75 P. 484 | Kan. | 1904
The opinion of the court was delivered by
The Royal Loan Association was a corporation organized under the laws of the state of Missouri, with' its principal office located in the city of St. Joseph. It organized a local board with a local secretary' and treasurer at Marysville, Kan. About
After the money was received by Forter, he subsequently made sixty payments of eight dollars per month, or $480. Having paid the amount received with the highest rate of interest permitted under the laws of Kansas, the Forters regarded the mortgage as paid and demanded that the Royal Loan Association release the same. This demand was refused and the present action was brought under sections 4224, 4225, and 4226, General Statutes of 1901, to procure a can-celation of the mortgage, and to recover damages for the refusal to enter satisfaction, as well as for a rear sonable attorney’s fee in prosecuting the action. A
The principal issue in the case was whether the ¡transaction between the parties should be treated as ;a building and loan contract, one where the dues, rpremiums and other charges provided for may exceed :the legal rate of interest on money borrowed, or ■whether it should be treated as a mere loan, wherein the parties stood toward each other in the relation of •creditor and debtor alone. If it be treated as a loan, it seems to be conceded that the Forters have paid •the amount borrowed with the full legal rate of interest chargeable for money in Kansas. If he became a •member and liable to pay the dues, premiums and •other charges imposed by the association, there is yet •due the sum of $142.79.
The conclusion of the trial court, that the contracts were usurious, the debt fully paid, and that the mortgage should be canceled and discharged, must be sustained. There was no competitive bidding for preference at a meeting of the directors when the loan was obtained, and they had fixed an arbitrary minimum rate, both of which, it is argued, were in violation of law. If this contention be correct, the case is in the situation of Savings Association v. Worz, 67 Kan. 506, 73 Pac. 117, and the transaction is no more than 'an ordinary loan. It is argued that the law of Missouri was amended on June 21, 1895, dispensing with •competitive bidding, and that, in pursuance of the amended law, the association, on June 22, 1895, amended its by-laws, making them conform to the new statutory provisions. This argument is met by the claim that the reorganization and enactment of by
Another point is made that when the loan was made to Forter in August, 1895, the code of by-laws furnished him was the one first adopted, which showed that a loan to a member could only be made on a bid for the preference of the loan in an open meeting. This was not done. Even if he were to be treated as a member, he had a right to rely on the by-laws furnished him as being the governing .rules of the association, and the association would be bound in its dealings with him by those by-laws. (McKenney v. Diamond State Loan Asso., 9 Hous. (Del.) 557, 18 Atl. 905; Sawyer v. Loan & Building Association, 103 Mich. 228, 61 N. W. 521; Peterson v. Building & Loan Ass’n, 124 id. 573, 83 N. W. 606.) Non-compliance with these rules tended to establish that the transaction was a loan, and subject to the usury laws of Kansas.
Did the relation of association and member exist between the parties ? Nothing in the case shows that Sarah E. Forter, one of the parties to the bond and mortgage, was in any sense a member of the association. As to Samuel Forter, he applied for a loan of money of Cole, the agent of the association which
Considering the plan and the way in which the negotiations were carried on, the transaction has all the symptoms of a scheme to avoid the usury law. In addition to these considerations, and more important, perhaps, the transaction appears to be a Kansas contract, and is necessarily governed by the laws of Kansas. It was a Missouri corporation, it is true, but its plan and its by-laws were quite unlike the provisions of the Kansas law with respect to building and loan associations. Even if the amended law of Missouri,
As the transaction is in the nature of a loan, and the relation between the parties is that of creditor and debtor, and as it was a Kansas contract, enforceable in Kansas, it is governed by the laws of Kansas in relation to usury. As tending to support these views we cite : Building Association v. Thompson, 19 Kan. 321; Savings Association v. Kidder, 9 Kan. App. 385, 58 Pac. 798; Savings Association v. Worz, supra; Investment Association v. Stanley, 88 Ore. 319, 63 Pac. 489, 58 L. R. A. 816, 84 Am. St. Rep. 793; Meroney v. Loan Association, 116 N. C. 882, 21 S. E. 924, 47 Am. St. Rep. 841; Rhodes v. Missouri Savings Co., 173 Ill. 621, 50 N. E. 998, 42 L. R. A. 93; Building & Loan Ass’n v. Burch, 124 Mich. 57, 82 N. W. 837, 83 Am. St. Rep. 311; Hoskins v. Rochester Savings & Loan Ass’n, 95 N. W. (Mich.) 566; Building & Loan Ass’n v. Griffin
We cannot say that the attorney’s fee nor the damages allowed are excessive and, no error being found in the record, the judgment of the district court will be affirmed.