101 F. 12 | U.S. Circuit Court for the District of Southern Alabama | 1899
This is a hill in equity, praying, among other tilings, that the court will cause an account to be taken of the transaction between the complainants and the defendant set out in the bill; that the contract described therein may be declared to be usurious; and that the mortgage mentioned in the bill may be declared to be fully satisfied and paid, and canceled upon the record. The contract set out in the hill is a bond and mortgage executed by the complainants to the defendant to secure the payment of a suin of money loaned by the latter to. the former on certain terms and conditions therein recited. The contract expressly provides that the payment of the principal sum shall be made at the home office of the defendant in New York 'City. No express provision is made for the place for the payment of the interest. It is admitted in the bill that the contract provides for the payment of the debt in New York, but it is alleged that this provision in the bond was a mere guise, which was intended to enable the defendant to avoid the usury law’s of the state of Alabama, and that it was understood and agreed that all the payments to be made by the complainants should be 'made in Mobile, Ala., to the defendant, through one Willis G. Clark, who was the local collector of the defendant at that place. It is also alleged in the bill that certain monthly payments of premiums, dues, etc., provided for in the contract, should he made either to said ’Clark, local collector, or at the home office. In view of the express provisions of the contract, and of all the circumstances and conditions of the transaction as shown by the bill, I think there is no doubt that the agreement for payments to he made to Clark, the local collector, was for convenience sake only, and did not make the contract an Alabama contract. The real issue presented for our consideration is whether the contract is usurious. If the contract is usurious, the complainants’ bill should be sustained. If the contract is not usurious, the demurrers to the bill — many of them, at least — should be sustained, and the bill dismissed.
In deciding whether the contract is usurious or not we must determine by the law of which state — Alabama or New York — the performance of the contract is to be governed. All the terms of a contract must he examined, in connection with the attendant circumstances, to ascertain what law was in the view of the parties when the contract was executed. “In every forum a contract is governed by the law with a view to which it was made.” It is well-established law that the performance of contracts is to be governed by the law of the place of performance; and, if the interest allowed by the law of the place of performance is higher than that permitted at the place of the contract, the parties may stipulate for the higher interest without incurring the penalties of usury. Miller v. Tiffany, 1 Wall. 310, 17 L. Ed. 540; Coghlan v. Railroad Co., 142 U. S. 109,
“They made the contract. It is too late to complain that it was a bad one. Reckless borrowing and contraction of debts is the bane of this country; and too often, after parties have made bad contracts, they come to the courts asking their help, even though they must violate the law in granting it. It has been said that the speediest way to procure the repeal of a had law is by its strict enforcement» Perhaps the way to discourage the borrowing ma-t nia of the people is to strictly apply the law to all contracts. At any rate, the courts cannot violate the law to lighten the burden-of improvident contracts.” Trust Co. v. Dygert (C. C.) 89 Fed. 123.
These remarks may be appropriately applied to the case at bar and others of like character. My conclusion, therefore, is that the demurrers to the bill are well made, and should be sustained, and it is so ordered.
(March 17, 1900.)
In this case there are 80 grounds of demurrer assigned to the bill as amended. I think, as a whole, they are unnecessarily voluminous and prolix. Some of them, it seems to me, present points not raised by the bill, and many of them are repetitions of the same point. As I understand the amendments to the bill, there are practically but two material questions raised by them: First, the question whether there was a binding contract growing out- of the alleged representations as to the time of the maturity of the stock of the defendant company, — whether the time of maturity, alleged to have been fixed at seven years, could be arbitrarily fixed at that period by the company, so as to relieve the complainants, after that period, from the further payment of the charges provided for in the contract; and, second, whether the premium charged was unauthorized by the laws of New York, and the contract, therefore, usurious under those laws. This court held on the hearing of the demurrers to the bill as originally filed that the contract was governed by the laws of New York, and that under those laws it was not usurious. I see now no reason to change that ruling. The New York statute governing building and loan associations does not provide for the manner or mode of making loans to members of such associations, or of fixing the premiums to be paid by them, but it does provide that any premiums for loans made to such members shall not be deemed a violation of the provisions of any statute against usury. Andruss v. Association, 36 C. C. A. 336, 94 Fed. 575; Association v. Read, 93 N. Y. 474. If the statute had provided for the manner or mode of fixing the premiums to be paid, and such- mode had not been followed, then the premium would have been unlawful. Douglass v. Kavanaugh, 33 C. C. A. 107, 90 Fed. 375. By the terms of the contract providing for the payment of dues, premium, and interest, as the same is shown in the bill, the complainants are not entitled to cancellation of the mortgage after paying sucji charges for a period of seven