Lead Opinion
This is an action for the foreclosure of a real estate mortgage. The defense of usury was interposed and sustained. Decree was entered .for plaintiffs for the balance due on the principal of the notes secured by the mortgage. Plaintiffs have appealed.
The notes provided for interest from their date at 10 per cent, per annum, being the maximum legal rate, and the mortgage contained a clause which required the mortgagors to pay, in addition to the interest, all taxes and assessments levied upon the real estate and all other assessments levied upon the mortgage, or the note which the mortgage was given to secure.
In Stuart v. Durland, 115 Neb. 211, this court held: “A mortgage which, by its express terms, requires the mortgagor to pay the maximum legal rate of interest on the debt which it secures, and, in addition, to pay the taxes upon the mortgagee’s interest in the mortgaged premises, is usurious.” The above holding was by this' court reaffirmed in Quesner v. Novotny, 116 Neb. 84; Dwyer v. Weyant, 116 Neb. 485; and Dawson County State Bank v. Temple, 116 Neb. 727.
To avoid the effect of these decisions, plaintiffs cite and rely upon section 5952, Comp. St. 1922, as amended by chapter 178, Laws 1927. The title of the latter act is: “An Act to amend section 5952, Compiled Statutes of Nebraska for 1922, relating to revenue, to declare an emergency and to repeal said original section.” The original section 5952 of the Compiled Statutes was a part of the revenue law which provides for the assessment of real estate and real estate mortgages, and requiring the interest of the mortgagee in the mortgaged premises to be separately assessed, and also contained the following provision: “When any mortgage'contains a condition that the mortgagor shall pay the tax levied upon the mortgage or the debt secured thereby, the mortgage shall not be entered for separate assessment and taxation, but both interests shall be assessed and taxed to the mortgagor or owner of the real estate. An
Notwithstanding the usury statute (Comp. St. 1922, sec. 2888) providés that if a greater rate of interest than that allowed by law shall ibe contracted for or received or reserved, plaintiff shall recover only the principal without interest and defendant shall recover his costs, and if the interest shall’have been paid, judgment shall be for the principal, deducting the interest, plaintiffs in the instant case contend that section 5952, Comp. St. 1922, as amended, has the effect of destroying the defense of usury, in so far as it relates to obligations secured by real estate mortgages containing the tax clause above quoted, and that the amended statute is applicable to preexisting contracts, as well as to those made subsequent to its enactment.
Defendants contend that in the enactment of chapter 178, Laws 1927, a number of constitutional provisions were violated, and for that reason said chapter is void and can afford no relief to plaintiffs in this action.
It is a well-settled rule that courts will not determine the constitutionality of legislative acts- unless such determination is necessary to a proper disposition of the cause before the court. In Morse v. City of Omaha, 67 Neb. 426, it is held: “The appellate court will not pronounce a statute unconstitutional and void where a determination of the case does not require that the constitutionality of the statute be determined.” In State v. Fulton, ante p. 400, it is held: “This court will refuse to pass upon the constitutionality of a statute -unless- it is necessary to a proper disposition of an action pending in this court.”
In 12 C. J. 780, sec. 212, it is said: “It is a well-settled
A well-recognized rule of statutory construction, and one firmly established in this jurisdiction, is that a statute will be held to operate prospectively and not retrospectively unless the legislative intent or purpose that it should operate retrospectively is clearly disclosed. The following are some of the decisions of this court supporting the rule announced : Blunk Bros. v. Kelley, 9 Neb. 441; State v. City of Kearney, 49 Neb. 337; McIntosh v. Johnson, 51 Neb. 33; Commercial Bank of St. Louis v. Eastern Banking Co., 51 Neb. 766; Adair v. Miller, 109 Neb. 295; State v. Federated Merchants Mutual Ins. Co., 117 Neb. 98.
After a careful examination of chapter 178, Laws 1927, we discover nothing to indicate an intent of the legislature that said act should operate other than prospectively. It
The judgment of the district court is in conformity with the decisions of this court, and is
Affirmed.
Dissenting Opinion
dissenting.
I am unable to agree with the reasons assigned in the majority opinion and dissent from the affirmance of the judgment of the district court pursuant thereto.
In stating this conclusion, as well as in the further observations I shall make, I do so with a just appreciation of the pronouncement to which I except, and the favorable consideration which the undoubted learning of its author, as well as the well-founded reputations of each and all who supported it at its adoption iby this court, entitle it to receive. In this spirit, in support of my views, I submit the following for the consideration of this court:
It must be conceded that chapter 178, Laws 1927, under consideration, is not an act complete within itself. We must consider then this chapter for what it actually is, as a part of complete legislative action. The effect of this law of 1927, it must be admitted, was then to amend a single section of a statute comprising a number of sections. If this be true, it seems that the well-settled rule of construction to be applied, to determine the force and effect of the language used, is that all parts of this legislation, of which chapter 178 formed only a part, should be considered together, and not each section by itself. 2 Lewis’ Sutherland, Statutory Construction (2d ed.) 659, par. 344. This rule the majority apparently ignore.
It would also seem, in obedience to the many precedents the history of this court discloses, that if we should, on
It may also be observed that there is apparently -no issue between the members of this court on the question that— “It is clearly within the competence of the legislature to ordain that an amending act shall have a retrospective operation, saving contracts and vested rights in so far as they are protected by the Constitution; and when this intention is explicitly stated or deducible (by necessary inference from the terms of the statutes, the courts must give effect to it.” Perry v. Denver, 27 Colo. 93; Iowa Savings & Loan Ass’n v. Heidt, 107 Ia. 297; Lew v. Bray, 81 Conn. 213.
Indeed, the rule as stated in the majority opinion implies this conclusion and at least two of the Nebraska cases cited in support thereof proceed on the theory that this right is unquestioned. It follows, therefore, that the controlling question in this case as presented in the majority opinion is not one of legislative power, but what has been actually done by the legislature.
As to the law as it was, and as to the events, and the situation that preceded the original enactment of the legislation now under consideration, it is to be remembered, and the court will take judicial notice of the fact, that prior to 1911 the method by taxation of real estate mortgages in Nebraska then in vogue was by the best minds of our state regarded as highly unsatisfactory. At that time land mortgaged was assessed to the owner thereof without any deduction because of existing liens. The mortgagee thereof, so long as he remained the owner of the mortgage, if a resi
To avoid the effects of this situation, there was introduced as a custom of the financial market, the device of incorporating an agreement or condition in the mortgages whereby it was agreed on behalf of the mortgagor that he should and would “pay all taxes and assessments levied upon said (mortgage) premises and all taxes and assessments levied upon the holder of the mortgage for, or on account of, the same.” This afforded a measure of relief to the mortgagees, but none whatever to the landowner. It did make his payments patent where, before, the fact was in a measure concealed. However, when this court, in the cases of Garnett v. Meyers, 65 Neb. 287, Consterdine v. Moore, 65 Neb. 296, and Allen v. Dunn, 71 Neb. 831, announced and established the rule that the agreement,- or condition, in question inserted in the mortgage, under the laws of this state, operated to destroy the negotiability of the note secured thereby, even that measure of relief was' valueless. A non-negotiable note and mortgage is admittedly not a desirable investment in the money markets where such property is bought and sold. To the bona fide purchaser thereof there is ever present the shadow of litigation based upon unknown facts that might have -entered into the transactions between the immediate parties to the instrument. So it was rediscovered that increased risk has always been reflected in enhanced interest rates. Truly, in view of the course of events that transpired in the commercial life of the state, it could be well said of the debtor, after the developments mentioned, “the last state of that man was worse than the first.”
“Section 5. This act shall apply to all mortgages filed on and after July 1, 1911. Mortgages on lands in this state filed on and after said date shall not be taxed in any other manner than herein provided. All mortgages on real estate recorded prior to July 1, 1911, shall be taxable as provided by law under provision of law relating thereto, prior to the enactment hereof: Provided that this act shall not apply to corporations, the property of which is now exempt from taxation.
“Section 6. This act shall take effect and be in force on and after its passage and approval according to law.
“Approved April 3d, 1911.”
As preliminary to the discussions of the amendatory
Preliminary to a discussion of this legislation, it would seem of fundamental importance in this case that the following should be kept in mind: “The act is complete within itself,” and, fairly considered, constitutes “original and independent legislation.” If is not and cannot be inimical to the provisions of section 14, art. Ill of the Constitution, and where such an act is repugnant to, or in conflict with, a prior law which is not referred to, nor in express terms repealed by the later act, the earlier statute is repealed by implication. State v. Hevelone, 92 Neb. 748; State v. Ure, 91 Neb. 31.
This act also relates wholly to the exercise of the sovereign power of the state and rights incident thereto, arising therefrom, or connected therewith. It is to be remembered
The ancient maxim, “The king can do no wrong,” has no place in American jurisprudence. But the fair deduction therefrom that the sovereign intends no wrong and wills no unnecessary injury is a principle which applies to the modern state, and in the light of which its statutes are to be read. This statute so enacted, in view of its terms, and the history preceding it, is plainly remedial in nature; not only remedial, but it evidences the efforts of a sovereignty to correct an unintended wrong or injury incidental to the then operations of its taxing law. The court therefore is warranted in giving it a liberal and effective construction under the peculiar circumstances in this case and it should not be strictly construed. Buckmaster v. McElroy, 20 Neb. 557; McIntosh v. Johnson, 51 Neb. 33; Omaha Savings Bank v. Rosewater, 1 Neb. (Unof.) 723. In conforming to the rules of construction heretofore set forth, the several parts of this act are to be construed together in order to ascertain the intention of the legislature. Follmer v. Nuckolls County, 6 Neb. 204; City of Lincoln v. Janesch, 63 Neb. 707. The court will give this act the meaning which it is apparent from the language used that the legislature had in mind when the act was passed. State v. Hanson, 80 Neb. 738.
Applying the principles just enumerated, it is to be seen that sections 5 and 6, ch. 105, Laws 1911, above referred to, are important evidence of legislative intention in relation to the act before us. It will be noted there is an absence of an
In view of these facts, as well as the language of chapter 105, Laws. 1911, construed as an entirety, with due regard to the principles of statutory construction already discussed, the conclusion is inescapable that this chapter evidenced a clear and unmistakable expression in precise terms, as well as by necessary, inevitable implication, of a plain, positive, legislative purpose and intent, at the very
Heretofore the interpretation of this legislation by this court has been consistent with the conclusion just expressed. This act as amended by chapter 138, Laws 1919, “An act to amend sections 6350 and 6351, Revised Statutes of Nebraska for 1913,” was sustained as involving the sovereign power of taxation, as retroactive in effect, and the claim that it impaired the obligation of contract and destroyed vested rights was expressly denied. State v. Rowe, 108 Neb. 232. In Peterson v. Kuhn, 110 Neb. 372, a portion of section 5952, Comp. St. 1922, validating agreements between mortgagors- and mortgagees as to all payments of taxes, and particularly that portion of the same providing an agreement of this kind shall “not destroy the negotiability of any note secured thereby,” was sustained by a unanimous court, and the clause quoted held to be valid and effective. It is to be noted that the only change effected by the amendment of 1927 adds to the sentence just quoted, and which this court then sustained, the words “nor render such note usurious.”
This court is committed to the doctrine “that the simultaneous repeal and reenactment of a statute in terms, or in substance, is a mere reaffirmance of the original act and not a repeal in the strict or constitutional sense of the term.” The original legislation reaffirmed by the amendatory act of 1919 and of 1927 thus remains in full force and effect without interruption or change in legal interpretation. State v. Bemis, 45 Neb. 724; Stenberg v. State, 50 Neb. 127; Quick v. Modern Woodmen of America, 91 Neb. 106; Mulhollan v. Scoggin, 8 Neb. 202; Gooch Milling & Elevator Co. v. Chicago, B. & Q. R. Co., 109 Neb. 693.
Even if it be conceded in principle that amendments to a section might, as to interrelated parts of that act, of
The almost universal rule of construction applicable and controlling in the present situation, we find, appears in the history of American jurisprudence as announced in two leading cases, viz., Farrell v. State, 54 N. J. Law, 421, and Conrad v. Nall, 24 Mich. 275. In the New Jersey case the principle was stated as follows:
“The effect of an amendment of a section of the law is, not to sever it from its relation to other sections of the law, but to give it operation in its new form as if it had been so. drawn originally, treating the whole act as an harmonious entirety, with its several sections and parts mutually acting on each other.”
And the same rule was in substance announced in Conrad v. Nall, 24 Mich. 275. In that case the Michigan court said:
“The act of 1869 (Sess. L. 1869, p. 155) amending § 24, ch. 140, R. S. 1846 (Comp. L. § 5384), was not intended to operate independently of the other provision of the same chapter. The whole chapter in its present form is now to be read as one act, with its several parts and clauses mutually acting on each other as their sense requires.”
In the case of Blair v. Chicago, 201 U. S. 400, Justice Day, after a comprehensive discussion of the authorities covering this question, frames the rule in the following form:
“As a rule of construction, a statute amended is to be understood in the same sense exactly as if it had read from
Our own court in full accord with the decided weight of authority announces the rule in the following form:
“The section of an act properly amended should be construed precisely as though it had been originally enacted in its amended form.” State v. Hevelone, 92 Neb. 748.
So it fairly appears that to the authority of this rule there can be no contention; as to the result of it's application in the present case, little doubt. Reading the controlling statute before us, as an entirety, together with the amendment of 1927, “precisely as though it had been originally enacted in its amended form,” “with its several sections and parts mutually acting upon each other,” the words of the amendment “nor cause such note to be usurious” inevitably and inescapably would apply to all mortgages filed on or after July 1, 1911, and would therefore necessarily apply to the contracts in suit here. It would likewise involve, we respectfully submit, an unconditional negation of the premises on which the majority decision is based, viz.: “We discover nothing to indicate an intent of the legislature that (this legislation) it should operate other than prospectively.” If this is true, and the provision now construed is valid, it will operate retrospectively to cut off all defenses of usury for the future even in actions upon contracts previously made. Gibson v. Sherman County, 97 Neb. 79. In the Gibson case this court substantially without reservation quoted, approved, applied, and in applying adopted the doctrine on the subject, of usury announced by the supreme court of the United States in Ewell v. Daggs, 108 U. S. 143. The following excerpt will disclose the tenor of our then decision:
“Independent of the nature of the forfeiture as a penalty (for usury), which is taken away by a repeal of the act, the more general and deeper principle on which they are to be supported is, that the right of a defendant to avoid his contract is given to him by statuté, for purposes of its own, and not because it affects the merits of his obligation; and that
If this authority be finally adhered to, the judgment of the district court in this case must be revérsed, with directions to enter decree in accordance with plaintiffs’ petition. On the other hand, if the principles announced in the case be disapproved and the contention of appellees on these points be accepted by the majority, the result will be to approve the decree entered in the district court. But at least the merits of the case should be determined and the parties to mortgages advised as to their rights and the state notified as to the actual condition of this potential source of revenue, for, though not a technical parity to this litigation, it will nevertheless be affected toy the results.
To determine the validity of the provision we have discussed, “nor render such note usurious,” I conceive to be an imperative duty imposed by the record on this court, and because of the failure of the majority so to do, I am constrained to dissent.