107 Mo. App. 437 | Mo. Ct. App. | 1904
Plaintiffs charge defendant with having wrongfully converted to his own use in the State
Defendant claims to be the owner of the cattle. That they had been bought for him by Hale and one Hudson. That he knew nothing of Hale having given a mortgage on them until notified by plaintiffs. And in this condition of the ease, defendant attacks the validity of the mortgage under which plaintiffs claim, on the ground of usury, the note which it secures bearing ten per cent on its face, when eight per cent is the maximum ráte allowed in this State, though ten per cent is a lawful rate in Texas. Defendant also claims that while the note is not usurious on its face by the law of Texas, it nevertheless is usurious under the laws of that State, in that it has included as fictitious principal, about $300 which was in fact in interest charge of near seven per cent more than the highest rate in Texas. Defendant’s claim, therefore, is, that the note is usurious under the law of both States and that the mortgage securing it is therefore void under the terms of our statute, section 3710, Revised Statutes 1899, reading as follows:
“In actions for the enforcement of liens upon per
Plaintiffs contend that defendant is not a proper party to take advantage of the fact that usury was included in the note. It is undoubtedly true that a mere stranger can not avail himself of the plea of usury. It is a personal privilege of the debtor. But such rule must be accepted with certain qualifications, such as that those in privity with the debtor may show usury in defense as he himself could. American Rubber Co. v. Wilson, 55 Mo. App. 656; Coleman v. Cole, 158 Mo. 253; Marx v. Hart, 166 Mo. 503, 524. In the cases just cited, it was held that an attaching creditor stood in such relation. But it is manifest that a stranger, as for instance a mere general creditor who has not connected himself with the property, does not stand in privity with the debtor so as to be enabled to set up usury. It is in no instance disputed that the plea of usury is personal to the debtor and that those others who set it up must obtain their right through the debtor; that is, they must stand in some legal privity with him1. That privity is in representation, as, for instance, the debtor’s executor or administrator; or, in blood, as his heir; or, in estate, as his grantee. A grantee of the entire title to property ■encumbered by a lien securing usury is in privity with the grantor and may enter the plea of usury as effectually as the grantor himself could, for the grantor has transferred to him that right. And so a judgment creditor, where a judgment is a lien on the property affected, and execution or attachment creditors, where the property has been seized, may interpose the plea. But the
And, as to this rule, it makes no difference that the statute declares usurious contracts void. They are void if the debtor wishes to avoid them, but they may be recognized by him as valid. He may discharge such ■contract by payment in full. So he may require his grantee to do so. If such debtor’s property worth $1,000 should be encumbered with a usurious mortgage for $500 and he should sell it for the former sum, by receiving the latter sum from the grantee in cash and requiring him to assume and pay off the encumbrances as the remaining part of the consideration, no one would say that such grantee could interpose the plea of usury against the mortgagee. To allow such plea, in such case, would be a gross fraud enabling the grantee to obtain the property at half its agreed value. Tonesdell v. Dowden, 47 N. J. Eq. 396; DeWolf v. Johnson, 10 Wheat. 393. And so it has been universally held "that though the grantee as privy in estate receives by transfer the debtor’s right to set up the usury, he can
But it is said by counsel that the true owner of' property which has been mortgaged by some one who was clothed with such apparent dominion as to have ordinarily passed the title, can interpose the plea of usury against the mortgagee and avoid the mortgage. That contention is based on the fact that our statute declares the mortgage void. Our statute, though new to us, is no more than has been in force in a number of the-States (notably New York and Massachusetts), yet in none of these has the fact that the mortgage, or other contract, was declared to be void, had any effect on the question as to who could claim its. protection. In all of " them, it is held that the privilege to avoid is personal to the debtor and those claiming under or through him; and that he may waive the usury. That a usurious mortgage is not void, but only voidable, is manifest. Thus, it is not void as to the lender. Cases sometimes arise-where the lender wishes to annul the contract, yet it has. never been held that he could do it. La Farge v. Herter, 4 Barb. 346; s. c., 5 Seld. 241; Miller v. Kerr, 1 Bayley (South Car.) 4. Such statutes, whether they declare-the contract partly invalid or wholly void, are made for the protection of the debtor, and only he, and those claiming through him, can attack the mortgage securing-the usury. Billington v. Wagoner, 33 N. Y. 31; Bullard v. Raynor, 30 N. Y. 197, and the authorities heretofore cited.
In Green v. Kemp, 13 Mass. 515, the court said:
“Although by the statute of 1783, chapter 55, section 1, all mortgages on usurious considerations are declared to be utterly void; yet it never could have been intended that a stranger might enter on the mortgagee,.
In Williams v. Tilt, 36 N. Y. 319, the party attacking the mortgage claimed to be the true owner of the property and, as we have already said, the statute of that State, like ours, declared a usurious mortgage to be void, yet the court said:
“It has been long held and should now be deemed ■settled in this State, that a usurious agreement can not be assailed by a stranger, that is, one not a party to it, nor claiming under the party injuriously affected by it. 'The rule was stated by Bronson, J., in Dix v. Van Wyck, 2 Hill 522, as follows: ‘A mere stranger, or one who has-no legal interest in the question, shall not officiously intermeddle in the matter, nor take advantage of a statute not made for his benefit. ’ A similar statement was made by the chancellor in Post v. Dart, 8 Paige 640. He said, ‘a mere stranger can not insist upon the invalidity of a usurious security . . . but the defense ■of usury may be set up by anyone who claims under the mortgage, and in privity with him. ’ This is the extent to which the cases have carried the right, and even the right of privies may be cut off by the waiver of the ■original party. Sands v. Church, 2 Seld. 347. The contract is not absolutely void but only voidable, at the election of the borrower, or those who are privies' in interest or in contract with him. Hence, no other party can make the objection. . . . . It is difficult to see how, under the rule above referred to, the plaintiffs in the case at bar can be heard to complain of usury in the contract between Birch & Co. and defendant Tilt.
It is therefore manifest, we think, that the fact of' our statute declaring the usurious mortgage to be “invalid and illegal” has not enlarged the list of those who-may plead usury.
But it is suggested to' us by defendant that what we-have said is in conflict with Keim v. Vette, 167 Mo. 389. In view of such suggestion, we have examined that case and find that it involved the claim of the true owner of" the property which had been pledged by a party in possession under such circumstances as to give him apparent dominion over it. The pledge was to secure a loan to the pledgor in which there was usury, and the court, held that the mortgage, by statute, being invalid and illegal, would be declared to be void.
In Vette v. Geist, 155 Mo. 27, 34, and Marx v. Hart, 166 Mo. 524, and Coleman v. Cole, 158 Mo. 253, the Supreme Court, in considering the same statute, entertained the view then uniformly held, that the privilege-was personal to the debtor and could only be exercised-by him and his privies. And the same view is reiterated' by the Supreme Court in the late case of Missouri Syndicate v. Sims, 179 Mo. 679.
Still, there is no question but that Keim v. Vette has gone beyond those cases and has enlarged and; added to the class who may make the plea. The plea; was allowed to be made in that case by a party similarly connected with the property to the defendant here. That case applies to- this one, and that being true, it i& our duty to follow it. Since the Supreme Court, in-Missouri Syndicate v. Sims, supra, did not refer to that case, we do not feel at liberty to say that it was overruled.
Plaintiffs next urge that defendant did not affirma
There is another view, which is, that this being an action for conversion, based on title conveyed to plaintiff by the chattel mortgage, the plaintiffs may be shown to have no title (on account of usury making the instrument void) under a general denial. Adamson v. Wiggins, 45 Minn. 448; Davis v. Culver, 58 Neb. 265; Williams v. Tilt, 36 N. Y. 319, 323.
And yet another view is, that where the usury appears upon the face of the guilty party’s pleading, the opposite party need not specially plead it. Stockham v. Munson, 28 Ill. 51; Hamill v. Mason, 51 Ill. 488. In this case, it is claimed that the plaintiffs’ petition discloses the usury. If that be true defendant may properly show usury under his general denial.
But such rule of law gives way to the will of the contracting parties. If the parties stipulated either that the law of the place of performance, or the law of the place where made, shall govern, effect should be given to their will. Depau v. Humphreys, 10 Mart. (La.) 1; Miller v. Tiffany, 1 Wall. 298; Cromwell v. Sac Co., 96 U. S. 62; Bedford v. Eastern B. & L. Assn., 181 U. S. 227, 242; Coghlan v. Railway, 142 U. S. 101; Pecks v. Mayo, 14 Vt. 33; Townsend v. Riley, 46 N. H. 300; Rilgore v. Dempsey, 25 Ohio St. 413; Gault v. Trust Co., 100 Ky. 578, 585; Dugan v. Lewis, 79 Texas 246; Thornton v. Dean, 19 S. C. 583; Bolton v. Street, 3 Cold. 31. The same rule is approved by the best text-writers. 2 Parsons on Contracts, 583; Wharton’s Conflict of Laws, sec. 507; 1 Randolph on Com’l Paper, sec. 43; 2 Kent 460; 1 Daniel on Negotiable Insts., sec. 922.
And in instances as in this case where there is no ' express stipulation by the parties as to which law should govern, it will be presumed that they intended that law which recognizes such contracts to be valid, and not the law which would render them invalid. Pritchard v. Norton, 106 U. S. 124, 136, 137; Scott v. Perlee, 39 Ohio St. 63; Hunt v. Jones, 12 R. I. 265; Mott v. Rowland, 85 Mich. 561; Bigelow v. Burnham, 83 Iowa 120; Fisher v. Otis, 2 Chand. 102; Wharton’s Conflict of Laws, sec. 507.
But it has been suggested that in cases of a contract made in one place to be performed in another, where the contract itself does not specify which law is to govern, it can not be shown by oral evidence that the parties intended that the law of the place where made was to govern. This contention is based upon the idea that it would be contradicting or varying a written contract. The authorities do not seem to so regard it. Oral evidence is considered, not as contradicting the writing, but rather as showing by the situation and surrounding circumstances, what was meant or intended by the writing. Bishop on Contracts, see. 1392; Webb on Usury, sec. 265, and cases cited.
A consideration of the contract being condemned by the law of both States, becomes highly important in most cases (and this may be one) from the different consequences which- the laws of the two States attach to such transgression. In Missouri the consequence is that the mortgage is invalid; while in Texas, the consequence may be less drastic. The importance of this is pointed out by Judge Burgess in Trower Bros. v. Hamilton, supra, where the laws of Missouri and Kansas were involved. If the contract is usurious by the laws of Texas and they do not declare the mortgage void, it may be
We observe that plaintiffs deny that any part of the note is fictitious, and claim' that what is said to be fictitious principal, represents a proper and legal charge of commission for securing the loan to Hale. We can not anticipate what may be shown on this head, nor can we know what legal question it may involve.
It is apparent that the point of usury was not advanced in the trial court save as it may be considered to have been silently made by a demurrer to the evidence. It is furthermore probable that under the points discussed, there may be more in plaintiffs’ case than was disclosed at the trial, hence we deem it proper to-remand the cause.
Since the plaintiffs’ case is, on its face, based on a contract which would be usurious in this State, it would perhaps be wise to set forth in an amended petition the-laws of Texas which authorize the rate of interest agreed upon.
Reversed and remanded.