74 Mo. App. 468 | Mo. Ct. App. | 1898
Plaintiff continued to pay the interest, dues on stock and premiums, all monthly as required (except some delays not necessary here to state) until in June, 1897, when he attempted to pay off the loan and redeem his real estate from the incumbrance. But a misunderstanding then arose between the plaintiff and the
The case was heard by the circuit court in September, 1897, the issue above stated was found against the plaintiff, and in order to redeem from the debt and mortgage plaintiff was adjudged to pay the full sum of $512.91 with interest, penalties, etc., to wit, the total sum of $524.01, and from said judgment plaintiff appealed.
It will be noticed that this privilege of borrowing the accumulated funds of the association is confined to the shareholders, and to them in proportion to the par value of stock held by each; also that the stockholder has the right to get the loan for a small or even nominal premium, provided of course that no other member over-bid him at the open meeting held by the directors. This exclusive privilege belongs to the shai’eholders by virtue of, and in proportion to, their respective stock subscription. If in letting the money out, the officers or directors shall in any way take from the shareholders this privilege of attending the open meetings and securing loans for the least amount of premium they are able to get it in competition only with other members, and shall fix an arbitrary rate or premium below which the borrowing shareholders can not obtain the money, then clearly the statute above quoted is violated
As tersely expressed by the last named author: “A premium, in order to be lawful, must be one bid for the right of precedence in taking a loan, at a competitive sale of1 such right; and where there was no such sale and no bid, there can be no lawful premium. In other words, where it was simply agreed between a borrower and the association that he was to have a loan at a certain premium, not the result of any competitive sale, but of mere consent between the parties, the loan was held usurious. The so-called premium was in fact a part of the price named by the lender to be paid by the borrower for the use of the money loaned. The assent of the borrower to pay the price required did not make him a bidder within the meaning of the statute. Calling the excess above the highest legal rate a premium did not change the nature of the transaction. It was usurious.” * * * “It follows,” says the same author, “as a necessary consequence of the illegality of the attempt to establish and enforce any provision as to a fixed minimum premium, that contracts made under the stress of the operation of such a rule, and affected by it to the prejudice of the borrower, are usurious and can not be enforced according to their terms.”
When we bring now the facts of the case at bar alongside the principles of law above stated, the illegality of the so-called premiums which plaintiff agreed
In our opinion then the plaintiff was entitled to have the debt and mortgage against him satisfied and canceled on the payment of $512.91 less $48 the illegal premiums paid, that is, $464.91. The judgment will therefore be reversed and the cause remanded with directions to the circuit court to enter a decree to that effect. The entire cost in both courts will be adjudged against the defendant.