JAMES DOE GIBSON and his Wife, ETHEL R. GIBSON, Appellants, v. WILLIAM A. TUBMAN.

APPEAL FROM THE CIRCUIT COURT OF THE FOURTH JUDICIAL CIRCUIT, MARYLAND COUNTY. Argued November 2, 1959. Decided January 15, 1960. 1. In determining whether a contract is usurious, a court will look to the substance rather than the form of the transaction in question. 2. In the absence of special agreement the maximum permissible rate of interest is that permitted by the law of the place where the principal was advanced. 3. Interest in excess of ten percent per annum is usurious. On appeal from a judgment in an action for foreclosure of a mortgage on real property, judgment modified. appellants. Court. In this case brought up on a regular appeal from the Circuit Court of the Fourth Judicial Circuit, Maryland County, one James Doe Gibson and Ethel R. Gibson, his wife, prepared and executed to William Alfred Tubman a warranty deed which is hereunder recited word for word : “This indenture made and entered into this 8th day of November, 1955, by and between James Doe Gibson and Ethel R. Gibson, his wife, of the City of Harper, County of Maryland, hereinafter called Parties of the First Part, and William Alfred Tubman of the Township of Pleebo, Maryland County, hereinafter called Party of the Second Part, ” W / T NE SSE TH: “That the said Parties of the First Part, for and in consideration of the sum of $5,600 lawful money of the D. Bartholemew Cooper and 0. Natty B. Davis for Momolu S. Cooper for appellee. MR. JUSTICE MITCHELL delivered the opinion of the LIBERIAN LAW REPORTS 611 Republic of Liberia, to the Parties of the First Part in hand paid by the party of the Second Part (the receipt whereof is hereby acknowledged), the said Parties of the First Part have bargained, sold and conveyed, and by these presents do grant, bargain, sell and convey unto the said Party of the Second Part, and unto his heirs and assigns forever, a certain portion and parcel of land with a building thereon, being in the City of Harper, County of Maryland, Republic of Liberia, lying and situated on the North side of Gregory Street: “COMMENCING 178 feet from the Northeast corner of Mecklin and Gregory Streets ; thence in a line South 83 degrees, East 52 feet, to a point, thence in a line South 7 degrees, West mo feet, to a point, touching on the North side of said Gregory Street, thence in a line with the said Gregory Street, North 83 degrees, West 52 feet, to the place of commencement, the whole to constitute 5,20o square feet of land, or one and threetenths of a town lot, and no more; “Together with all and singular the hereditaments and appurtenances thereto belonging, or in any wise appertaining to the said premises, unto the said Party of the Second Part, his heirs and assigns forever, and the reversion or reversions, remainder or remainders, rents, issues and profits thereof, and all the estate, right, title, claim and demands whatsoever of the said Parties of the First Part, either in law or equity, of the above granted premises with the hereditaments and appurtenances, to have and to hold the above granted premises, with the appurtenances and every part and parcel thereof, to the said Party of the Second Part, his heirs and assigns forever. And the said Parties of the First Part do covenant, grant, bargain, promise and agree to and with the said Party of the Second Part, his heirs and assigns, to warrant and defend the above-granted premises, and all and every part and parcel thereof in 612 LIBERIAN LAW REPORTS being in the quiet possession of the said Party of the Second Part, and against all and every other person, claiming or to claim said premises or any part thereof. “In witness whereof the said Parties of the First Part have hereunto set their hands and seals the day and year first above written. [Sgd.] JAMES DOE GIBSON [ ” ] ETHEL R. GIBSON “Signed, sealed and delivered in the presence of : [Sgd.] CHARLES FREEMAN [ ” ] SAMUEL KOFA.” That is the text of the outright transfer deed executed to William Alfred Tubman by James Doe Gibson and Ethel R. Gibson, his wife. Concluding the terms of a mortgage thereon, the following document was subsequently tendered completing the deal by giving the property as a lien or security for the payment of the money received including interest: “We the undersigned, having received from Mr. William Alfred Tubman of Pleebo, Maryland County, Republic of Liberia, the sum of five thousand six hundred dollars ($5,600) being principal and interest, we do hereby stipulate and agree to refund said amount, or any portion thereof, within eighteen months from the date of this stipulation. “We guarantee the payment of this amount over to Mr. Tubman within the time stipulated. We have executed in his favor warranty deed for our premises lying and situated on the north side of Gregory Street with a building thereon, and upon any failure or defalcation on our part to refund said amount, or any portion thereof, within the time stipulated, the said Mr. Tubman is authorized and empowered to offer to court the admission into probation and registration of said warranty deed without any objection from us. LIBERIAN LAW REPORTS 613 The terms and conditions of this objection being fully complied with are to render same null and void and of no legal effect. “In witness whereof we have subscribed our names this Loth day of November, 1955. [Sgd.] JAMES DOE GIBSON [ ” ] ETHEL R. GIBSON.” At the expiration of the time specified according to the terms and conditions stipulated by the appellants, they had failed either to comply in whole or in part. Appellee called attention to their default by letters, and it also appears from the records that appellee offered to have their property restored to them, even then, if they were prepared to make payment of the amount for which the mortgage was instituted. Regardless of this magnanimous and generous offer, they made no attempt whatever to settle the mortgage, and judging from the defense they set up in the court below after the institution of the suit in foreclosure, we get the impression that they relied upon the artifices employed by themselves which they felt could be accepted as legal blunders, and thereby deprive the petitioner of his rights in law. The petitioner, having no alternative, instituted an action in equity for the foreclosure of the mortgage transaction, and the appellants appeared and filed their answer denying his right to recover on the grounds that their consent to the transaction was obtained through means of meditated imposition which entrapped them, by the fraudulent acts of the appellee, and other legal technicalities. Such allegations on the part of the appellants savor, in our opinion, of dishonest minds. The pleadings rested at the reply and amended answer of the appellants. The case was called and law issues disposed of by the court below on October 3o, 1957. The issues of fact laid in the bill and in Counts “to,” “11,” and “12” of appellants-respondents’ answer were ruled to trial. For 614 LIBERIAN LAW REPORTS the benefit of this opinion, we will quote these counts of appellants-respondents’ answer below: “1o. And also because respondents deny the legal and equitable sufficiency of petitioner’s bill and say, in further reference to Count ‘3’ of said bill, that profert of the stipulation marked Exhibit ‘B’ cannot be considered as sufficient proof under the law as to the amount of $5,600. Respondents submit that said stipulation was also barely issued along with the warranty deed for the loan of $2,00o, and when the usurous and iniquitous interest of Ka monthly, or 120% per annum which aggregates $3,600 is added to the amount of $2,000, the total thereof is $5,600, as appears on said stipulation. Respondents therefore pray for the dismissal of petitioner’s bill with costs. “1 i. And also because respondents further deny the legal and equitable sufficiency of Count ‘4’ of petitioner’s bill, and allege that said count avers that petitioner repeatedly demanded said amount of respondents in person and by medium of other persons, but respondents have failed to make payment. Respondents deny that the petitioner ever approached them in person or through the medium of other persons demanding the amount due him, but rather allege that the said petitioner insisted that the business between him and respondents was an outright sale, and that respondents should vacate and surrender their premises over to petitioner. Respondents therefore pray this Honorable Court not to countenance said count, but to dismiss petitioner’s bill with costs against him. 12. And also because respondents deny the legal and equitable sufficiency of Count ‘5’ of petitioner’s bill of complaint, since said count alleges that respondents made faithful promise to pay LIBERIAN LAW REPORTS 615 an amount of $5,600 which they never received at the time of the conclusion of their business deal; rather their consent was obtained through means of meditated imposition, and circumvention, and by entrapping respondents by fraudulent contrivances and cunning and deceitful management, and by purposely misleading respondents with the view of depriving them of their property and obtaining excessive and exorbitant interest on the loan of $z,000. It can clearly be seen that petitioner’s stealth in probating said deed in the absence of respondent James Doe Gibson, while at Nyaake Webbo, before the expiration of the eighteen months covered by the loan, was in itself a base and selfish means to further this dastardly and wicked purpose, which is the essence of premeditated fraud. Respondents submit that, in courts of equity, it is an admitted principle that, in cases of fraud the court may investigate questions growing out of the fraudulent transaction when properly presented. It is a general rule that fraud vitiates all acts into which it enters, and where a conveyance upon which a party relies to establish his claim is shown to have its inception in fraud and it is shown that he was a participant in such fraud, his claim may be decreed void. Respondents therefore pray for the dismissal of the petitioner’s bill with costs against him.” After hearing evidence in the case, the court below decreed that: “[T]he mortgage property be sold at public auction to the highest bidder after due and timely notice, and that from the proceeds of petitioner’s loan, costs of court be paid, together with all accrued interest, and the surplus, if any, be paid over to the respondents herein. . . . The respondents are afforded six months 616 LIBERIAN LAW REPORTS from the date of this decree and after the enforcement of the final decree to take advantage of their right of equity of redemption ; thereafter they are forever barred the right of so doing.” It is from this final decree that respondents excepted and brought their appeal for review. We advert to the important issue raised by the respondents that the entire transaction is fraudulent and should not be considered by the court. We have wondered upon what principle of law they have predicated this erroneous contention. The respondents themselves prepared both the warranty deed and the stipulations in this case, and at no stage of the transaction, even up to the filing of petitioner’s bill in equity, did they elect to raise the issue of fraud, as they have now alleged. The law on the question is unequivocal : “In Story’s Equity Jurisprudence (vol. 2, sec. 1540) it is held that in cases of actual fraud, courts of equity feel great reluctance to interfere where the party complaining does not apply for redress at the earliest convenient moment, after the fraudulent character of the transaction comes to his knowledge. A party upon whose right or interest a fraud is attempted, should not be allowed, after the fact comes to his knowledge, to speculate upon the possible advantage to himself of confirming or repudiating the transaction.” Page v. Jackson, [1912] LRSC 5; 2 L.L.R. 77, 79-80 (1912). In view of the settled principle of law cited, supra, we do not feel that the respondents could sustain this defense; but since the proceeding is in Chancery, where flexibility prevails, the final decree could have been milder under the controlling law, and we quote the following: “Whatever the form of a mortgage, it cannot be deprived of its essential attributes by any stipulations of the parties, however express and positive; and equity will take a broad view of the obligations of the mort- LIBERIAN LAW REPORTS 617 gagor and lean against harsh remedies invoked against him.” 59 C.J.S. 159 Mortgages � 113. Another point we wish to review before entering upon the details of the bill of exceptions is the contention raised by appellants, respondents below, that the bill of complaint was insufficient because the warranty deed and stipulations upon which the bill was founded had not been registered and probated ; not knowing at the time of the filing of the original answer that the petitioner had taken the precaution to comply with these legal prerequisites. It does seem from this allegation that the respondents intended to commit fraud through their contemplated act of inserting into the stipulations that petitioner was not authorized to probate and register the deed in question until after the expiration of the eighteen months period for which the loan was given, knowing that the controlling statutes provide to the contrary. Such strategy is highly tainted with the essence of dishonesty, and we regard it as a reprehensible act, since any disclaimer of the bona fides of one’s own act must be frowned upon by our courts. When this case was called for hearing, counsel on both sides directed their attention especially to the question of the mortgage transaction and the interest computed on the principal in the deal. Very little argument was made on the several points raised in the bill of exceptions, since it embraces mainly exceptions to the rulings of the court on the law issues and on questions propounded to witnesses ; therefore, we do not feel it necessary to review the nineteen counts thereof, seriatim, in our effort to reach the crux of the case according to the records before us and the arguments made thereon. The appellants do not deny instituting the mortgage with the petitioner below, now appellee, nor do they disclaim responsibility for the payment of the sum of money loaned to them by the appellee for which their property was given as security for the payment thereof. They also 618 LIBERIAN LAW REPORTS contend that they have not refused to make payment of the sum of money borrowed, but that the interest computed on the said sum was usurious, since it was computed at a rate in excess of that which the law provides, that is to say, at to percent per month and 120 percent per annum ; there was no medium left to them other than having a court sitting inChancery, where the flexible spirit and intent of the law is the predominant factor in the disposition of such matters, determine the legality or illegality thereof. And therefore they sought the opportunity to appeal their cause before this bar, for a review of the final decree of the lower court, for such judgment to be given as ought to have been given below. They cited in course of their argument our law on the question of hard, oppressive and exactive interest. Although this argument of appellants’ counsel was far from the arguments advanced in the court below according to the records before us, however, since it is considered with the subject matter, we feel that it should claim our attention. Appellee’s counsel, on the other hand, argued that both the warranty deed and the stipulations which consummated the mortgage deal show the sum of $5,600 to be the amount received, not specifying what portion thereof was the principal or what was interest; and that notwithstanding that the said total sum comprised both principal and interest, even if the interest computed was in excess, as the appellants alleged, they having subscribed to both documents without coercion in any form, shape or fashion, the appellants had waived their right to protest against the legality thereof and therefore were estopped from disclaiming their voluntary commitments. Continuing however, he argued further that, being aware of the effect of our statutes and the common law deal on the question of legal interest to be computed in such a transaction, he conceded the argument of his opponent, and suggested that this Court, in disposing of the issues involved, might give the appellees the benefit which the law authorizes LIBERIAN LAW REPORTS 619 according to good conscience, as is applicable in equity, considering the time involved, the default and the motives of the respondents now appellants. Referring to the records in the case before proceeding to reach a final conclusion on the principles involved, it is necessary to note a document which the respondents made profert in their pleadings. This document is a receipt for the sum of $2,000, purporting to be the full sum of money received from the petitioner below; and, very strangely, nowhere in the records is there any showing of any attempt on the part of the petitioner to show that this sum of money was the actual amount that he gave respondents below on loan in the transaction. We deem it necessary to quote this receipt: “Receipt. Received from Mr. William Alfred Tubman of Pleebo, the full amount of $2,00o.00 (two thousand dollars) account loan to be refunded within eighteen months in keeping with terms of understanding as per stipulation of agreements made and entered into. “Harper, Cape Palmas, November 8, 1957. Amount received in full [Sgd.] JAMES DOE GIBSON.” When William Alfred Tubman, the petitioner, took the witness stand in the court below, the following question was put to him on cross-examination and his answer returned, as follows : “Q. I suggest that the whole transaction which you referred to in your statement in chief which embodied an amount of $5,600, being principal and interest to be paid within eighteen months was as follows : $2,000 principal and interest at io percent per month, or 120 percent per annum, aggregating $3,600, added to the principal amount of $2,000, totalling $5,600; am I correct? “A. I am not disposed to state as to whether your cal- 620 LIBERIAN LAW REPORTS culation is correct or not; one thing I know, you issued a receipt in my favor covering $5,600, being principal and interest against which you issued a warranty deed.” The obvious evasiveness of the above-quoted answer of the petitioner should have had some effect on the mind of the Judge below as trier of the facts, especially since, in such cases it is the province of a court of equity to relieve against the harsh rule of the law. “The cupidity of lenders and the willingness of borrowers to concede whatever may be demanded or promise whatever may be executed in order to obtain temporary relief from financial embarrassment resulted in a great variety of devices to evade the usury laws. To frustrate such evasions the courts look beyond the form of transactions to their substance. The general rule is that a court in determining whether or not a contract or forbearance is usurious will disregard its form and look to the substance, condemning it when it finds the requisites of usury present, regardless of the disguises they may wear.” 55 Am. JuR. 332 Usury � 14. In the light of the settled principles referred to, supra, the court below should have probed into the substance of the proceedings then pending before it and based its decree on the fundamental merits of the case. If this had been a suit in law, and not in equity, this Court would have found merit in appellee’s argument to the effect that appellants were estopped from raising the question of usurious interest on the loan when they had voluntarily subscribed thereto by their consent at the institution of the mortgage. In previous instances this Court has enunciated and interpreted the law as it concerns rates of interest to be assessed, and in doing so, has said : “Ordinarily it is the law of the place of performance, or the place where money is invested, that deter- LIBERIAN LAW REPORTS 621 mines the rate of interest, and ordinarily it is admitted that whoever advances money is entitled to interest by operation of law, but in the absence of special agreement no higher rate of interest than the law of the place of investment allows.” McGill’s Trustees v. Worrell, i L.L.R. 175, 177 (1884). Permissible interest rates are statutorily defined as follows : “It shall be permissible by express agreement to charge any rate of interest not exceeding ten percent per year. When there is no express agreement as to the rate of interest to be charged in the case of open accounts, promissory notes, bills of exchange, other negotiable paper, or other debts or obligations, the creditor shall be allowed six percent per year and no more.” 1956 Code, tit. 1 5, � soo� After close consideration of all the facts in evidence and the law controlling, we cannot feel ourselves justified in affirming the final decree of the court below. The interest assessed, although on special agreement, should not have exceeded the principal sum; nor should it have exceeded ro percent per annum; and the court sitting in equity should have recognized the usurious nature of the said agreement rendering such judgment as should have been rendered by the court below. We hereby order the reduction of the interest computed on the loan of $z,000 to the rate of io percent per annum, beginning from the date of the institution of the mortgage transaction, so as to aggregate a sum total of $2,833.34. The respondents, however, are granted a period of six calendar months from the date of this judgment in which to redeem the mortgage property with the same rate of interest, to be computed for the additional period ; and, upon their failure to do so on or before the expiration of the period so specified, they shall forfeit all right of equity redemption and be forever barred in both law and equity, and the court below shall resume jurisdiction and have the said prop- 622 LIBERIAN LAW REPORTS erty sold at public auction, in keeping with law, by the Sheriff of Maryland County, to the highest bidder, and the sum of $2,833.34 with additional interest which may have accrued at the time of the sale at the rate of io percent per annum, shall be paid over to the appellee as mortgagee; and after deduction of such costs as may be due, the residue if any, shall be paid over to the appellants as mortgagors. The appellants are hereby ruled to all costs. And it is so ordered. Modified.