75 S.W. 438 (Mo. 1903), McDonnell v. De Soto Savings And Building Association

Citation:75 S.W. 438, 175 Mo. 250
Opinion Judge:BURGESS, J.
Party Name:McDONNELL et al., Appellants, v. DE SOTO SAVINGS AND BUILDING ASSOCIATION et al
Attorney:James J. O'Donohoe for appellants. Campbell & Thompson for respondents De Soto Savings and Building Ass'n and Joseph P. Harnett. Thomas E. Ralston for respondent Anderson.
Case Date:June 09, 1903
Court:Supreme Court of Missouri
 
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Page 438

75 S.W. 438 (Mo. 1903)

175 Mo. 250

McDONNELL et al., Appellants,

v.

DE SOTO SAVINGS AND BUILDING ASSOCIATION et al

Supreme Court of Missouri, Second Division

June 9, 1903

          Appeal from St. Louis City Circuit Court. -- Hon. Jas. E. Withrow, Judge.

          Affirmed in part and reversed and remanded in part.

         James J. O'Donohoe for appellants.

         (1) It is well settled in this State: "That the funds of a building and loan association must be offered to the stockholders without restriction as to the premium, affording to each stockholder entitled to borrow the opportunity of borrowing at the lowest rate he can obtain in competition with other stockholders. The board of directors have no right, under the statute, to fix the minimum rate of premium, or to regulate the premium by private contract with the borrower." Ruppell v. Mo. Guar. S. & B. Ass'n, 158 Mo. 613; Fry v. Sav. & Bldg. Ass'n, 88 Mo.App. 289; Fowles v. Loan Co., 86 Mo.App. 103; Clark v. Mo. Guar. S. & B. Ass'n, 85 Mo.App. 388; Barnes v. Guar. Sav. & B. Ass'n. 83 Mo.App. 466; Edinger v. Mo. Guar. Sav. & B. Ass'n, 83 Mo. 615; Miller v. Mo. Sav. & B. Ass'n, 83 Mo. 669; Price v. Empire L. Ass'n, 75 Mo.App. 551; Moore v. Cameron B. L. Ass'n, 74 Mo.App. 468; Brown v. Arker, 62 Mo.App. 277; Link v. B. L. Ass'n, 89 Pa. St. 15; B. L. Ass'n v. McKnight, 35 Pa. St. 470; Maroney v. B. L. Ass'n, 57 Mo.App. 384. (2) Section 1364, Revised Statutes 1899, and all corresponding sections, as well as all by-laws based thereon, do not protect the present case from the charge of usury, for the Legislature has no power by a special law to authorize a certain class of corporations to loan money at a higher rate of interest than is allowed by the Constitution and general laws of the State; such sections and by-laws are in conflict with article 4, section 53, Constitution of Missouri and section 3709, Revised Statutes 1899. Reiser v. Savings F. Ass'n, 39 Pa. St. 137; Premium F. Association's Appeal, 39 Pa. St. 156; Simpson v. Kentucky Citizens B. L. Ass'n, 101 Ky. 496; Monticello B. L. Ass'n v. Smyth, 10 Cent. L. J. 434; Citizens Security Co. v. Uhler, 48 Md. 455; Association v. Bollinger, 12 Rich Eq. (S. C.) 124; Cooley on Constitutional Limitations, p. 485; Endlich on Building Associations, sec. 363. (3) Part of the act concerning building and loan associations has been passed on by this court and held to be unconstitutional. State ex rel. v. McGrath, 95 Mo. 193. (4) The cestui que trust can not serve as trustee, and while bearing that relation his acts as trustee are void. Craig v. Hone, 2 Edw. Ch. 554; Coster v. Lorillard, 14 Wend. 354; Farmers' Loan & Trust Co. v. Carroll, 5 Barb. 643; Bundy v. Bundy, 38 N.Y. 417. (5) A sale under a deed of trust is not valid if the trustee be not present and conduct the sale himself. He can not delegate his powers as trustee to another. St. Louis v. Priest, 88 Mo. 612; Sparlook v. Sproul, 72 Mo. 503; Brickinkamp v. Rees, 69 Mo. 426 Landrum v. Bank, 63 Mo. 48; Harper v. Mansfield, 58 Mo. 17. (6) The grossly inadequate sum for which the property was sold is sufficient to indicate fraud and imposition and to set aside the sale. But if not, of itself, when coupled with the other unfavorable circumstances attending the transaction and surrounding the sale, demands that the sale should be set aside. Montgomery v. Miller, 131 Mo. 595; Holdsworth v. Shannon, 113 Mo. 508; Cole Co. v. Madden, 91 Mo. 614; Vail v. Jacobs, 62 Mo. 130; Stoffle v. Schroeder, 62 Mo. 147; Durfree v. Moran, 57 Mo. 374; Thornton v. Irwin, 43 Mo. 153; Railroad v. Brown, 43 Mo. 294; Holmes v. Fresh, 9 Mo. 201. (7) It is held in the cases: Arbuthnot v. Association, 72 S.W. 132; Thudium v. Brookfield L. & B. Co., 72 S.W. 134; Callison v. Association, 72 S.W. 477, that a by-law fixing a minimum premium makes a loan usurious, and that, too, even though the premium, as in this case, is in excess of that fixed by the by-law, that in such a case the creditor is entitled to only six per cent interest on the loan, and that the borrower is entitled to credit on the principal for all payments made in excess of such rate. (8) The respondents in this case did not plead estoppel, and, to be available as a defense, it must be pleaded. Cockrill v. Hutchinson, 135 Mo. 75; Throckmorton v. Pence, 121 Mo. 60; Avery v. Railway, 113 Mo. 568; Hammerslough v. Cheatham, 84 Mo. 21; Bray v. Marshall, 75 Mo. 330; Ferneau v. Whitford, 39 Mo.App. 317; Rock Island Plow Co. v. Lang, 55 Mo.App. 356.

         Campbell & Thompson for respondents De Soto Savings and Building Ass'n and Joseph P. Harnett.

         (1) The mere fact that the defendant association had a by-law fixing a minimum premium of ten per cent., does not render the premiums invalid, because the by-law was utterly disregarded in these transactions; the loans were made by bidding as the statute requires, and without reference to the by-law. Again, the by-law was void and was never re-enacted after the Act of 1895. Bertsch v. Ass'n, 147 Mo. 365; Endlich on B. & L. Ass'ns, secs. 411, and 95; Thornton & Blackledge on B. & L. Ass'ns, sec. 229; Fund & Loan Co. v. Young (N. D.), 9 W. N. C. (Pa.) 251; Albright v. Bldg. Ass'n, 102 Pa. St. 411; Savings & Loan Co. v. Shain, 77 N.W. 1006. (2) When, as in these loans, the premium is deducted in advance, it is proper to charge interest on it. R. S. 1899, secs. 1364, 2814; Thornton & Blackledge on B. & L. Ass'ns, secs. 226, 281; Ass'n v. Neurath, 2 W. N. C. 95; Selden v. Ass'n, 81 1-2 Pa. St. 336; Ass'n v. Webster, 25 Barb. 263; Ass'n v. Robinson, 69 Ala. 413; Loan & Trust Co. v. Whithed, 49 N.W. 318; Bowen v. Bld. Ass'n (N. J.), 28 A. 67, 51 N.J.Eq. 272; In re Martin's Estate, 56 Minn. 420. (3) Even though the premiums should be treated as interest, yet on the evidence before the court the total amount of interest charged per year can not be calculated, because plaintiff neglected to offer evidence to show when the stock would probably mature. Laidley v. Cram, 70 S.W. 913; 4 Am. and Eng. Ency. of Law (2 Ed.), 1077. There is no presumption that the loan was usurious. Thornton & Blackledge on B. & L. Ass'n, sec. 256. If the premium has not been properly charged, yet the loan is not usurious if the premium, together with the interest, does not exceed the lawful rate of interest. Brown v. Archer, 62 Mo.App. 277; More v. Ass'n, 74 Mo.App. 468; Price v. Ass'n, 75 Mo.App. 551; Sappington v. Ass'n, 76 Mo.App. 242; Barnes v. Ass'n, 83 Mo.App. 466; Edinger v. Ass'n, 83 Mo.App. 615; Miller v. Ass'n, 83 Mo.App. 669; Clark v. Ass'n, 85 Mo.App. 388; Fowler v. Ass'n, 86 Mo.App. 103; Fry v. Ass'n, 88 Mo.App. 289; Ruppell v. Ass'n, 158 Mo. 618. (4) Neither section 1364, Revised Statutes 1899, nor any of the other sections of the act relating to building and loan associations, violates article 4, section 53 of the Constitution. Said act is constitutional. It is not a local or special law fixing the rate of interest. State ex rel. v. Herrmann, 75 Mo. 340; Masonic Aid Ass'n v. Waddill, 138 Mo. 628; Haynie v. Indem. Co., 139 Mo. 416; State ex inf., v. Aetna Ins. Co., 150 Mo. 113; Hammann v. Central Coal & Coke Co., 156 Mo. 232; Holmes v. Smythe, 100 Ill. 413; Wright v. Ass'n, 128 Ill. 84; McLaughlin v. Bldg. Ass'n, 62 Ind. 264; Loan & Trust Co. v. Whithed, supra; Savings Bank v. Allen, 28 Conn. 97; Welch v. Wadsworth, 30 Com. 149; Archer v. Ass'n (W. Va.), 30 S.E. 241; Smoot v. Ass'n (Va.), 29 S.E. 746; Loan Ass'n v. Richards, 21 Ga. 592; Ass'n v. Robinson, 69 Ala. 413; Brandon v. Miller, 118 F. 361; 4 Am. and Eng. Ency. Law (2 Ed.), p. 1073. This question can be raised only by the State. Wright v. Bldg. Ass'n, 128 Ill. 67; Frieland v. Ins. Co., 94 Pa. St. 504; Morawetz on Corp., secs. 759, 760. (5) The trustee was the selection of both plaintiff and defendant associations; he was present at the sale and the sale was cried by an auctioneer at his request in his presence. After having agreed to him as trustee, plaintiff will not be heard to say that he was incapable of acting as trustee. Lipscomb v. Ins. Co., 138 Mo. 23; Million v. McRee, 9 Mo.App. 344; Brickenkamp v. Rees, 69 Mo. 426; Lewin, Trusts and Trustees, sec. 448; Lewin, Law of Trusts, p. 498. (6) Mere inadequacy of price, abstracted from all other considerations, is not sufficient to induce a court to set a sale aside, unless the inadequacy is so great and unconscionable that of itself, ex evidentia rerum, it proves fraud, and the evidence does not bring this sale within the rule. Holmes v. Fresh, 9 Mo. 213; Bispham on Equity, sec. 219; Keith v. Browning, 138 Mo. 23; Hardwicke v. Hamilton, 121 Mo. 465; Million v. McRee, 9 Mo.App. 344; Kline v. Vogel, 11 Mo.App. 211; Harlan v. Nation, 126 Mo. 97; Morris v. Philliber, 30 Mo. 145; Routt v. Milner, 57 Mo.App. 50; Phillips v. Stewart, 59 Mo. 491; Landrum v. Union Bank, 63 Mo. 48; Judge v. Booge, 47 Mo. 544; Maloney v. Webb, 112 Mo. 575; Kingman & Co. v. Hill, 71 Mo.App. 666. (7) Plaintiff being a director of the association at the time the bonds and deeds of trust were executed, permitted sale to be made without objection, and is estopped from asking that the sale be set aside or that the loan be declared usurious. Reynolds v. Kroff, 144 Mo. 433; Taylor v. Zepp, 14 Mo. 482; Peckington v. Nat'l Ins. Co., 55 Mo. 172; Slagee v. Murdock, 65 Mo. 522; Skinner v. Stowe, 4 Mo. 93; Imbodem v. Ins. Co., 31 Mo.App. 321; Endlich B. & L. Ass'n, sec. 377; Spurlock v. Sproule, 72 Mo. 503.

         Thomas E. Ralston for respondent Anderson.

         (1) John McDonnell, as well as Lorenzo E. Anderson, agent of the Wiggins Ferry Company, and Alonzo C. Church (vice-president), of said company, were all present at the sale made by the trustee, Hartnett, under deed of trust on July 18, 1899. McDonnell solicited Zelle Brothers, holding a third deed of trust...

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