McDonnell v. De Soto Sav. & Bldg. Ass'n.

• Decision Date: 09 June 1903
• Citation: 175 Mo. 250,75 S.W. 438
• Court: Missouri Supreme Court
• Parties: McDONNELL et al. v. DE SOTO SAV. & BLDG. ASS'N et al.

75 S.W. 438

175 Mo. 250

McDONNELL et al. v. DE SOTO SAV. & BLDG. ASS'N et al.

Supreme Court of Missouri, Division No. 2.

June 9, 1903.

BUILDING ASSOCIATIONS — LOANS — BY-LAW FIXING MINIMUM PREMIUM—USURY—TRUSTEE— COMPETENCY—ESTOPPEL—FAILURE TO PLEAD—MORTGAGE SALE—INADEQUACY OF CONSIDERATION—SETTING ASIDE.

1. Statement by the secretary of a building association that plaintiff could get a certain loan, but he would have to "pay pretty high for it," about 15 per cent., in consequence of which he bid the amount of premium suggested, could not be construed into an agreement between the association and plaintiff by which he was to receive the loan at the premiums bid by him.

2. Rev. St. 1899, § 1362, relative to building associations, provides that loans shall be made "to shareholders who shall bid the highest premium." The statute relative to interest fixes the legal rate at 6 per cent., but provides that 8 per cent. may be contracted for. Held, that where a building association had a by-law which fixed a minimum premium of 10 per cent., thereby destroying competitive bidding below that amount, and there was no written application for a loan, and the only agreement in writing to pay interest was found in the bonds, which called for 6 per cent., given by the borrower, any premium paid by him was usurious.

3. Where the premiums paid to a building association are to be treated as interest, because of the fact that they were fixed arbitrarily, instead of by free competition, the total rate per year of interest charged cannot be calculated, without evidence as to the time when the stock will probably mature.

4. A director of a building association is not incompetent to discharge the duties of trustee in a deed of trust given the association on a loan.

5. Mere inadequacy of price, in the absence of other considerations, is no ground for setting aside a mortgage sale, unless it be so unconscionable as to shock the moral senses.

6. While, as a general rule, an estoppel must be pleaded, failure to plead it may be waived by plaintiff by proceeding with the trial of the case, without objection, as if the defense relied on had been pleaded.

Appeal from St. Louis Circuit Court; Jas. E. Withrow, Judge.

Suit by John McDonnell and wife against the De Soto Savings & Building Association and others. From a judgment dismissing the bill, plaintiffs appeal, pending which, on death of John McDonnell, suit was revived in the name of his heirs and administrator. Reversed as to defendant savings association, and affirmed as to the others.

James J. O'Donohoe, for appellants. Campbell & Thompson, for respondent DeSoto Ass'n. Thomas E. Ralston for respondent Anderson.

BURGESS, J.

This suit was instituted by John McDonnell and Catharine McDonnell, his wife. Since the suit has been pending in this court John McDonnell died, and the suit was duly revived in the name of his heirs and the administrator of his estate. The purpose of the suit is to have canceled and set aside two certain bonds and two deeds of trust securing the same, executed by McDonnell and wife to defendant Hartnett, as trustee of the De Soto Savings & Building Association, as well as the sale of the property described in the deeds of trusts by said trustee and the deed by him to the defendant Anderson.

The petition is in two counts. In the first count it is alleged, in effect, that on the 10th day of April, 1895, plaintiffs, McDonnell and his wife, borrowed of defendant De Soto Savings & Building Association the sum of $3,000, at the stipulated rate of 15 per cent.; that the premium for said sum was deducted, and the balance of $2,550 was paid to plaintiffs; that this loan of $3,000 was on the 27th of August, 1897, secured by a bond and deed of trust on certain property on Bremen avenue, in the city of St. Louis, Mo.; that on the 14th day of May, 1896, McDonnell and wife borrowed of the defendant association the sum of $13,000, at the stipulated rate of interest of 6 per cent. per annum; that from this sum 15½ per cent. premium was deducted, and the balance of $10,985 was paid to McDonnell; that to secure the payment of said $13,000 loan McDonnell executed his bond and deed of trust on the same property on Bremen avenue. The petition then recites that from the 10th day of April, 1895, when the first payment on stock and interest was made, until the 19th of May, 1899, when the last payment on stock and interest was made, McDonnell paid to the association the sum of $5,795; that since the 10th of April, 1895, McDonnell has been the owner of 80 shares of the stock of said defendant association, which stock, together with the earnings, profits, and dividends, "aggregate a sum the exact amount of which is unknown to plaintiffs, but which should have been applied by said association to the payment of the loans aforesaid"; that in said deed of trust Joseph P. Hartnett was made trustee, and that in said capacity he offered the property described in said deeds of trust for sale on the 18th day of July, 1899, and sold it to Lorenzo E. Anderson for the sum of $13,100, and executed to him his deed as trustee therefor; that said property was of the value of $55,-000 on the day of sale; and that plaintiffs had made all legal payments to the association that could be demanded, and were not delinquent at the time of the foreclosure under said deeds of trust. The petition then closes with a prayer for relief, which is as follows: "Wherefore plaintiffs pray that the bonds aforesaid be delivered up to plaintiffs to be canceled; that said deeds of trust be ordered canceled on the records; that a general accounting be taken between plaintiffs and defendants, and the amount due defendants, if any, be judicially ascertained and determined; that defendants be ordered to pay to plaintiffs the difference between the actual value of said property and the amount that plaintiffs owe defendants, if any be so found to be due them, and for their costs in this behalf expended; and for such other orders, decrees, and judgments as may be proper in view of the premises." The second count alleges that plaintiffs borrowed from the association the amount stated in the first count, executed the bonds and deeds of trust mentioned in the first count; that the payments were deducted as alleged in the first count; and that plaintiffs had paid to the association the amounts stated in the first count. This count alleges that Joseph P. Hartnett, trustee in said deeds of trust, "confederating with his codefendants, De Soto Savings & Building Association and Lorenzo E. Anderson, to obtain said property for their own use, and to defraud plaintiffs of said property, and in pursuance of this fraudulent design, claimed that plaintiffs were delinquent in payments under said deeds of trust, and caused the real estate described in said deeds of trust to be advertised and sold under both deeds of trust; the same being purchased by defendant Lorenzo E. Anderson colorably, and not for value, but for a pretended consideration of $13,100, in order that he might make such purchase, not for himself, but in reality for all of said defendants." The petition then alleges that the property was sold for a pretended consideration of $13,100, while the property was at the time of the sale and now is worth $55,000; that said sale was made on the 18th day of July, 1899, and the trustee's deed made, executed, and delivered by the trustee to said Anderson; that at the time of the foreclosure sale plaintiffs had made all payments that could be lawfully demanded; and that they were not delinquent. Then follows the prayer for relief: "Wherefore plaintiffs pray that the bonds aforesaid be delivered up to plaintiffs for cancellation; that said deeds of trust be canceled; that said sale be set aside and for naught held, and that the trustee's deed be canceled, and the title to said property be divested out of the said defendants and vested in plaintiffs; that an accounting be had between the plaintiffs and defendants, and the amount found to be due, if any, by plaintiffs to defendants, be ordered to be paid, which plaintiffs are ready, willing, and able, and hereby offer and agree to do; and for such further orders, decrees, and judgments as may seem proper in view of the premises."

The De Soto Building & Loan Association and Lorenzo E. Anderson filed separate answers, but they are in all respects the same, except that the answer of Lorenzo E. Anderson differs from that of the association in this: He alleges that he bought said property not for himself or defendant association, but for the Wiggins Ferry Company. Their answers allege that in April, 1895, plaintiff John McDonnell was, and for a long time theretofore had been, and that he continued to be until about July, 1898, a stockholder in the defendant association, and that until March, 1896, he was a director of said association. They then set out a number of the by-laws of the association; the sections quoted having particular reference to the making of loans and the foreclosure of securities. They then recite that in April, 1895, John McDonnell was owner of 80 shares of stock of the association; that he made application for a loan of $3,000, and having bid 15 per cent. therefor at auction, and being the highest bidder, said sum was knocked down to him by the defendant association, and was, less the premium, paid to said McDonnell; that to secure the payment of said sum McDonnell gave a deed of trust on property on Prairie avenue, in the city of St. Louis, Mo.; that in September, 1897, upon McDonnell's application, said loan of $3,000 was transferred from the property on Prairie avenue to the property described in the petition, on Bremen avenue, and that said bond and deed of trust on the Prairie avenue property were canceled and released, and the association took from McDonnell a bond and deed of trust to secure said loan of $3,000 on the said Bremen avenue property; that said...