Bank of Harrison v. Gibson

• Decision Date: 23 February 1895
• Citation: 30 S.W. 39,60 Ark. 269
• Parties: BANK OF HARRISON v. GIBSON
• Court: Arkansas Supreme Court

30 S.W. 39

60 Ark. 269

BANK OF HARRISON v. GIBSON

Supreme Court of Arkansas

February 23, 1895

Appeals from Boone Circuit Court in Chancery BRICE B HUDGINS, Judge.

STATEMENT BY THE COURT.

The first one of these two suits was instituted in the Boone circuit court in chancery by the appellees, T. M. Gibson and wife, against the appellant, Bank of Harrison, as the assignee of one T. E. Garvin, and as such the holder of a note and mortgage executed and delivered by them to said Garvin. The history of this suit is briefly as follows to-wit: One F. M. Garvin, a son of T. E. Garvin, and one Duncan were doing business at the town of Harrison in said county, under the corporate name of the "Harrison Investment Banking Company," and it appears that a part of the business of the concern was to negotiate loans for people who sought their services in that line.

Some time, say in June or July, 1887, the appellee, T. M. Gibson being in need of money to settle some fines and costs, and perhaps other matters, and, after some efforts in other directions, finally engaged the company named to effect a loan of a thousand dollars, engaging at the same time to give a mortgage on certain real estate he then owned, and which turned out to be the lands he resided on as his homestead, to whoever would loan him the money required. As the manner of such institutions is, the Investment Company, through its active manager or secretary, the said F. M. Garvin, proceeded to have the title to the land examined, and to make an abstract of the same. In the meantime, appellees signed an application for the loan, in which the usual statements were made in regard to their ability to pay and meet their obligations, and the value of the security to be given. It appears that copies of this application were sent to various money lenders in different parts of the country--one to T. E Garvin, residing in Evansville, Ind.; one to another party in the same place; one to Gettysburg, Pa.; and others to other points. These efforts finally resulted in an acceptance on the part of the said T. E. Garvin of the proposition to make the loan to appellees on the terms and security offered by them. T. E. Garvin seems to have entrusted to his son, the said F. M. Garvin, the duty of seeing that proper instruments of writing, were executed, and of approving or rejecting the security, so far as its value was concerned.

According to the proposition so made and accepted as aforesaid, the note and mortgage were executed actually on the 30th July, 1887, but dated the 15th July, for reasons given in testimony explanatory of the discrepancy; and the amount of money actually paid Gibson, and for him in the settlement of certain urgent demands in the hands of the sheriff of that county, was $ 950, instead of $ 1,000, as the face of the note showed; F. M. Garvin having reserved $ 50 for his commission for effecting the loan, examining titles, making the abstract, and certain expenditures by him made. The mortgage having been recorded, the original of the same and the notes were transmitted to T. E. Garvin, at Evansville, Ind., his place of residence, and they were subsequently assigned for value to the Bank of Harrison, which had in the meantime become the successor of the Harrison Investment Company, as claimed by Gibson.

Proof of the existing laws of Indiana on the subjects of interest and usury was duly made, and copies of the same are made part of the transcript in the case.

T. E. Garvin, Catherine Duncan, his immediate assignee, and the Bank of Harrison, the holder of the note and mortgage, were made parties defendant, and all answered; Garvin and Duncan disclaiming all present interest in the suit, and the bank making its defense on the note and mortgage and the facts in support of the validity thereof, and filing a cross bill, praying foreclosure of its mortgage.

The object of the bill of plaintiffs was to have the mortgage declared invalid, on the grounds that the lands included therein constituted part of the homestead of Gibson, and that the wife had not joined with him in the conveyance of the same in the mortgage, as required by statute; and on the further ground that the transaction with T. E. Garvin, in the consummation of which the note and mortgage were given, were in fact usurious.

The decree of the court as to the mortgage of the homestead was for the plaintiffs, holding the same to be void; and on the question of usury it was for the defendant bank, holding that the transaction was not usurious. From this decree the bank appeals to this court.

The second of these was instituted against Gibson and wife and the Bank of Harrison as the makers and holder of the note and mortgage involved in the first one, in which the same attacks were made on that note and mortgage as were made by Gibson and wife in the said first suit. The basis of the second suit was a note by Gibson and wife to the Boone County Bank for the sum of five hundred dollars, dated 26th day of June, 1890, and mortgage of same date, and on the same lands as were included in the mortgage involved in the first suit--that is, the homestead of Gibson--given to secure the note. The suit was for foreclosure, and the validity of the note and mortgage were not called in question, and Gibson and wife suffered decree by default. Decree for plaintiff in effect as against the Bank of Harrison, the same as in the first suit, from which the defendant bank appealed to this court.

The two suits were submitted together, and came up for hearing as one case, on the same abstracts and briefs.

Decree affirmed and cause remanded.

Crump & Watkins and Rose, Henningway & Rose for appellants.

1. The decree in the first case must be reversed, because, pending the appeal, the act of April 13, 1893, yeas passed, curing defective conveyances of homestead. Acts 1893, p. 303; 23 S.W. 648.

2. As to the Boone County Bank, whose mortgage was executed before the passage of the act--the act only requires the wife to "join in the execution" of the deed, and to "acknowledge the same." Acts 1887, p. 90. In this case she complied with the act. That is sufficient. 57 Ark. 246. No express relinquishment of the homestead is required. Smith on Exemption, sec. 245; Waples on Homestead, p. 374; 86 Ala. 211; 82 id. 315; 84 id. 314; 81 id. 357; 55 id. 322; 86 Tenn. 457; 37 N.W. 491; S. C. 23 Neb. 579; 16 S.W. 277; 13 id. 914; 11 Iowa 375; 15 id. 5; 13 Cal. 643; 13 Mo.App. 576; 6 S.W. 777, S. C. 69 Tex. 462; 41 Ark. 101; 51 id. 419.

W. F. Pace and Dan W. Jones & McCain for appellees.

1. The contract was purely an Indiana contract, and the law of Indiana must govern. 44 Ark. 234; 47 id. 58. By the Indiana law a note bearing ten per cent. interest is usurious, and works a forfeiture of all interest over and above six per cent. As to usury a note is governed by the law of the State where payable. 26 60 Ark.--18 Ark. 356; 33 id. 645; 35 id. 55. But the validity of the mortgage is governed by the lex rei sitae. 47 Ark. 262; 35 Ark. 217; 18 id. 456.

2. The land was a homestead, and the act of 1887 was not complied with. A mere dower clause in the acknowledgement is not sufficient. 51 Ark. 419; 57 Ark. 242; Thomps. on Homest., secs. 526-532; 10 Bush. 280; 83 Ky. 620; 2 Allen (Pa.), 202; 95 Ala. 514.

3. The curing act could not affect vested rights. 57 Ark. 246.

Crump & Watkins and Rose, Hemingway & Rose for appellants in reply.

1. The question of usury is settled by 56 Ark. 513; 17 Am. & Eng. Enc. Law, 356.

2. When the lender resides in one state and the borrower in another they may stipulate for the highest rate of interest allowed by the laws of either. 96 U.S. 51; 1 Wall. 298; Perley on Int. 189; Mansf. Dig., sec. 4736.

OPINION

BUNN, C. J. (after stating the facts.)

First. As to the execution of the mortgage to the Bank of Harrison.

By the provisions of section 1 of an act entitled "An act to render more effectual the constitutional exemption of homesteads," approved March 18, 1887 (see acts of 1887, page 90), "no conveyance, mortgage or other instrument affecting the homestead of any married man shall be of any validity, except for taxes, laborers' and mechanics' liens and the purchase money, unless the wife joins in the execution of such instrument and acknowledges the same." By section 1 of an act entitled "An act to cure defective conveyances and acknowledgments," approved April 13, 1893, it is provided that all deeds, conveyances, instruments of writing affecting or purporting to affect the title to the real estate, which have been executed since the 18th day of March, 1887, and which are defective or ineffectual by reason of section one. (1) of an act entitled 'An act to render more effectual the constitutional exemptions of homesteads, approved March 18, 1887' be and the same, and the record thereof, are hereby declared as valid and effectual as though said act had never been passed." See Acts of 1893, page 303.

The mortgage in question was executed since the 18th of March 1887, and, as to and between the parties thereto,...