Trible v. Nichols

¶1Triblé borrowed money from Oglesby, and, to secure the loan, executed to him a deed absolute in form to the land in question. Subsequently, at Trible’s request, Oglesby executed a deed to the same land to Nichols. We think the chancellor was amply sustained by the proof in the finding that the consideration for the deed from Oglesby to Nichols was a usurious loan of money from Nichols to Trible, the deed being intended as security therefor. A part of the loan was applied by Nichols, at the request of Trible, in paying off Trible’s debt to Oglesby; the residue was paid to Trible. The chancellor held that Nichols should be subrogated to the rights that Oglesby had under his mortgage, and decreed a foreclosure of the same for Nichols’ benefit. The correctness of that ruling is the legal question presented by the appeal. *

¶2Subrogation to. usurious securiThe general rule is well established that one who, at the request of another, pays off an incumbrance upon the ter’s land, is entitled to be subrogated to the security; and it is also a settled rule that when a valid security is cancelled by means of a subsequent agreement and security which is void for usury, the original security is not invalidated, but equity will revive and enforce it. But Nichols cannot invoke the aid of either of these principles. One who seeks protection under the equitable doctrine of subrogation must come into court with clean hands. It is not applied to relieve one of the consequences of his own wrongful or illegal act. Where therefore the claim to subrogation grows out of an-agreement which is void by reason of usury, it furnishes no basis for the equitable doctrine. Sheldon on Subrogation, secs. 42, 44; Perkins v. Hall, 105 N. Y., 539.

¶3If Nichols had been the owner of the Oglesby mortgage, and subsequently entered into the usurious contract he actually made, and by means of it had cancelled the first mortgage, the case would be like that of Gerwig v. Sitterly, 56 N. Y., 214, which he relies upon to sustain his contention. There it was not necessary to resort to the illegal contract to take the benefit of the binding security. And in Patterson v. Birdsall, 64 N. Y., 294, the other case relied upon by Nichols, it did not become necessary to resort to any dealings between the usurer and the debtor in order to establish the right to the first mortgage when the usurious security was annulled. But the position of Nichols is such that he is forced to resort to proof of his illegal contract to establish any claim whatever. The agreement to take the legal- title from Oglesby who held it in trust for Trible, instead of from Trible himself, and the payment of Oglesby’s debt are inseparable parts of the usurious agreement. But as it is against the policy of the law to found any right upon an illegal contract, Nichols cannot have the benefit of the Oglesby mortgage.

¶4The two cases cited by Nichols are commented upon and distinguished from this class of cases in Perkins v. Hall, 105 N. Y., supra, and Baldwin v. Moffett, 94 N. Y., 82.

¶5Reverse the judgment, and remand the cause with directions to enter judgment for Trible. Nichols will be decreed the amount of taxes paid on the land, as found by the court below, and interest.