I am unable to see that the judgment of the trial court should not be affirmed. The contract between Citizens National Bank of Abilene and Briley and Huddleston seems, on its face, a legal contract. True, it contemplated that after procurement of loans the bank was to hold the notes not transferred to the lender secured only by a subordinate lien; but that, so far as I can see, is no evidence of illegality in the contract. The contract does not specify that the loans were to be procured only from the Federal Land Bank or Commissioner. If laws or rules and regulations governing loans by a Federal Land Bank or Commissioner made it impossible for the bank to retain ownership of a part of the series of purchase money notes that fact would not make the contract an illegal one. It would simply prevent procurement of the loans from that particular source or require a modification of the original plan. The more reasonable view would be, if the loans were procured from that source, that the contract would be modified to conform to the law or regulations. I am unable to find in the statement of facts any evidence of an agreement to which the Citizens National Bank of Abilene and Cozart were parties, or the intent or purpose of either of them, that Cozart, after the cancellation and discharge of a part of the purchase money notes, was to execute to the bank new notes in lieu thereof. The contract between said parties provided that the deed from the bank to Cozart was not to be delivered until the matter of the loan was settled. In other words, the bank, by its contract retained the right to call off the deal entirely, provided a loan upon satisfactory terms to it was not procured. Had Oldham never been produced by Briley as a prospective purchaser of the land there is no way of knowing, or legitimately inferring, that the bank would or would not have released, and marked discharged, the said notes other than those transferred to the Federal Land Bank and Commissioner. It is very probable, I think, that when the Abilene Bank was apprised of the demand that all the notes, except those transferred, be discharged and released, it would have called off the deal. If not, it cannot be presumed that it would have insisted as a condition of proceeding with the sale to Cozart that Cozart execute notes in lieu of those released; or that Cozart would have agreed to such demand if made. That *Page 810 would have been contrary to the plain terms of his written contract. No such agreement could have been proved, over the objection that it was in conflict with the terms of the written contract.
Now it so happened that after the contract was made by the Abilene Bank and Cozart providing for sale of the land, and before the transaction was completed, Cozart desired to be released. This was before the Abilene Bank was ever confronted with the alternatives of calling the deal off, or releasing the notes not transferred to the Land Bank and Commissioner. Then Briley, who in a way represented himself in an interest contrary to the bank, but also represented the Abilene Bank in another way, produced to said bank a new man, G. D. Oldham, willing, if satisfactory terms could be made, to purchase the land for $15 per acre. A contract was made with him which, it may be presumed, contemplated on the part of the bank the calling off of the deal with Cozart. This contract had no relation to the deal with Cozart and like the contract between the bank and Cozart there is nothing on its face to show any purpose or intention to violate any Federal law, rule or regulation of the Federal Land Bank or Commissioner, or any principle of public policy. I cannot see, however, that this contract has any important bearing on the questions presented. It is very certain that the acquisition of the land by Oldham was not in accordance with the terms of that contract. That contract contemplated a purchase directly from the bank, and the procurement of a loan by Oldham. The deal that was actually made involved delivery of the deed previously made to Cozart and the deraignment of the title to Oldham from Cozart. The actual transaction by which Oldham acquired the land was so essentially different from the one contemplated in the original contract as to show that such original contract was, in effect, abandoned. It is idle, as I see it, to talk about the deal that was made as being in fact a sale of the land by the Abilene Bank to Oldham. The Federal Land Bank and Commissioner actually got no title to the land upon which they hold their lien, save upon an actual, as distinguished from a simulated, conveyance of title from the Abilene Bank to Cozart; and Oldham got nothing by his deal save that he got actual title to the land, not from the Abilene Bank, but from Cozart. As I see it, nothing can alter the fact that the Abilene Bank sold the land to Cozart and Cozart sold it to Oldham.
When, pending the deal with Cozart, Oldham appeared upon the scene willing to purchase the land and pay, or promise to pay, $15 per acre, the Abilene Bank was presented with an opportunity by which it could get its required purchase price for the land, and at the same time, in entire good faith, cancel and discharge all of the purchase money notes agreed to be given by Cozart, except those required to be transferred to the Federal Land Bank and Commissioner as security for the amount of the loan. It is true that it could not do this except by agreement of Cozart. Absent the consent of Cozart that the notes representing the amount of the purchase price of the land which Oldham was willing to pay over and above the amount of the loan which he was to assume should be made payable to the Abilene Bank, or payable to Cozart and by him indorsed to the bank, it may be assumed that the bank would not have permitted delivery of the deed to Cozart, but, on the contrary, would have called off the deal. It is apparent, however, that if Cozart agreed — that being, of course, a matter for his own determination — that the notes should be made to the bank, there was no obstacle to prevent the bank from going ahead with its deal with Cozart by delivery of the deed to him and in entire good faith discharging and giving up all other notes not transferred. It could well afford to do this because in lieu of its loss, a new purchaser of the land who had no dealings with the Land Bank and Commissioner was willing to give his notes for the agreed value of the land over and above the amount of the assumed loan, and Cozart was willing that said notes be paid to the bank.
Even if there was illegality in the previous contract, which, as said, I am unable to find any evidence to show, it seems to me a situation is presented very much analogous to one where a purchaser of land as a part of the consideration for the purchase assumes and agrees to pay a note void in part as violating the law against usury. It is a well known principle that usury cannot be pleaded against such an assumption because the party's right to contract for the payment of the consideration of the land must be respected and the fact that it happens to be the amount of a usurious obligation is of no importance because, after all, the *Page 811 former obligation is merely effective to measure the amount of the new obligation. So in this case it seems to me if it should be granted that it was contemplated that Cozart should execute new obligations to the bank to take the place of those which the bank was required to discharge and release in order to get the loan, the mere fact that such released and discharged obligations constituted the balance of consideration which a new purchaser of the land obligated himself to pay, in addition to the amount of the loan, would not affect the new obligation with the vice of the old.
This suit is grounded upon the theory that the sale of the land by the Abilene Bank to Cozart was a mere colorable or simulated transaction and in truth the Abilene Bank sold the land to Oldham. It may be admitted that, if in the beginning there had been an agreement between Oldham and the Abilene Bank by which the sale was to be made by the bank to Oldham, and Cozart was to be used merely to give the semblance of legality to the transaction; it being contemplated that the title was to be made to Cozart, the loan was procured by a release of the excess indebtedness, then a conveyance of the title by Cozart to Oldham, he assuming the amount of the loan and executing his notes for the balance of the consideration, the notes payable either directly to the bank or to Cozart with the agreement that they were to be indorsed by Cozart to the bank for the purpose of enabling the parties to circumvent the law or regulation against retaining indebtedness over and above the amount of such loan, the transaction would have been void. That such was not the real transaction, whatever any of the parties may say about it, is well and conclusively exemplified by this record. The plaintiff admits that when he signified his assent to purchase the land for $15 per acre he knew nothing of the previous deal with Cozart. While he says that he had no dealings with Cozart it is very clear that he made Briley his agent for some of the things that were done, or accepted what he did for plaintiff so as to be bound by it.
Another fact that cannot be gainsaid is that there was no complete substitution of Oldham for Cozart. Cozart, for aught that appears to the contrary, is personally liable on the notes held by the Federal Land Bank and Commissioner and the entire amount of the indebtedness may be collected from him if Oldham fails to pay it, and the title of the land should fail, or for any reason be insufficient to discharge the debt. The Abilene Bank, when it determined to go ahead and complete the sale to Cozart and release all of Cozart's indebtedness to that bank, except that transferred to the Federal Land Bank and Commissioner, took a chance of disposing of all of its interest in the land for the amount of the loan paid to it, since Cozart had it in his power to require the notes of Oldham be made payable to himself and to dispose of such notes as he saw fit. When the deed to Cozart was delivered Cozart was the owner of the land, free and clear of all encumbrances, save and except the $4,800 indebtedness to the Federal Land Bank and Commissioner. He could dispose of it in any way he saw fit, and the purchaser would take good title subject only to the lien securing said loan and the terms of the new sale. There can be no question of Cozart's right and power to sell said land for $15 an acre, represented by vendor's lien notes subject to the farm loan, in addition to an assumption of the farm loan indebtedness. It would be wholly immaterial with the purchaser whether he made such notes payable to Cozart or to another designated by Cozart. Cozart could have those notes paid to the Abilene Bank, or to any other person, and the validity of the indebtedness, if any, constituting the reason for having them made so payable would be wholly immaterial. It might be a debt barred by limitation. It could be a mere moral obligation, not enforceable in law. It could be because of favors received or expected, and, in my opinion, it would be wholly immaterial that the reason may have been that the Abilene Bank had found it necessary to incur so great a loss by discharging the former notes in order to get a loan.
Under the allegations of plaintiff's pleadings, by which certainly he is bound, the Abilene Bank was wholly blameless in the matter; and never at any time had any intention of requiring the revival of the indebtedness which it had discharged and released. Briley was only the agent of the bank in the essential transaction of conveying the land to Cozart and/or Oldham, and seeing that the required consideration demanded by the bank was paid *Page 812 to it. If the bank were entirely blameless, then there is absolutely no warrant for saying that the notes in suit were in any sense a reacknowledgment of the formerly existing but discharged and released indebtedness. The notes in suit, under the undisputed evidence of the plaintiff himself, represent the agreed purchase price of the land by Oldham at $15 per acre, less the amount of the Federal Land Bank and Commissioner's loans assumed by Oldham as the remainder of such consideration.
Oldham as a witness said that if he had known that the Land Bank had required that the excess indebtedness over the amount of the loan be discharged, he would not have executed the notes. If so, he would not have gotten the land. When he comes into a court of equity asking for the cancellation of these notes, he does not offer back the land, and he is forced to acknowledge on the witness stand that these notes represent not the indebtedness which was required to be discharged and released, but a part of what he had agreed to pay as the purchase money of the land, and which, of course, was a condition upon which the land was conveyed to him. It is worth repeating: There is no evidence that Cozart executed to the Abilene Bank any notes in lieu of the notes released and discharged; and no evidence that he ever agreed to do so, or that any demand was made upon him to do so. The only notes he ever agreed to execute he did execute, a part of which was transferred to the Federal Land Bank and Commissioner, and the rest released and discharged. While Briley, as a witness, testified that Oldham agreed to assume the obligations of Cozart, that testimony calls for interpretation. What were the obligations of Cozart? In agreeing to assume the obligations of Cozart it is not to be implied, — particularly when such implication is not necessary and would involve something illegal, — that he agreed to pay debts that were discharged and paid. They were no longer obligations. It seems clear to me that the obligation which Oldham took upon himself was to assume the indebtedness represented by the loan from the Federal Land Bank and Commissioner and to execute notes for the balance of the purchase price of $15 per acre. In a sense that was assuming the obligation of Cozart, but only in the sense that it was an obligation very similar to that originally assumed by Cozart.
From these considerations it seems to me the learned trial judge reached the proper conclusion and that his judgment should be affirmed.