Opinion
December Term, 1849.
Where a deed of trust is given for the security of several debts, some of which are bona fide and some tainted with usury, the deed is not void as to the bona fide debts, provided these debts are separate from and unconnected with the usurious debts.
APPEAL from the Superior Court of Law of ROCKINGHAM, at Spring Term, 1849, Dick, J., presiding.
This is an action of ejectment to recover the possession of the tract of land set forth in the plaintiff's declaration. Both parties claimed under Thomas Thompson. The defendant claimed under a deed of trust duly executed and registered in the register's office of Rockingham County. The plaintiff claimed under a sheriff's deed founded on judgments and executions, levies and sale duly made by the sheriff. It is admitted by the parties that among the debts secured under the trust there is an amount sufficient to cover the value of the property conveyed in the trust which are bona fide and not affected by usury. It is also admitted that among the debts secured under the trust there are debts founded on usurious considerations to an amount sufficient to cover the value of the property conveyed, and that the deed of trust is prior in date and registration to the judgments and executions under which the plaintiff claims. If in the opinion of the court, on this statement of fact, the plaintiff is in law entitled to recover, the defendant being in possession, there is to be a judgment for him; otherwise, judgment for the (429) defendant. His Honor being of opinion with the defendant, pro forma, gave judgment accordingly, and directed a nonsuit, from which judgment the plaintiff prayed and obtained an appeal to the Supreme Court.
Morehead for plaintiff.
Iredell for defendant.
The only question is whether a deed of trust is void which was made to secure several debts due to different individuals, some of which debts are usurious. It is not void. The estate passed, and is a security for the debts not tainted with usury. The declarations of trust only in reference to the usurious debts are void.
In Shober v. Hauser, 20 N.C. 222, it is held that a deed of trust made to secure a usurious debt is void; in that case there was but one debt secured, which debt being usurious, the deed could only operate as an "assurance for a usurious debt," and was properly held to be void.
But in this case there are several debts due to different individuals; some of them are not tainted with usury, and are in no wise connected with those that are. The operation of the deed was to pass the legal estate, with a separate declaration of trust for each of the debts therein enumerated. There can be no reason why the declaration of trust in reference to one debt may not stand, and the declaration of trust in reference to another be held void. So if a deed contains a declaration of trust in favor of several debts, one of which is feigned, and there be no connection or combination between the creditors to whom the true debts are due and the grantor or person for whose benefit the feigned debt is inserted, there can be no reason why the declaration of trust in favor of the true debts may not stand and the feigned debt be treated as a nullity.
If a bond secures the performance of several covenants (430) on conditions, some of which are legal and the others void, it is valid so far as respects the conditions that are legal, provided they be separated from and are not dependent on the illegal. But if a contract be made on several considerations, one of which is illegal, the whole contract will be void. The difference is that every part of the contract is induced and affected by the illegal consideration; whereas in cases where the consideration is tainted by no illegality, but some of the debts are illegal, the illegality of such as are bad does not communicate itself to or contaminate those which are good, except where from some peculiarity in the contract its parts are inseparable or dependent upon one another. 1 Smith Leading Cases, 284; note to Collins v. Blanton, and the cases cited. Here the consideration which raised the use for the purpose of the conveyance is merely nominal. The debts secured are distinct, due to different individuals and in no way connected with or dependent on one another; the deed is valid so far as respects the good debts. It would be unreasonable and defeat the object of deeds of trust if they are to be declared void, and honest creditors deprived of their security for debts, because the debtor, without their knowledge or concurrence, may insert an usurious or feigned debt. No one would bid at a trustee's sale if he could be deprived of his title by showing that one of many enumerated debts was tainted with usury. The case of Harrison v. Hanent, 5 Taunt, 780, was relied on for the plaintiff. The case is not an authority against the conclusion above announced, but tends, we think, greatly to confirm its correctness. The son of the defendant owed several debts to the plaintiffs, some of which were usurious, and wishing to get a further advance, agreed to draw three bills upon his father as a security for the whole. The bills were accepted, and the first paid; but, in a suit on the second, it was held to be void because it (431) was a security for the amount in which were included some usurious debts. Although it was urged that the amount of the first and second bills would not exceed the amount of the good debts, the reply was that if the plaintiff was allowed to recover he could apply the amount to the bad debts and sue the son on the good debts; that it was the same as if the son had given his note, with his father as security, for the whole debt. The contract was entire. The security was given as well for the illegal as the legal part; they are connected together and cannot be separated; which distinguishes it from this case. Here the debts are connected; one may be paid and another rejected. It is the duty of the trustee to pay the good and reject the bad ones. It is the same as if a separate deed of trust for each of the creditors had been executed.
PER CURIAM. Judgment affirmed.
Cited: Harris v. DeGraffenreid, 33 N.C. 93; Stone v. Marshall, 52 N.C. 304; Palmer v. Giles, 58 N.C. 78; McCorkle v. Earnhardt, 61 N.C. 301; Carter v. Cocke, 64 N.C. 242; McNeill v. Riddle, 66 N.C. 294, 5; Morris v. Pearson, 79 N.C. 257, 262; Savage v. Knight, 92 N.C. 500; Woodruff v. Bowles, 104 N.C. 207; Brown v. Nimocks, 124 N.C. 417, 422; Sutton v. Bessent, 133 N.C. 564.