69 Neb. 667 | Neb. | 1903
On December 4,1900, The National Mutual Building and Loan Association of New York, a foreign corporation, filed in the district court for Harlan county a petition, making Ferdinand Retzman and Magdalena Retzman, his wife, defendants, alleging its corporate existence under' the laws of the state of New York; that it was authorized to transact business of a building and loan association, and its authority to do business in the state of Nebraska; that in June, 1890, Alice G-. Simms made application in writing for membership in plaintiff association, and subscribed for twenty shares of plaintiff association’s stock, which application was accepted and the shares issued; that in July, 1890, Alice G. Simms, as such member, applied for a loan of $2,000, which was granted, payable in instalments, the last payment to be made on completition of certain buildings, as stipulated in her application; that on March 13,1891, Alice G. Simms gave a bond mortgage and assignment of her shares of stock to plaintiff, to secure the payment of her loan. From the petition it appears that the mortgage bond contained the usual stipulations and conditions, that upon failure to pay as therein agreed, the whole principal sum, including arrearages of interest, premiums, dues and fines, at the option of the mortgagee, became due and payable; contained the description of certain lots in Alma, Nebraska, the property mortgaged. The petition alleged failure on the part of Alice G-. Simms, and the defendants Retzman to pay certain monthly dues of $10 from January to March, 1899; that three months had elapsed since default; that plaintiff elected to consider the whole amount of $2,000 due and payable, including interest at six per cent, from January, 1899, together with a monthly premium of $10 from March 13, 1899, amounting on June 1, 1900, to $170 and $24.33 permiums, subject to the application thereon of the value of the aforesaid shares in accordance with a collateral agreement in the bond that upon default in the stated payments said shares might be
Ferdinand Retzman answered, admitting the execution of the mortgage for $2,000; that Alice G. Simms subscribed for the shares of stock as alleged, but for the sole purpose of obtaining the loan; pleaded that the mortgage was a Nebraska contract, and that Alice G. Simms agreed to pay for the use and forbearance of the money loaned the sum of $240 per annum; admitted that on March 1, 1895, he bought a half interest in the mortgaged premises, Simms and wife warranting the title to be free of all incumbrances except plaintiff’s for the sum of $1,237; admitted that he agreed to assume half this indebtedness, and thereafter paid his share upon the indebtedness at the rate of $240 per annum; that under this agreement he paid and plaintiff received and accepted the sum of $1,388; alleged that on March 15, 1898, he purchased of the Simmses the
Alice G. Simms and B. M. Simms filed a joint answer and cross-petition, alleging the transfer of March 1, 1895, of one-half interest, and of March 15, 1898, of the other half interest, to Retzman; his assumption of plaintiff’s mortgage; that at the time of the second transfer the stock of goods was valued at $1,033.50, the interest of the Simmses being $516.75; the value of the real estate was $2,000, the interest of the Simmses being $1,000, making the total interest of the cross-petitioners $1,516.75, which was agreed by Retzman to be paid for the interest of the cross-petitioners; that he paid $1,000, assuming to pay $500 on the mortgage; that he had paid thereon only $118; they accordingly prayed that, if the court find nothing due to plaintiff from Retzman, he be adjudged to pay to the cross-petitioners the sum of $382. They denied all allegations in both petition and Retzman’s ans wer not admitted. Retzman’s reply to the cross-petition denied generally. Plaintiff replied to Retzman’s answer, pleading that the contract sued upon was a New York contract, and not subject to the usury laws of Nebraska. Trial was had and the court found generally for defendants Retzman, and dismissed both the petition of plaintiff and cross-petition
A brief outline of the evidence may conveniently be given before stating the contentions of the several parties to this appeal. In 1895,- B. M. Simms was engaged in the retail drug business at Alma, Nebraska, the business being carried on in a building located on lots owned by his wife, Alice G. Simms. The real estate was mortgaged as alleged in the pleadings. In March, 1895, Ferdinand Retzman purchased from the Simmses a half interest in the real estate and drug business. The deed from Simms to Retzman contained this clause:
“This conveyance is subject to an indebtedness of twelve hundred thirty-seven dollars in favor of National Mutual Building & Loan Association of New York, and one-half of said amount grantee herein assumes and agrees to- pay as part of the consideration herein named.”
The parties continued to do business as partners, apparently under the name of the “Simms Drug Company,” for some three years. In the course of time, however, the partnership proved highly unsatisfactory to both Simms and Retzman, and various attempts were made to separate, culminating on March 15,1898, in the acceptance by Simms of an offer of $1,000 by Retzman for the former’s half interest in all the real estate and drug business. Thereupon a deed was executed by B. M. and A. G. Simms to Ferdinand Retzman, conveying the half interest belonging to Simms for a consideration of $1,000, the deed containing the following clause:
“This conveyance is made subject to a certain mortgage given by first parties to National Mutual Building & Loan Association, of New York, for the sum of $2,000, on which a large amount has been paid, second party assuming balance unpaid, which may he found to be due.”
Appellant makes two principal contentions: (1) That the contract sued on is a New York contract, and, tested by the laws of that state, is not usurious; (2) that appel
The first contention of appellant can scarcely be sustained. There is no question ’whatever made that, if tested by the laws of this state, the contract was indisputably usurious, and that at the time of bringing this suit the whole principal sum with legal interest had been more than paid. The only question, therefore, is Avhether the contract was a New York or Nebraska contract. It was doubtless the latter. Alice G. Simms was a resident of Alma, Nebraska. Appellant is a corporation of New York state. The contract was made by an agent of appellant located at Alma, Nebraska, and we must hold the contract a Nebraska contract under the test applied in People’s Building, Loan & Savings Ass’n v. Shaffer, 63 Neb. 573, namely:
“Contracts made in Nebraska, with residents of this state, by a foreign building and loan association, if made by agents of such association Avithin this state, are Nebraska contracts; and by their construction, validity and enforcement are governed by the laws of this state.”
Appellant cites Cheney v. Dunlap, 27 Neb. 401; McKnight v. Phelps, 37 Neb. 858; Building & Loan Ass’n of Dakota v. Walker, 59 Neb. 456, and many cases from other states in support of the second contention, that appellee Retzman, not being a privy to the contract with A. G. Simms, but only the purchaser of the equity of redemption, can not plead the defense of usury. We think the authorities are very clear to the effect that usury is a defense personal to the borrower, his privies or representatives, to be waived by him but only available to him, and not to one who purchases his equity recognzing the validity of the
“If the mortgage debt Avere to be reduced on the present application, by reason of the alleged usury in the contract, it is manifest the complainant Avould get the estate purchased for less than she agreed to pay for it.”
The rule is similarly stated in a quotation from 27 Am. & Eng. Ency. LaAV (1st ed.), 952, made by appellant. The ‘inquiry accordingly is Avhether Retzman and Simms, at the time of the second transaction, by which Retzman acquired ■the half Interest theretofore- held - by* »Simm%; had in, ¡mind the1 usurious1' character ¡of the incumbrance,! and s intpndofl that there ¡should1' be deducted from the purchase, px-Re pply enough to pay the incumbrance, less msnry;. ..p. ,--,■
• It is established "by-the evidence! that.ait the, time pf, Tbe conveyance;to Retzman of Mareh 1, 1895, the amount of the indebtedness-was understood by a1! ear ties to be §1,237,
We-think that no other conclusion cah fairly be drawn from the evidence than that the parties, at the time of their last negotiations in March, 1898, both treated appellant’s mortgage as tainted with usury, and that under the laws of this state the original mortgagor would not have been obligated to pay more than the principal sum with legal interest; and, further, that Retzman, in taking the latter conveyance, was retaining out of the purchase price only enough to pay “the balance which may be found to be due,” without usury. The difference in the wording of the assumption clauses in the two deeds goes to sustain this view.
In Essley v. Sloan, 116 Ill. 391, 399, 6 N. E. 449, it is said :
“It would be inequitable, after his having received the benefit of the incumbrances by deducting the amount thereof from the consideration paid for the land, to permit him to keep it himself, and not apply it to the purpose for which it was set apart and reserved in his hands.”
In Wiltsie, Mortgage Foreclosures, sec. 395, it is said:
“It is a general rule that a purchaser, whose conveyance is by its terms made subject to a prior mortgage, the amount of which is deducted as part of the consideration of the purchase, whether he expressly assumes it as a part of the purchase money or not, can not plead usury as a defense to the foreclosure of such mortgage.”
We think from what has already been said, it will he apparent that the doctrine announced in the citations just made, is inapplicable to the facts in this case. In the Essley case, the decision is based in equitable considerations, namely, that the purchaser shall not be permitted to divert to himself money left in his hands by his grantor
The facts in this case bring it within the doctrine as announced in Maher v. Lanfrom, 86 Ill. 513:
“If a party purchases from a mortgagor without any deduction from the price on account of the incumbrance, the grantee thereby becomes invested with the right to interpose the same defenses as might have been made by the mortgagor. In such case the conveyance amounts to an authority to the purchaser to interpose the defense of • usury.”
We fail to discern any conflict betweem these decisions. There was a deductioin from the purchase price paid by Retzman because of appellant's mortgage, but the language in the deed, as well as the evidence, amply show that this deduction did not and was not intended to usurious interest, abd if it did not, then Simms never waived the advantage thereof. If in the transfer of simms' half interest there had been deducted the full amount of appellant's moprtgage including all charges that entered into its usurious elements, there would be manifest inequit in permitting Retzman, no such deduction was made, but only a deduction sufficient to pay the loan with legal interest, less credits there is no injustice in Retzman's plea of usury. We concluede taht then judgement of the trial court. as betweem Retzman and appellant, dismissing the latter's petition, is right.
With reference to the demand of the cross-petitioners, Alice G. and B. M. Simms, for judgement in their favor against appellee Retznan, in case the court determines that appellee is not liable opn appellant's mortgagae, it follows necessarily from the conclusion already reached, that in denying their prayer the judgement of the trial court is also right. It was the theory of the cross-petitioners that there was a deduction from the purchase price on
By the Court: For the reasons stated in the foregoing opinion, the judgment of the district court is
Affirmed.