230 Mo. 380 | Mo. | 1910
This is a suit on a note for $4900, pay-
able on or before two years after date to the order of Edward S. Warner, dated September 15, 1892, with interest at eight per cent from maturity, and signed by Robert K. Woods and Lucy H. Woods, brought by the. plaintiff, who claims Warner pledged the note to him on August 19, 1893, as collateral security for the payment of note of that date for $2300 made by Warner to plaintiff as payee.
The trial court gave a peremptory instruction to the jury to find for plaintiff, and they, after some reluctance, returned a verdict, on April 26, 1904, for $8668.01. The defendant filed a motion for a new trial, and that was sustained on April 3, 1905, and from this order granting defendant a new trial plaintiff has appealed.
The defendant was formerly Lucy H. Woods, the wife of Robert K. Woods, the maker or one of the makers of the $4900> note sued on. In the summer of 1892 one Greenwood, a real estate broker in St. Louis;
According to the testimony of plaintiff, James B. Johnson, Warner on the 16th day of January, 1893, borrowed $2000- from him, and executed Ms note for that amount payable in thirty days, and delivered and pledged to the plaintiff to secure the payment of said $2000 note the $4900 note which AYarner had received from Robert AYoods, and also the interest notes and deed of trust. Plaintiff says that he deducted $100
But that is not the whole of plaintiff’s testimony. On the other hand, his deposition was taken prior to the trial, and at the trial defendant’s counsel read him certain questions and answers from that deposition to
On re-direct examination he testified that on March 10th Warner took up the $2000 note, and “increased the original sum to $3000,” and gave a renewal note for that amount, and on its maturity on April 12th “he renewed it for three thousand and on the maturity he paid it down to $2000. That $2000 note matured May 20, 1893, and on May 20th he got $200 more, made it $2200, and that was due July 15', 1893, and on July 15th he got $100 more, making it $2400, and that was due August 19th, and upon August 19th he paid $100, and that left $2300, which note is there.”
The petition alleges that plaintiff “is the bona-fide owner and holder for value of a certain negotiable promissory note made and executed by the defendant herein as Lucy H. Woods,” etc.
The answer consists (1) of a general denial; and (2) allegations to the effect that when plaintiff signed her name to the note sued on she was the wife of Robert K. Woods, and owned no property of any kind, was engaged in no business; that the note was entirely without consideration; that it was signed by her ‘ ‘ inadvertently, and without any intention of binding herself ; ’ ’ that she never delivered or authorized said note to be delivered to the payee or any one else; that said Warner, the payee, knew all of these facts when he obtained possession of the note; that he was not a bona-fide holder for value; that plaintiff received said note as collateral security for past due indebtedness of said Warner; that said past due indebtedness has been paid; that the time for the payment of said past due indebtedness was extended without the knowledge or consent of plaintiff. “And further answering defendant states that Edward S. Warner did on or about the 16th day of January, 1893, borrow from plaintiff the sum of $2000 and executed and delivered to said
The reply is a general denial.
The defendant asked for instructions predicated on the grounds of defense set up in her answer, all of which were refused. The court, as said, instructed “the jury that under the law and the evidence in this case
Our labors in disposing of the points at issue have been much lightened by the excellent briefs filed by learned counsel on both sides.
OPINION.
It will.be seen that this is an appeal by plaintiff in a law case from an order granting defendant a new trial after the court had coerced a verdict from the jury for plaintiff in a suit on a negotiable promissory note, of which plaintiff claimed to be “the bona-fide owner and holder for value,” to which defendant had set up various defenses, namely, a general denial, a lack of consideration, that it was pledged to plaintiff to secure the payment of an usurious note, and that the note was pledged to secure a preceding indebtedness.
I.
The order granting a new trial did not specify the grounds upon which the new trial was granted. In such case it has been held that the order will be sustained if any of the grounds set out in the motion are sufficient. [Metropolitan Mining Co. v. Webster, 193 Mo. 351; Hewitt v. Steele, 118 Mo. l. c. 473.] Trial courts have large judicial discretion in granting one
If, therefore, the trial court should have denied plaintiff’s peremptory instruction and have submitted the case to the jury, for an even stronger reason we should not reverse its action in granting defendant a new trial.
II.
The answer pleaded that the note for $2300 given by Warner to plaintiff, to secure the payment of which the note in suit was pledged, was an usurious transaction, and, therefore, under the statute, plaintiff cannot recover on this $4900 note. To this plaintiff
Section 3710, Revised Statutes 1899, reads: “In actions for the enforcement of liens upon personal property pledged or mortgaged to secure indebtedness, or to maintain or secure possession of property so pledged or mortgaged, or in any other case when the validity of such lien is drawn in question, proof upon the trial that the party holding or claiming to hold any such lien has received or exacted usurious interest for such indebtedness shall render any mortgage or pledge of personal property, or lien whatsoever thereon given to secure such indebtedness, invalid and illegal.”
This statute is unlike the usury statutes of most of the other States. The usual usury statute merely provides that excess interest,shall be credited on the loan, and when suit is brought all unpaid usurious interest is forfeited. But this is a very much more comprehensive statute. It embraces not only the immediate transaction in which the usury was exacted, but it includes collateral transactions as well. It says: “In actions for the enforcement of liens upon personal property pledged ... to secure indebtedness.” The note for $4900' was personal property. Plaintiff introduced the agreement by which this $4900 note sued on was pledged to him as security for the payment of an “indebtedness” of a note for_$2300‘. He claimed no other right to this note except its assignment to him by means of that agreement and its indorsement. The
Is the pledge void only upon the plea of the pledgor or his privies? Is it void only when the immediate parties to the illegal transaction desire it to be void? The statute does not say so. It says it is void “in any case” when the validity of the lien is drawn in question. It is not void because the immediate parties to the transaction invoke its invalidity, but because the General Assembly has said it is void. Public policy condemns it, and it matters not from what source the objection comes. We have declared it is a remedial statute, and that, being such, it will “be liberally construed,” and that “it is the duty of judges to so construe the act as to suppress the mischief and advance the remedy.” [Keim v. Vette, 167 Mo. l. c. 401.] In that case Yette, the defendant, had received from Kuhn some notes indorsed in blank, before maturity, and had loaned him money thereon at a usurious rate of interest, and in the suit of replevin by Keim, the true owner, to recover the notes, this court held that Keim
In Davis v. Tandy, 107 Mo. App. 437, the learned judge argues at great length to establish the rule that was formerly generally adhered to, that no one hut the debtor or his privies could raise the defense' of usury. And this court, so announced in Mo. Real Est. Synd. v. Sims, 179 Mo. l. c. 686, and in Coleman v. Cole; 158 Mo. 253; hut Ellison, J., in the Tandy case felt compelled to follow the Keim case and held that the purchaser of mortgaged cattle could plead against the mortgage the defense that the mortgage note made hy his vendor was usurious; and in the two cases decided by this court no reference is made to the statute. In our opinion the construction placed upon the statute hy Gantt, J., in Keim v. Yette, supra, was correct, and we therefore hold that defendant could plead usury in the note for $2300- given hy Warner to plaintiff as a defense to his suit on the note pledged to secure the payment of that;
There was evidence from which the jury would have been justified-in finding that the $2300 note given hy Warner to plaintiff on August 19, 1893, and the $2000 note given on January 16th, and the $2400 note given on July 15th, were all usurious. Plaintiff testified that the first note for $2000 ran thirty days and he charged $100 as commissions for making the loan. He was not entitled to any commission. It was his own money he was lending. [Osborn v. Payne, 111 Mo. App. l. c. 34; Western Storage Co. v. Glasner, 169 Mo. 38; R. S. 1899, sec. 3709.]
In Kreibohm v. Yancey, 154 Mo. l. c. 85, this court said: “The test of usury in a contract is whether it would, if performed, result in securing a greater rate of profit on the subject-matter than is allowed by law.” If that is the test, then Warner, if he had paid the $2000 note of January 16th at the end of thirty days when it fell due, would have paid $100' interest on $1900, or at the rate of 63 per cent per annum. [State ex rel. v. Bank, 48 Mo. 189; Adler v. Corl, 155 Mo. l. c. 155.]
And the giving of a renewal note in which is included. usurious interest charges as a part of the principal does not purge the note of usury, whether the interest has been previously paid or not. If usury was exacted and received at the inception of the transaction it could not be purged by any number of renewals. [Citizens’ Bank v. Donnell, 172 Mo. 384; affirmed in U. S., Nov. 28, 1904; Saylor v. Daniels, 37 Ill. 331; Tiedeman on Commercial Paper, sec. 180.]
Plaintiff’s deposition tends to show that on May 15th. when Warner’s note for $3000 matured, Warner
III.
The note for $4900 was absolutely without consideration. Neither Woods nor his wife received anything of value for it. Woods was simply a “straw man.” He signed the note and deed of trust for no other purpose except to aid Greenwood and Warner to get the title to the real estate in such shape that Greenwood could handle it. Neither Woods nor his wife received any money or any lots or anything else of value. Defendant testified that she had no remembrance of the transaction whatever; that she had never before signed a note, and supposes that she must have signed this because her husband ásked her to do so. Her averment in her answer that she “inadvertently” signed the note seems to have been literally true. It is stated in her counsel’s brief, but is not shown by the testimony, that Woods was an employee in Greenwood’s office. Plaintiff testified that he and 'Warner, before the notes were made, had officed together, and though they were on' different floors at the time they were made, they had offices for many years prior to that time and afterwards in the same building. Plaintiff did not testify pointedly that he knew nothing of the infirmities of the nóte, or that it was without consideration, or the circumstances under which it was made.
IY.
There was evidence that the note for $2300 for which the note sued on was pledged, was given to secure a pre-existing debt. In Goodman v. Simonds, 19 Mo. 107, it was held that where a negotiable note is transferred merely as collateral security for a preexisting debt, and no new consideration is given for it, the assignee takes it subject to all the equities existing between the original parties to it. That case was fully and carefully reviewed by Burgess, J., in Loewen v. Forsee, 137 Mo. l. c. 41 et seq., and a large number of Missouri authorities to the same effect were cited, and others to the contrary reviewed, and it was held that “the rule announced in the Goodman case . . . must be. regarded as the settled law •
Prior to the trial of this case plaintiff had sued defendant on one of the interest notes for $147, executed at the same time the $4900 note was, and as a part of the same transaction, and at the trial of that case he gave this testimony: “Q. Was this indebtedness of $2300, which was evidenced by a note, money that you loaned Warner at the time you took these notes as collateral? • A. That was for money that I loaned Warner at various times. I don’t know the times exactly, but he was in court at the time I sued him and he admitted it. Q. Don’t you recollect whether you had loaned him any cash on that day? A. I couldn’t say. Q. Was it an indebtedness created-on that day? A. I don’t know when it was. Q. Was it an amount representing a balance? A. I don’t know whether it was or not. Q. Can’t you tell me whether you loaned him $2300 on that day, or whether you loaned Mr. Warner that amount? A. I could not tell you that. Q. You could not tell me whether that indebtedness was created that day or prior to that day? A. I could not say now, he owed me $100 one day, and $500 the next, and $200 the next, I could not say about that.” Here was testimony tending to establish that the note for $2300 was for a pre-existing debt, and it was for the jury to say whether or not it was sufficient to establish that defense, which was pleaded. If no money was received by Warner when the $2300 note was made and if the $2300 note had been executed- and delivered by Warner to' plaintiff prior to the execution of the pledge agreement, then the note in suit was given for a pre-existing debt, and plaintiff cannot recover. Under the evidence that was a question of fact to be determined by the jury.
Y.
The plaintiff, even if there was no usury in the ease and the note sued on was not given as collateral security for a pre-existing debt, is not entitled to recover more than the amount of the $2300 note to secure which it was pledged. The $4900 note was without consideration, and was given as security for the payment of a $2300 note dated nearly one year later. Yet, under the peremptory instruction of the court, the jury were required to render a verdict for plaintiff for the full amount of the $4900 note, with eight per cent interest thereon from date, and they returned. a verdict for $8668.01. To permit a judgment for that amount to be rendered in behalf of this plaintiff would be unjust and unreasonable. The law seems to be that, where the pledged note was supported by a valuable legal consideration, the pledgee may sue for the entire amount thereof, and so much of it as may be necessary to satisfy his claim may be retained by him, and the balance must be turned over to the payee of the note. But Warner is not entitled to have anything turned over to him. In such case, the note being without consideration, the pledgee is entitled to recover' only so much of the note
We shall quote from a few of these cases, because they were all decided by the courts of other States.
A very clearly reasoned case considering this quesiion, and this question alone, is Farmers’ Bank v. Blevins, 46 Kan. 536. There notes aggregating $5000 were.transferred to the plaintiff bank by the payee to secure an indebtedness of $4367.63. The bank sued the maker for the full amount of the notes. The maker pleaded failure of consideration for the notes. The court stated the question for solution thus: “The only question for determination by this court is whether, in an action against the maker of notes which have been transferred before maturity to an innocent and bona-fide holder, as collateral security for an indebtedness existing between the payee of such notes and the indorsee, the indorsee and holder is entitled to recover against the maker the full amount of such collateral notes, where such amount exceeds the indebtedness which they were transferred to secure, with-put regard to any defenses that exist between the orig
The case of New England Trust Co. v. N. Y. Belting Co., 166 Mass. 42, is this: The New York Belting Company executed notes payable to its own order and indorsed them in blank and delivered them to Potter Lovell Company, doing a general banking and note brokerage business, for the purpose of having them sold and the proceeds remitted. Instead of so doing the Potter Lovell Company, without paying the Belting Company any consideration, pledged them, and the pledgee sued. The court said: “The Potter Lovell Company could not have enforced the notes now
In Union National Bank v. Roberts, 45 Wis. 373, it is said: ‘ ‘ The general rule is that a plaintiff recovering on an instrument held as collateral is entitled to recover the entire amount. . . . The rule has been established in this court for twenty years, and still appears to be the proper one. If the holder of the collateral recover more than his principal debt, he recovers it for the use of his principal debtor. But there are exceptions to the rule. As between the pledgor and pledgee, when the securities pledged are the obligations of the pledgor, the pledgee can only recover his principal debt. For it would be worse than idle that a plaintiff should recover an amount which he would be obliged instantly to restore' to the defendant. So where the collateral is in the hands of a bona-fide holder without notice of a good defense against his assignor, the general and better rule appears to be that the pledgee can recover the amount of his principal debt only (citing cases). There are other cases to the same effect. And this court holds this to be a proper exception to the general rule. For it would be manifestly unjust to allow a plaintiff to recover for the use of his assignor what the assignor could not recover for himself.”
All the authorities are to the effect that if the pledgee recovers, he cannot retain for himself more than the amount of his claim against the pledgor, and the only reason he is permitted to have judgment for the full amount of the pledged note is that the pledgor
Nor was this a matter that could have been regulated by the judgment. The rule of law in this State is that the jury must calculate the interest on a note sued on, and even where a peremptory instruction to find for plaintiff is proper the court cannot assume to calculate the interest, but must submit that matter to the jury. [Corbitt v. Mooney, 84 Mo. App. 645; Cates v. Nickell, 42 Mo. 169; Burghart v. Brown, 60 Mo. 24.] Therefore, even if a peremptory instruction had been proper in this case, it should have directed the jury to find for plaintiff for only the principal and interest of the $2300 note from its date. On that ground alone the order of the trial court granting a new trial was proper.
All these defenses having been pleaded, and there being some evidence to sustain each of them, and defendant having asked instructions upon each of them and assigned them in her motion for a new trial, the trial court did not abuse its discretion in granting said motion. -
Entertaining the views to which we have herein given expression, the judgment of the trial court is affirmed.