properly impose'. In short, it is a security given and received by the defendant’s intestate in this State, in violation of the provisions of the statute of this State. Although it was received as security for notes not found to be usurious, it was none; -the less received in violation of the statute, for the reason that by its very terms it secured some notes which were usurious. It is to be observed that no complaint is made nor any claim of error is urged on this appeal that it Avas erroneous, upon the facts found, to pronounce the four* notes dated July 1, 1854, to be usurious and void, and to direct their surrender. The question raised by the present appeal relates simply to that part of the decree Avhicli requires the surrender and cancellation, or discharge, of this mortgage, and not to that part which directs the surrender of the four notes adjudged usurious. The mortgage is void. No action can' he maintained thereon -in this State in any form, and it is a cloud upon the title to the lands of the defendant. Third, does it follow that the decree in this action, so far as it -directed the surrender and discharge of the mortgage, Avas warranted by AAr-ell established" rules of equity applicable to the subject? It is a familiar doetrine in courts of equity tliat ‘he who seeks equity must do equity/ and without that the court of equity will not extend its arm for the relief of the suitor. If he can protect himself, either in whole or in part at law, if he can defend when assailed, very well; he can decline any -concession of the equitable rights of the adverse claimant and stand upon h-is legal position, it may be safe, or it may be in peril, but if he invoke equitable interposition he must come with clean hands and prepared to do whatever in the judgment of equity is fair -and equitable to his -adversary; else the court will not entertain him, but ivill answer, ‘stand upon vour legal rights, or come here and perform the just condition of equitable relief.’ It -cannot be doubted, therefore, that when a party comes into a court of equity to remove a cloud upon the title to his hand, he must do whatever is equitable that he -should do, before the court ivill interfere. In that respect he stands in no other or better condition than he who comes to compel the specific performance of a contract to convey; he must come prepared to pay and perform all that by the conditions of the contract he ivas bound to pay or perform,—or than he who comes to set aside -a conveyance obtained from him by fraud: he must come prepared to restore all that he has received as the consideration of such conveyance. And, -on precisely the same ground, it iras the well settled rule -of courts of equity that he who came into that court to set aside a conveyance or other security -as void, because given to secure -a usurious loan, must come prepared to pay so much as he had in fact received. He might -stand on Ills legal rights and defend -any and every endeavor to compel him to pay, but if he invoked -the aid of a court of equity to give him affirmative relief that court recognized his equitable obligation to refund ivh-at he had received.—Rogers v. Rathbun, 1 Johns Ch., 367; Tupper v. Powell, Id. 439; Fanning v. Dunham, 5 Id. 122, 137; Morgan v. Schermerhorn, 1 Paige, 544; Fulton Bank v. Beach, Id. 429; Taylor v. Bell, 2 Vern. 170; Whitman v. Francis, 8 Price, 616.” Under the usury statute's of North Carolina (1 Eev. Stat., published 1837), it was provided that no person shall, directly or indirectly, take for loan of any money, etc., above the value of six dollars by way of discount or interest for the forbearance of one hundred dollars for one year, etc.; and that all bonds, contracts ■and assurances whatsoever for the payment of any principal or money to be lent, etc., upon or for any usury, etc., shall be utterly void; and that every person whatsoever, who, upon any contract, shall take, accept and receive by wav or means of any corrupt bargain, loan, exchange, shift, or interest of any money, etc., shall forfeit and lose for every such offense the double value of moneys, etc., so lent, bargained, exchanged or shifted; the one moiety of all which forfeitures to be to the State, and the other to him or them that will sue for the same by action of debt in any court of record within this State. In the case of Ballinger v. Edwards, 39 N. C. 4-49, Ruffin, C. J., speaking for the court, said: “The statute is as binding in this court as at law. If indeed the borrower asks for assistance from equity, it may be refused, unless he deal equitably by paying the principal money borrowed and legal interest. But the lender has no ground on which he can come into and stand in a court of equity.” • The statute of New Jersey against usury is substantially the same as that of North Carolina.—Stilt. New. Jersey, 3847, p. 795. In Ware v. Thompson, 2 Beasley, 66, the Supreme Court of New Jersey said: “The bill contains no offer to pay the sum actually due, or that may be. found due upon the bond. The rule is well settled, that where a party comes into a court of equity seeking relief against a usurious contract he must offer to pay the sum actually due.” Under the statutes of Arkansas (Dig. Oh. 90, § 7, p. (535) all contracts in which usury is reserved are void. In Ruddell v. Ambler, 38 Ark. 369, the court, after quoting the statute, said: “It is said that when a statute makes the usurious contract void, or forfeits a part of the principal, or legal interest, by way of penalty, the creditor, of course, must lose this, for the debtor may interpose this defence however inequitable it may be. But if the debtor makes himself a plaintiff, and seek relief against a contract for its usury, it is held, in equity, that he must pay, or lender the whole amount of principal and legal interest” In the ease of Teague v. Williams, 6 Texas Civil App. Rep. 468, appellants sought to have a deed made bv them set aside upon the ground that the consideration therefor in part was the dismissal of a criminal prosecution against them. The remaining portion of the consideration of the deed was for money paid for the property. It Avas held, that they could not be heard in a court of equity to allege their own unluAvful acts as a ground for setting aside a settlement and conveyance Avhen they do not offer to do equity by tendering the purchase money received by them, for the property. In Manchester & Lawrence Railroad v. Concord Railroad, 66 New Hampshire, 100, it was held, AA'here a contract, illegal because prohibited by statute, has been executed by one of the parties, the other Avill not be alloAyed to retain its benefits and- at the samp time •set up its illegality. Numerous other adjudications to the same effect can be found in the decisions of other courts. The same doctrine is announced in the text books. In Tyler •on Usury, 435, it is said: “In addition to the remedies Avhich the borrower has against the lender, at law, on account of usurious interest and Aisurious transactions, the common law', and in general the statutes enacted against usury, give the party relief against usury in a court of equity. There are certain rules, however, which proA’ail in such cases in a court of equity Avhich do not, as a general thing, apply to a proceeding at haw. Unless a statute exists to the contrary, the principles upon which a party to a usurious contract can, in a court, of equity, obtain relief against the usurious premium are well settled. The. invariable mile in equity is, that a bill or other proceeding in equity to set aside or affect, a usurious contract, whether filed for relief or discovery, or for both, cannot be maintained without paying or offering to pay the amount actually loaned. Neither discovery nor relief can in any case be obtained in the court of chancery, or by proceedings in equity, without a repayment of the sum actually lent, with lawful interest, because the borrower cannot, in any case, or under any circumstances, he entitled to keep the money which he has actually received from the lender, and for which the lender has received no consideration. * * And in some cases, where the form of the security was -such as to enable the lender to collect it without a suit, either at law or in equity (as a bond and warrant of attorney, or a mortgage), the borrower, although he had -competent evidence of the usury, still, as he had no opportunity, from the -form of the proceeding, to avail himself of it at law, was compelled to file his bill, and ask relief in equity. In such a case, also, although he sought -and required no discovery, a 'court of equity would not relieve him -from the usurious excess, except upon the equitable condition of his repaying the sum actually loaned. This was the rule, not by reason of any express statutory provision, but according -to the established principles upon which a court of equity always exercised its jurisdiction in granting relief. The court of chancery invariably exacted- of the party who asked relief against a usurious, transaction that he pay, or offer to pay, both principal and interest, as a condition precedent to the compelling of the defendant to answer and make discovery. “This maxim principally ‘ applies to the party who is seeking relied in the character of a plaintiff in the court. Thus, for instance, if a borrower of money upon usurious interest -seeks to have the -aid of a court -of equity in cancelling or procuring the instrument to he delivered up, the court will not 'interfere in his favor unles-s upon terms that he will pay the lender what is really and bona fide due to him. Rut if the lender comes into equity to assert and enforce his own claim under the instrument, there the borrower may show the invalidity of the instrument, and 'have a decree in hi-s favor -and a dismissal of the bill without paying the lender anything; -for the court will never assist a wrong-doer in effectuating his wrongful and illegal purpose.”'—1 Story Equity Jur., (13th ed.), § 64 6. Mr. Pomeroy, in his great work on Equity Jurisprudence, states the doctrine to be: “Another remarkable application of the principle is seen in the action of the courts -towards parties -seeking its -aid under the statutes against usury. Wherever the statutes have made usurious loans and obligations absolutely v-oid, if a borrower brings a suit in equity f-or the purpose of having a usurious bond or other security surrendered, up and cancelled, the relief will be granted only upon condition that the plaintiff himself does equity by repaying bo his creditor what is justly and in good faith due; that is, the amount actually advanced, with lawful interest; unless, indeed, the statute has gone so far as to expressly prohibit the court from imposing -such terms as the price of its relief. The samo principle has been applied to a lender seeking the aid of the court to reform a security tainted with usury. The case is entirely different and -another maxim governs its decision, when the. lender -sues in a court of equity to enforce a usurious obligation. The borrower -may -set up the defense and defeat -the suit, without repaying any amount. The rule extends to all cases Where a party seeks to have a contract -set aside and cancelled on the ground of its illegality in violating the provisions of some statute; the court -will require him, as- a condition to its granting the relief, -to pay what, i-s really -due on the agreement, unless the illegality is malum in so, or the statute itself prevents the imposition of such terms.”—1 Pom. Eq. Jur., § 391. See -also 2 lb. § 937; Webb on Usury, § 343; Green v. Kemp, 13 Mass. 515. There is a clear distinction between acts which are mala in .sr which are generally regarded as absolutely void in the -sen-se that no right or claim can be derived from them, and acts which are mala prohibí ta, which are void or voidable, according to the nature and effect o-f the act prohibited.—Ewell v. Daggs, 108 U. S. 143, 150. Where the act is malum in no, neither party to the contract can have any relief. Where it is malum prohibitum-, as in the case of usury, the lender cannot enforce the contract, but the borrower can 'have relief •against it, notwithstanding he is partieeps criminis. I-ie is not regarded as being in pari delicto. He commits no crime by agreeing to pay the usury. The crime is committed by the lender, and he alone is subject to prosecution.—Pratt v. Short, 79 N. Y. 437. In Schermerhorn v. Talman, 14 N. Y. 123, the' -court said: “There is no rule ladder established iban that which refuse's the 'active interposition of a court of equity in favor of one who is particeps criiniuis ■ but like most other rules, it admits of exceptions. There are certain cases where the party seeking relief, although particeps criiniuis, is not in pari delicto, to which it does-not apply. This distinction seems to have been first taken by Lord Mansfield, in the case of timith v. Bromley. The exception was there applied only to eases where the law violated was intended to protect one of the parties from particular acts of oppression or extortion by the other; as for instance the statute against usury. Hubsequeht cases, however, -show that the principle is not confined to that class of cases. The next case in which the question arose was that of Jaques v Golightly, 2 Wm. Bl. 1073. The plaintiff had paid to the defendants money as a premium for insuring lottery tickets, a transaction prohibited by statute, and the action was brought to recover it back. It was in■sisted for the defendant, that- the plaintiff being particeps criiniuis, could not recover. But the action was sustained. Blackstone, J., -said it- was not like the stock-jobbing act; ‘because there both parties are made criminal, and subject to penalties.' Browning v. Morris was another case of the same kind. Lord Mansfield there draws the distinction between acts which are mala in so, such as bribery, and those which are-merely prohibited by statute; and in the course of his opinion remarks that, ‘it. is very material that the statute itself by the distinction it makes has marked the criminal; for the penalties are all on one side; upon the office keeper.’ A similar question afterwards arose in the -case of Williams v. Hedley, where it was very elaborately examined by Lord Ellenbokough, who> confirmed the doctrine of the previous cases. The principle of these eases is so obviously just, that no argument seems necessary to sustain it. To say that in every transaction prohibited by positive enactment, the parties concerned are necessarily in, pari, delicto, would in many cases he manifestly absurd; and the test adopted by Lord Mansfield ' and Mr. Justice Klackstoxe, by which to determine tin* relative guilt of the parties, viz., to see upon which party the penalty is imposed, would seem to he just.’’ In Browning v. Morris, 2 Cowp. 793, Lord Mansfield said : “Where contracts or transactions are prohibited by positive statute, for the sake of protecting one set of men from another set of men; the one, from their situation and condition, being liable to be -oppressed or imposed upon by the other; there, the parties are not in pari delicto, and in furtherance of these-statutes, the person injured, after the transaction is finished -and completed, may bring his action -and defeat the contract. For instance, by the statute of usury, taking more than 5 per cent, is declared illegal, and the contract void; but these statutes were made to protect needy and necessitous persons, from the oppression of usurious and moneyed men, who are eager to take advantage of the distress of others; while they, on the other hand, from the pressure of their 'distress, are ready to come 'into any terms, and, with their eyes ojien, not only break the law, but complete their ruin.” The same, doctrine is held in Williams v. Medley, 8 East, 378, also in Smith v. Bromley, 2 Dong. 670. Blacltstone, in Yol. 2, 455, says the taking of usury is not mala in- in sc. ' , It is manifest from the fact that courts of equity in-England and in this country, notwithstanding- the existence of criminal statutes punishing the lender for their violation, have always extended aid to the borrower in freeing him from the obligation of usurious contracts upon condition that he does equity by repaying the money loaned and legal interest, thereon, have not regarded him as being in pari delicto, nor have they regarded the usurious transaction as beingmalum in se. The act of -the bank in this case in charging usury involved no moral turpitude, no moral wrong; independent of the statute it would have involved no crime. The consideration of the notes was-for money loaned, which cannot be said in any sense to be unlawful, wrong, or in violation of public policy. The wrong, if one was committed, was in charging for the use of the money loaned a higher rate of interest than the statute against usury permits to he taken. There is no element of malum in se in the transaction. .So, then, the case is controlled, by the principles which we have- declared, and which are supported by the authorities cited. The concessions which we have made in this opinion as to the fact of possession by -the complainant of the lands at and prior to the filing >of the bill and the fact that the mortgages were usurious, were only made for the purpose of the discussion indulged in by us. Tt is but fair to the respondent bank to say that each of these facts is controverted by it in its pleading and by the. evidence introduced by it. We made these concessions for the purpose of simply showing that all the complainant’s material contentions upon which rest the equities of her case may be conceded, and yet, she is not entitled to the relief she' seeks. ■What we have said covers all the assignments of error insisted upon in argument; and those not insisted upon, under the uniform practice that prevails in this court, must be treated as waived. It follows that the ■decree of the chancellor dismissing complainant's bill must be affirmed. Affirmed.