When the jurisdiction of this Court depends upon the amount in
controversy, it is to be determined by the amount involved in the
particular case, and not by any contingent loss which may be
sustained by either one of the parties through the probative effect
of the judgment, however certain it may be that such loss will
occur.
The plaintiff made a loan to the defendant upon his promissory
notes to the amount of $8,500, secured by a mortgage of real estate
in Georgia of the value of over $20,000. In assumpsit to recover on
the notes, the jury found the transaction to have been usurious and
gave judgment for the sum actually received by the debtor, which
was $1,700 less than the amount claimed, and for interest and
costs. The effect of that judgment, if not reversed, is, under the
laws of Georgia, to invalidate the mortgage given as security, in
proceedings to enforce it.
Held that notwithstanding such
indirect effect, this Court has no jurisdiction, the amount
directly in dispute in this action being only the usurious sum.
This was an action of assumpsit by the plaintiff in error
against Jacob M. Gay upon four promissory notes, made by Gay,
amounting to $8,500, with interest at eight percent, payable
annually, with all costs of collection, including ten percent
attorneys' fees. These notes were made payable to Charles L. Flint
or order at the office of the Corbin Banking Company, New York
City, and as to each of them the defendant waived his right to the
benefit of the exemption provided for by the Constitution and laws
of Georgia. To secure these notes, a deed was given by Gay, with
the consent of his wife, to said Flint, of land in Schley County,
Georgia, with release of homestead and dower. At the same time, a
bond for a reconveyance on payment of the notes was given by Flint
to Gay, according to the usual course of business in Georgia, where
such deed and bond stand in the place of a mortgage.
Page 145 U. S. 124
Flint took the notes and deed in behalf of the plaintiff, and
afterwards endorsed the notes to the plaintiff.
The defendant pleaded four pleas, two of which were stricken out
by the court, and the case was tried upon the first, which was an
ordinary plea of
nil debit and upon the second, wherein
the defendant alleged that the consideration of these notes was a
loan of money by the plaintiff to the defendant of the sum of
$6,463, and that all of said sum and notes sued on in excess of
said sum was contrary to law, and defendant was only liable for the
sum received by him and lawful interest thereon from the dates of
the notes, which amount he averred his willingness to pay. Upon the
trial, the defendant relied solely upon the defense of usury, and
the court charged the jury that the defendant admitted an
indebtedness of $6,463, with interest, etc., and instructed them,
in any event, to return a verdict for that amount. 33 F. 636. In
this connection, he further charged that if they believed the
defendant received $6,800, they were then directed to return a
verdict for that sum, with interest and attorneys' fees, etc. The
jury returned a verdict for $6,800 principal, $2,041.51 interest,
and $884.15 attorneys' fees, making a total amount of $9,725.66,
for which a judgment was entered, with costs.
Plaintiff thereupon secured the settlement of a bill of
exceptions, and sued out a writ of error from this Court.
Page 145 U. S. 127
MR. JUSTICE BROWN, after stating the facts in the foregoing
language, delivered the opinion of the Court.
From the above statement of facts, it is clear that, while the
plaintiff sued to recover $8,500 and interest, he actually
recovered $6,800 and interest and attorneys' fees, amounting in all
to $9,725.66, so that the amount actually in dispute between
Page 145 U. S. 128
the parties in this Court is the difference between the amount
claimed and the amount of the verdict. Computing interest at eight
percent upon the entire amount of the notes, and adding an
attorney's fee of ten percent, the amount due, according to the
plaintiff's theory, was approximately $12,155, or $2,429.34 more
than the amount recovered. This is the proper method of
ascertaining the amount in dispute in this Court.
Tinstman v.
National Bank, 100 U. S. 6;
Jenness v. Citizens' National Bank of Rome, 110 U. S.
52;
Wabash, St. Louis &c. Railway v. Knox,
110 U. S. 304;
Hilton v. Dickinson, 108 U. S. 165.
It is true that, under the Code of Georgia, section 2057, subd.
f, "all titles to property, made as a part of a usurious
contract, or to evade the laws against usury, are void." The
Supreme Court of Georgia has construed this as rendering a deed
infected with usury void as title, and depriving the holder of the
right of recovery of the land against the maker.
Carswell v.
Hartridge, 55 Ga. 412;
Johnson v. Griffin Banking,
Co., 55 Ga. 691. It was said in
Broach v. Smith, 75
Ga. 159, that usury not only destroys the legal title, but prevents
the deed from ever being treated as an equitable mortgage. It
appears in this case that the value of the property conveyed as
security is $22,500, and under the laws of Georgia, it may be that
the finding of usury may have the effect of invalidating the deed
given as security for the loan.
Assuming this to be true, however, it is not the immediate
result of the judgment in this case. The provisions of the Georgia
Code with respect to real estate security for loans are somewhat
peculiar. The practice is for the person receiving the loan to
convey the real property by deed to the person loaning or advancing
the money, and to take a bond for title back to the vendor upon the
payment of the debt, and, by section 1969,
"such conveyance of real or personal property shall pass the
title of said property to the vendee . . . till the debt or debts
which said conveyance was made to secure shall be fully paid,"
etc. By section 1970,
"when any judgment shall be rendered in any of the courts of
this state upon any note or other evidence of debt which said
conveyance of realty was
Page 145 U. S. 129
made and intended to secure, it shall and may be lawful for the
vendee to make and file, and have recorded in the clerk's office of
the superior court of the county wherein the land lies, a good and
sufficient deed of conveyance to the defendant for said land; . . .
whereupon the same may be levied on and sold under said judgment as
in other cases; provided, that the said judgment shall take lien
upon the land prior to any other judgment or encumbrance against
the defendant."
The substance of this is that, upon taking judgment upon the
note or bond given for the loan, the lender may reconvey the
property to the debtor, and immediately levy upon and sell it by
virtue of his judgment and execution. In such case, it would seem
that, if he buys the land at the sale, he would recover possession
of it by an action of ejectment upon his sheriff's deed.
In this connection, it was held by the Supreme Court of Georgia
in
Carswell v. Hartridge, 55 Ga. 412, 414, that the
proceeding under this statute was optional and that a recovery in
ejectment might be had upon the original deed made to secure the
debt, so long as the title remained in the creditor and the debt
was unpaid. "That the next section of the Code," said the
court,
"gives a remedy for collecting the money by proceeding to
judgment, filing a deed, levying upon the land, and selling it,
does not negative the former remedy. The creditor may either assert
his title or part with it to the debtor at his option. He may
possess himself of the land and hold it till he is satisfied, or he
may enforce satisfaction in the manner pointed out by section 1970.
In this respect, his position is like that of an ordinary vendor of
land who retains the title as security, giving a bond to reconvey
upon payment of the purchase money."
That the creditor may also have the land sold by the sheriff,
and bring ejectment upon the sheriff's deed, is evident from the
case of
Johnson v. Trust Co., 55 Ga. 691.
In either case, however, the effect of the seizure upon the
title of the creditor to the property can only be judicially
determined in an action of ejectment, either upon the original deed
or upon the sheriff's deed given in pursuance of the
Page 145 U. S. 130
statute, or by a bill in equity to enjoin the creditor and
sheriff from making sale under the levy.
Johnson v. Griffin
Banking & Trust Co., 55 Ga. 691. The effect of the
judgment in this case, then, is not to avoid the title of the
plaintiff to this property, but to establish the existence of
usury, which, in another action, may be pleaded as avoiding such
title. It is true that the plaintiff set forth in its declaration
that the defendant gave a deed of certain lots, describing them, to
secure the payment of the notes; but it claimed nothing by virtue
of this allegation in its prayer for relief, demanding only a money
recovery. Upon the trial, the deed and bond were offered in
evidence, but were ruled out, and the judgment was simply for the
amount of the notes and interest, less the alleged usury.
It is well settled in this Court that when our jurisdiction
depends upon the amount in controversy, it is determined by the
amount involved in the particular case, and not by any contingent
loss either one of the parties may sustain by the probative effect
of the judgment, however certain it may be that such loss will
occur. Thus, in
Grant v.
McKee, 1 Pet. 248, it was held that the Court would
not take jurisdiction of a case where the title to a piece of land
of less value than the jurisdictional sum was directly involved,
although the whole property claimed by the lessor of the plaintiff
under a patent, and which was recovered in ejectment in the court
below, exceeded that sum. In
Farmers' Bank of Alexandria v.
Hooff, 7 Pet. 168, a bill was filed for the purpose
of foreclosing a deed of trust given to secure a sum of money less
than $1,000. It appeared that the property covered by the deed
exceeded that sum in value, but the court held the real matter in
controversy to be the debt claimed in the bill, "and, though the
title of the lot may be inquired into incidentally, it does not
constitute the object of the suit." A similar ruling was made in
Ross v.
Prentiss, 3 How. 771, where a bill was filed to
enjoin the marshal from levying an execution of less than $2,000
upon certain property, the value of which was more than $2,000. In
this case, as in the other, the argument was made that the
defendant might lose the whole benefit of
Page 145 U. S. 131
his property by the forced sale under the execution, but the
Court held that it did not depend upon the amount of any contingent
loss, and dismissed the bill. In
Troy v. Evans,
97 U. S. 1, action
was brought to recover certain installments upon bonds, the
aggregate of which bonds exceeded $5,000, but the judgment was for
less. The case was dismissed, although it appeared that the
judgment would be conclusive in another action upon future
installments upon the same bonds. A like ruling was made in
Elgin v. Marshall, 106 U. S. 578,
where a judgment was rendered for $1,660.75, against a town, on
interest coupons detached from bonds which it had issued under a
statute claimed to be unconstitutional. The case was dismissed in
an elaborate opinion by Mr. Justice Matthews, although it appeared
that the judgment might be conclusive as an estoppel in any
subsequent action upon other coupons, or upon the bonds themselves.
So in
New Jersey Zinc Co. v. Trotter, 108 U.
S. 564, an action of trespass wherein the plaintiff
recovered judgment for less than $5,000, the case was dismissed,
although the court indicated that the jury were compelled to find
the plaintiff had title to the land, and "that in this way the
verdict and judgment may estop the parties in another suit, but
that will be a collateral, not the direct, effect of the judgment."
See also Opelika City v. Daniel, 109 U.
S. 108. In
Bruce v. Manchester & Keene
Railroad, 117 U. S. 514,
suit was brought to collect interest due on certain railroad bonds
by the foreclosure of a mortgage made to trustees to secure a
series of bonds amounting to $500,000. As the suit was brought only
to recover the interest on the bonds, which was less than $5,000,
the appeal was dismissed.
Most of the authorities on the subject are collated and reviewed
in
Gibson v. Shufeldt, 122 U. S. 27, and a
conclusion reached in consonance with the view expressed in the
prior cases.
The case of
Stinson v.
Dousman, 20 How. 461, is not in conflict with these
authorities. The action in that case was for rent amounting to less
than $500, but the case itself involved the question whether a
certain contract for the sale of
Page 145 U. S. 132
real property, valued at $8,000, had been annulled, and the
answer of the defendant was framed not only to present a legal
defense against the claim for rent, but also to obtain a decree
affirming the continued validity of the contract of sale. It was
held that the effect of the judgment in that particular case was an
adjustment of the legal and equitable claims of the parties to the
subject of the suit, which was the title to the land under the
contract.
Upon the whole, it appears to us that we have no
jurisdiction of this case, and that the writ of error should be
dismissed, and it is so ordered.
MR. JUSTICE LAMAR and MR. JUSTICE BREWER dissented.
