Flinn v. Mechanics' Building Ass'n.

• Decision Date: 01 April 1902
• Court: Missouri Court of Appeals
• Parties: FLINN v. MECHANICS' BUILDING ASS'N.<SMALL><SUP>1</SUP></SMALL>

67 S.W. 729

93 Mo. App. 444

FLINN v. MECHANICS' BUILDING ASS'N.¹

Court of Appeals of St. Louis, Missouri.

April 1, 1902.

USURY — VOLUNTARY PAYMENT — RECOVERY — STATUTE — CONSTRUCTION — DURESS — EVIDENCE — SUFFICIENCY.

1. Rev. St. 1899, §§ 3709, 3710, providing that usury may be pleaded as a defense, and that usury paid shall be credited on the debt, and that usury invalidates chattel mortgages or liens on personal property, does not affect the rule that a debtor cannot sue to recover usurious interest voluntarily paid.

2. Evidence, in an action by a borrower against a building and loan association to recover a sum paid in settlement of the debt, which did not even show that defendant threatened to sell the property, held not to show duress in such payment which would authorize a recovery of the sum paid.

Appeal from Hannibal court of common pleas; David H. Eby, Judge.

Action by Frances H. Flinn against the Mechanics' Building Association, to recover money alleged to have been unlawfully collected from plaintiff by defendant. From a judgment for defendant, plaintiff appeals. Affirmed.

John L. RoBards, for appellant. Thos. H. Bacon, for respondent.

GOODE, J.

The appellant, Frances H. Flinn, sued to recover the sum of $1,265.30, alleged to have been unlawfully exacted from her by the respondent as nominally premiums, but in fact usurious interest on a loan made to her by the respondent in February, 1890. The sum really in controversy is $811.70, which appellant claims was extorted from her by a threat to foreclose a deed of trust given on her property to secure the loan after she had paid in full the amount she had borrowed, together with all legal charges thereon.

In our opinion, the disposition of this appeal depends entirely on whether appellant paid the sum of money last mentioned voluntarily, or under circumstances which constituted duress; not that we hold she did not owe any part of the sum, or that all of it consisted of usurious interest for lack of competitive bidding to fix the premium when the loan was made, but because we are of the opinion that whatever portion of it was usury cannot be recovered if it was paid voluntarily. Ransom v. Hays, 39 Mo. 445; Kirkpatrick v. Smith, 55 Mo. 389; Peters v. Lowenstein, 44 Mo. App. 406. That was unquestionably the law of this state prior to the enactment of the statute of 1891 (Rev. St. 1899, §§ 3709, 3710), but appellant claims that statute changed the rule. It did change it, so far as it undertook to; that is, to the extent of providing that usurious interest which has been paid shall be credited to the principal debt, when usury is pleaded as a defense to an action, so that the creditor may recover judgment for no more than the amount due on the principal debt, with legal interest, after deducting therefrom all usurious payments. The statute further provides that, in an action for the enforcement of a lien on personal property pledged or mortgaged to secure indebtedness, or in a case where the validity of such a lien is drawn in question, proof that the party holding the lien has received or exacted usurious interest renders the lien void. Neither of those provisions reaches this case, or enables a party to voluntarily pay usury and thereafter maintain an action to recover back the money paid, but leaves that matter as it was before; wherefore a debtor from whom a creditor seeks to collect usurious interest must resist the attempt, and in default of so doing has no standing to get back his money, unless he is excused from resisting payment because of duress.

The question, then, is, was the money which appellant seeks to recover extorted from her by the respondent by conduct and under circumstances which amount to duress? There may be such duress of property or goods as will entitle a person thereby coerced into making payment to reimbursement, as where an owner is compelled to yield to an extortionate demand to obtain possession of his property. Wilkerson v. Hood, 65 Mo. App. 491. But the circumstances under which appellant paid this money, as testified to by herself, do not lend the slightest countenance to the notion that she was duressed or coerced; but, on the other hand, show a purely voluntary payment. As this is the pivotal point of the case, her version of the affair is the best means of deciding it, and had better be given, together with some preliminary statements. She was a music teacher in the city of Hannibal, and had been paying rent for a long while, and, desiring to purchase a home at a moderate cost and near the business part of the city, she applied to Llewellyn W. Boswell, who is a lawyer and real estate agent, and also secretary of the Mechanics' Building Association, to find her such a property. Thereafter he submitted a proposition to sell her a home at about the cost she desired, owned by Mrs. Mary J. Rhodes. Appellant had but little money to pay on the purchase price, and Boswell suggested to her that she pay $200 in cash, and borrow the balance from the building association. It should be stated that this controversy is one of many growing out of the failure of building associations to mature their stock as soon as their officers and stockholders expected. Mrs. Flinn claims that Boswell represented to her that she would only have to pay eight years on her loan, by which time her stock would be paid up, — that he made that statement over and over again, and she relied on it, and borrowed from the company on the faith of it. Boswell told her that she would have to take stock in the company and bid not less than 25 per cent. premium to get the loan of $1,900. Here is what she says as to that:

"A. He said, with regard to the premium, that I would be obliged to bid 25 per cent. of $1,900. I said, `I want to know what that means.' I had never heard of the premium before. He said that every one who borrowed money of the building association was obliged to pay a premium of 25 per cent. on their loan, and I then refused to go any farther. I said, `Well, if I have got to do that, I will not go any farther.' `Well,' he says, `if you are not willing to do so, you might as well stop right here.' Then I realized that there were other people in building associations who thought it was a good investment — Q. Never mind about your opinion. Just state the facts. A. I said then, `How am I to bid that?' He said, `You should go to a meeting of the directors, and bid it in yourself.' I said, `Where do the directors meet?' He said that they met in a down-town office, and he mentioned the office (I have forgotten where it was), but he says, `If you want, I can bid it in your name,' and I asked in regard to the amount. I said, `Must I bid 25 per cent.?' He said, `No one gets a dollar of the building association for less than 25 per cent. premium.' After talking it over, I decided to do it, and gave Mr. Boswell power to bid for me the 25 per cent. which he said was called for."

She authorized Boswell to make the bid for her, he telling her that she would have to give a note for $2,535 in order to get the $1,900 in cash which she desired. The loan was duly made, although she claims an excessive charge was exacted at the time, a contention not made good by the proof, and not important to be considered here. She paid on the loan for eight years, or thereabouts, and then concluded she had paid enough to be entitled to have her note returned, and the deed of trust canceled, according to the aforesaid statement she claims Boswell made to her, — that she would only have to pay for eight years. When she investigated the matter, the company claimed she still owed $811, which sum she paid, and the question is whether this payment was voluntary or under duress. Here is her testimony on the subject, which we will set out rather fully, because of its importance:

"A. * * * I paid during those nine months still my...