Brower v. Life Ins. Co. of Virginia

• Decision Date: 29 April 1898
• Citation: 86 F. 748
• Parties: BROWER v. LIFE INS. CO. OF VIRGINIA.
• Court: U.S. Court of Appeals — Fourth Circuit

86 F. 748

BROWER v. LIFE INS. CO. OF VIRGINIA.

United States Circuit Court, W.D. North Carolina.

April 29, 1898

A. E Holton, for plaintiff.

MacRae & Day, for defendant.

SIMONTON Circuit Judge.

The plaintiff instituted his proceedings in the state court of North Carolina. They have been removed into this court. The facts of this case are these:

The Life Insurance Company of Virginia is a corporation of the state of Virginia. Besides being engaged in the business of life insurance, it is authorized by its charter to lend its surplus profits on mortgages or loans of real estate. For many years it has been engaged in making such loans. Under its fixed rules, no loans are made except to persons who hold policies in the company, either life policies or endowment policies. The plaintiff, John M. Brower, a citizen of the state of North Carolina, resident at Mt. Airy, in that state desiring to improve certain real estate in that town, wished to borrow the sum of $5,000. He made application to Mr Carter, an attorney at law, at Mt. Airy, who examined titles for the company, to effect a loan for him. Carter explained to him the rule of the company, limiting its loans to policy holders; and Brower qualified himself by subscribing to three endowment policies in the Life Insurance Company of Virginia, one for $1,000, and two for $2,000 each. He then made application for a loan of $5,000 for the term of seven years, interest 6 per cent. per annum, payable monthly, on the last Saturday of each month, at such place as lender may direct, the loan to be secured by mortgage of real estate. The original application for $5,000 was withdrawn, and three separate applications of the same kind were made,-- one for $1,000, and two for $2,000 each. The real estate of Brower which he wished to improve was in three separate parcels, and this division of the sum needed was made for convenience. The application was granted. The insurance company furnished Brower $1,000, and took his bond in the penal sum of $2,000, of which this is a copy:

'Know all men by these presents, that I, John M. Brower, of Mount Airy, in the county of Surry and state of North Carolina, am held and firmly bound unto the Life Insurance Company of Virginia in the sum of two thousand dollars, to be paid to said company, its successors or assigns, at its home office in Richmond, Virginia, to which payment well and truly be made I bind myself, my heirs, executors, and administrators, jointly and severally, firmly by these presents. Sealed with my seal, and dated at Mount Airy, N.C., this 21st day of January, one thousand eight hundred and ninety-three.

'The condition of this obligation is such that whereas, the said John M. Brower has made application to said the Life Insurance Company of Virginia for the advancement to him by said company of one thousand dollars, by way of anticipation of the value, at its maturity, of an endowment of one thousand dollars, evidenced by a certain certificate or policy No. 3,211, issued by said company to said John M. Brower; and whereas, said company has advanced to said John M. Brower the sum of one thousand dollars by way of said anticipation: Now, therefore, if the above-bounden John M. Brower, his heirs, executors, and administrators, or any of them, shall pay or cause to be paid unto said company, its successors or assigns, the just sum of one thousand dollars, seven years from the 28th day of January, A.D. 1893 (or at and upon the maturity of the endowment set forth and provided for in said certificate or policy, if that shall sooner happen), together with interest thereof during said period and until paid, at the rate of six per cent. per annum from the date last mentioned, payable monthly on the last Saturday of each and every month, and shall also pay or cause to be paid unto said company, its successors or assigns, the sum of twelve ($12.00) dollars, on the 28th day of January, A.D. 1893, and on the last Saturday of each and every month thereafter, as and for the monthly payments or installments on said endowment, the certificate or policy of which endowment the said John M. Brower hereby assigns, transfers, and sets over unto said company as security for the faithful performance of this bond, and shall also pay or cause to be paid all fines which become due thereon, and shall also pay or cause to be paid all taxes and assessments on the property conveyed in the deed of trust given to secure this bond, and also all premiums on the policy or policies of fire insurance assigned to said company as additional security, until the maturity of the said endowment, then the above obligation to be void; otherwise, to remain in full force and virtue: provided, however, and it is hereby expressly agreed, that if at any time default shall be made in the payment of said interest or of the said monthly payments or installments on said certificate or policy, or of said fines, if any shall have become due, for the period of six months after the same or any part thereof shall have become due, or if the taxes and assessments on the property conveyed in the deed of trust given to secure the faithful performance of this bond be not paid when due, or if the insurance policy or policies on the said property be allowed to expire without removal, or if the premiums thereon be not paid when due, then, and in either or any such case, the whole principal sum aforesaid shall, at the election of said company, its successors or assigns, immediately thereupon become due and payable, and payment of said principal sum, together with all monthly payments, interest, and fines then due, and all costs and disbursements, including said taxes, assessments, and insurance which shall have been paid by said company, may be enforced and recovered at once, either by foreclosure of the deed of trust given to secure this bond or otherwise, anything hereinbefore contained to the contrary notwithstanding: and provided, further, that payment of said principal sum shall be made to the said the Life Insurance Company of Virginia at its home office in the city of Richmond, Va., and all other sums herein provided for may be paid at said home office, or to the duly-authorized local treasurer of said company at his office in Mount Airy, N.C.: and provided, further, that nothing herein contained shall operate to impair or suspend the right of said the Life Insurance Company of Virginia to enforce the payment and recovery of said principal sum, either by foreclosure of the deed of trust given to secure this bond or otherwise, at once upon default being made in the payment of said principal sum, when the same shall become due and demandable according to the terms of this bond.

'Witness: W. F. Carter.

John M. Brower. (Seal.)'

To secure this bond, he and his wife executed a deed of trust to J. W. Ashby and W. F. Carter, as trustees, covering a lot of land at Mt. Airy, with power of sale in case of default in any of the covenants in the deed. Afterwards another loan of $2,000 was made, secured by the same sort of bond, and by a similar deed of trust to the same trustees, covering another lot in the town of Mt. Airy. The last $2,000 was never loaned, because Brower had begun to make default on the preceding loans. The third endowment policy was surrendered, the company paying him $116. On this had been paid $140. Default having been made on the two deeds of trust, the Life Insurance Company of Virginia threatened action under them, and Brower filed his complaint, charging the whole transaction as usurious, and praying an injunction. The cause comes into this court, and, an answer having been filed and testimony taken, is now heard on the merits.

The following is a copy of the endowment policy:

'The Endowment Fund of the Life Insurance Company of Virginia.

'No. 3,211. Richmond, Virginia. 10 Shares.

'Amount, $1,000.00

'This certifies that John M. Brower,

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