Laidley v. Cram

• Decision Date: 25 November 1902
• Citation: 70 S.W. 912,96 Mo. App. 580
• Parties: LAIDLEY et al. v. CRAM et al.
• Court: Missouri Court of Appeals

70 S.W. 912

96 Mo. App. 580

LAIDLEY et al. v. CRAM et al.

Court of Appeals at St. Louis, Missouri.

November 25, 1902.

BUILDING ASSOCIATION — USURY — PREMIUMS — INTEREST ON BONDS.

1. The transactions which are the basis of plaintiffs' claim that usury was exacted of them on certain moneys borrowed by them from a building and loan association examined, and held to afford no proof that usury was exacted.

2. Held that, if the sums charged as premiums on a loan are to be treated as interest on the assumption that they were fixed arbitrarily, instead of by free competitive bidding, the total rate of interest charged per year cannot be calculated on the facts in the record, for, to do that exactly, the loans would have to run until the stock matured, while, to do it approximately, proof must be made as to when the stock would probably mature. In this case the premiums claimed to be usurious are not distributed as monthly payments over the months the loans were to run, nor is there any fixed date of maturity in the bonds. They were to mature when the stock of the association did.

3. The bonds named 5 per cent. as the interest to be charged on the loans. Plaintiffs contend that any sum charged as premiums above 5 per cent. is usurious, because, as 5 per cent. is the interest named to be paid, whatever other interest was charged was not agreed to be paid in writing. Held that, if the premiums are to be treated as interest, because not fixed by bidding, they were either agreed to be paid in writing, or not agreed to be paid at all, since the bonds are the only evidence of the agreements made by the association and the borrowers. Held, further, that unless such premiums, by an annual apportionment through all the years of the loan, when added to the 5 per cent. interest, make the total interest charged in excess of what may be lawfully agreed on in writing, the loans were not usurious.

(Syllabus by the Court.)

Appeal from St. Louis circuit court; S. P. Spencer, Judge.

Action by L. H. Laidley and others against George T. Cram, trustee, and others. Judgment for defendants, and plaintiffs appeal. Affirmed.

Ten Broek & Spooner, for appellants. H. M. Pollard, for respondents.

GOODE, J.

We will make up our statement of the facts of this case principally from the statement prepared by the counsel for the appellants, which seems to be full and fair. The respondent the Underwriters Building & Loan Association was organized under the laws of Missouri March 31, 1887, and proceeded to issue shares of capital stock of the par value of $240 each. On March 7, 1890, Gilbert H. Barnes subscribed for 30 shares of stock in the second series, and about the same time applied for a loan of $7,200 on said shares and a parcel of ground in the city of St. Louis. The loan was made, and Barnes executed his bond, secured by deed of trust, to the association, for $7,200. On October 5, 1891, he and his wife sold, conveyed, and assigned his interest in the ground and stock to the appellant L. H. Laidley, who assumed the debt, and on the same day Laidley applied to the association for an additional loan, agreeing to subscribe for 18 additional shares of stock in the third series. This loan was granted, and Laidley executed his bond to the association for the sum of $4,320, secured by deed of trust on his shares of stock and the real estate he had bought from Barnes. When the first loan was made to Barnes, the association withheld $1,800 as 25 per cent. premium bid by Barnes for the loan, paying him the balance, or $5,400; and when the second loan was made the association withheld $750, paying Laidley $3,570, thus keeping back 20 per cent. of the amount of the loan, claiming that Laidley had bid that premium. Appellants contend no premium was bid for either loan, but that these deductions from the amounts borrowed were arbitrarily exacted by the officers of the association, and that, when added to the interest stipulated, they make the loans usurious. In the view we take of this case, we think it unnecessary to set out the testimony bearing on the question of whether or not premiums were bid within the meaning of the law, but the court below found they were. Appellants state in their petition that they have paid on the first loan $5,914.76, and on the second loan $3,147.18, or in all $9,061.34, whereas the amount of cash received on the two loans was only $8,970; and that, therefore, the loans have been more than paid; the idea being, apparently, that no interest accrued on the loans at all, during the years they have been running, because usurious interest was exacted, and that the excess paid on the first loan above the face of the bond ought to be applied in discharge of the balance due on the...