225 Mo. 660 | Mo. | 1910
The plaintiff was the owner of ten shares of stock of the par value of $240 each in the defendant corporation and building association, organized under the laws of this State, and on the 30th day of June, 1892, she borrowed from it the sum of $2400, and, together with her husband, Henry Spit-hover, executed to the defendant a bond, wherein they acknowledged themselves indebted to the association in the sum of $2400, with $10 per month interest from date, and a premium of $8.40 for a preference in obtaining the loan, and conditioned that they would
At the time of the execution of this bond and deed of trust, plaintiff also pledged her ten shares of stock to the association. The last payment made by the plaintiff and her husband on account of the loan was in February, 1900, and because of the default in payments the association caused the property to be sold after advertising the same, on the second day of March, 1901, and it was purchased by the association for $2250'. On the 28th of August, 1905, plaintiff instituted this suit claiming that the loan made to her was usurious and that she had in reality paid back all that was due from her, and consequently there was no default on her part at the time of the sale of the property by the trustee, and in her petition she prays that
The grounds upon which plaintiff seeks recovery are set forth in her petition as follows: “Plaintiff states further that defendant charged plaintiff thirty-five per cent of said loan of twenty-four hundred dollars as and for a premium, and that said premium is unreasonable, extortionate, oppressive, illegal and usurious; and article 10 of chapter 13 of the Revised Statutes of Missouri, 1899, particularly section 1362 thereof, and article 9 of chapter 42 of the Revised Statutes of Missouri, 1899, especially section 2814 thereof, under which said loan was pretended to be let, and by virtue of which it (defendant) was incorporated, are all in conflict with and in contravention of section 59', article 4, of the Constitution of the State of Missouri, and especially that part of said section of said article, which provides: ‘The General Assembly shall not pass any local or special law fixing the rate of interest,’ and in violation of sections 5973 and 5975, chapter 90, of the Revised Statutes of Missouri, 1899, and in conflict with section 3708, chapter 40, of the Revised Statutes of Missouri, 1899. That the Constitution and statutes aforesaid were all in full force and effect at all of the dates herein named. Plaintiff further states that said loan was not awarded by means of an auction and there was no competitive bidding therefor; on the contrary, defendant charged said premium through private contract with plaintiff and by an arbitrary demand of said thirty-five per cent per annum.”
On the part of the defendant the evidence tended to prove that at a regular monthly meeting on June 8, 1892, the executive committee presented an appli
Section 36 of the by-laws of the defendant corporation was offered by the plaintiff and read in evidence ; it was in these words: ‘ ‘ The funds of the association will arise from the collection of monthly dues, premiums on loans, fines and other sources. The money thus accumulated shall the second Wednesday in each month be put up at auction, and awarded to the shareholder who bids the highest premium for the same. Each stockholder is entitled to receive from the association a loan on real estate security of $240 for each share of stock he holds. The successful bidder shall be entitled to take at the premium bid, a loan on all the shares he holds. If there is not that much money on hand, the succeeding collections shall be placed to. his credit until his loan is all paid off. No loan shall be made to a second bidder on the same evening for a premium lower than the successful bid. The secretary may bid in any loan for any member requesting same and filing his application. All members desiring to take out a loan must file with the secretary an application as prescribed by law.”
It was admitted that the real estate upon which
It is obvious that the plaintiff based her claim for relief upon two substantive propositions, to-wit: that the loan which was made to her was not awarded at an auction of the money of the association, but was made through private contract, and secondly, that the statute (sec. 2814, E. S. 1889) which provided, “No premiums, fines or interest on such premiums that may accrue to the said corporation according to the provisions of this article shall be deemed usurious, and the same may be collected as debts of like amount are now by law collected,” is and was unconstitutional.
I. In regard to the first proposition that the money or loan was not awarded to her at an auction as required by the statutory provision in section 2812, Eevised Statutes 1889, there was .absolutely no proof worthy of the name which sustains her contention in this respect. The testimony of Mr. Kelly, the secretary of the association, and of Mr. Hercules, the president, as well as a record of the association made on the day the loan was awarded to her, contradicts her contention in this respect and the proof on her part utterly fails to substantiate her claim. She herself did not establish the truth of this allegation when she was a witness on the stand, and the deed of trust which she executed to secure the loan recites on its face “said premium having been bid at the rate of thirty-five per cent.” As to her insistence that Mr. Kelly and Mr. Hercules were not competent witnesses, it appearing that plaintiff’s husband acted for her on the occasion of the awarding of the loan on her bid, their competency, even if questioned at the proper time, was settled by this court In Banc in Southern C. S. Bank v. Slattery’s Admr., 166 Mo. 620.
To the further contention along this line, that there could be no fair letting under the association’s
We may also add in this connection that the point attempted to be made by the plaintiff in regard to section 35 of the by-laws, is wholly outside of the record in the case and was not involved in any manner, and was not before the circuit court, and was entirely unsupported by any evidence whatever.
II. Although section 2814 of the Revised Statutes of 1889 was enacted in 1879, and appears in the revision of 1879 as a new section, number 964, and is substantially in the same form in the revision of 1899, section 1364, its constitutionality has never been determined by this court. But the question of usury, as inhering in these building and loan contracts, has been the occasion of many decisions in our sister states upon the origin and character of such associations and especially as to the relation of a loan to the stock upon which it is based. And while there has not been perfect unanimity of opinion on the subject, a very large majority of the courts have upheld the constitutionality of statutes which are practically the same as section 2814, Revised Statutes 1889. Some of the courts, notably the Supreme Courts of Kentucky, South Carolina and North Carolina, treat the sale of the funds for premium as a subterfuge for charging usurious
The act incorporating building associations in the state of Illinois, approved April 4, 1872, contained a section, numbered 10, in almost the identical words of section 2814, Revised Statutes 1889, of this State, and on a bill charging usury because the bonus bid for the loan increased the interest beyond the legal rate, the Supreme Court of that state held-said section to be in violation of two sections of the Constitution of Illinois, namely that prohibiting the regulation of interest on money and that prohibiting the granting to any corporation any special or exclusive privilege by a special or local law. Afterwards, however, in Holmes v. Smythe, 100 Ill. 413, the same act came before the Su
In Iowa Savings and Loan Association v. Heidt, 107 Iowa l. c. 303, it was said: “First, it is said that the Building and Loan law of the State is unconstitutional, because it is class legislation. Some of the arguments advanced in support of this claim assail rather the policy of such statutes than the power to enact them. In theory these institutions are profit-sharing. The amounts directly paid for the use of money go indirectly to the benefit of the stockholders, through the increase in the value of their shares. Where the loans are confined to shareholders, we can see good reason for exempting such associations from the operation of the usury law. That the constitutional power exists to make this exemption, we think is without serious doubt. [Association, v. Billing, 104 Mich. 186; Trust Company v. Whithed, 2 N. D. 82; Archer v. Association, 45 W. Va. 37.] See, also, on the general character of these institutions and the reasons for special legislation in their favor, Hawkins v. Association, 96 Ga. 206; Association v. Monk, 30 Atl. 872; Association v. Shields, 71 Miss. 630.”
In Security Savings Association v. Elbert, 153 Ind. l. c. 202, the Supreme Court of that state said: “This court, since the McLaughlin case, 62 Ind. 264, has continued to recognize that the transaction between a borrowing member and his society is not a mere loan
See, also, a full review of the law of building and loan associations and the character of the applications between the stockholder and the association in Cook v. The Equitable Building & Loan Association, 104 Ga. 814, and in Patterson v. B. & L., 14 Lea (Tenn.) 677, in which those courts also held that a provision similar to section 2814, Revised Statutes 1889, is not unconstitutional.
It seems unnecessary to make further citations of authority along this line, and it is only necessary to add that the great weight of authority in this country is to the effect that a statute like ours, section 2814, Revised Statutes 1889, is perfectly constitutional and therefore the contract for premium at a public auction of the money is lawful and does not violate our general statute against usury.
The judgment of the circuit court was for the defendant, and in our opinion, was correct, and it is therefore affirmed.