Building & Loan Ass'n v. Griffin

• Decision Date: 15 March 1897
• Court: Texas Supreme Court
• Parties: BUILDING & LOAN ASS'N OF DAKOTA v. GRIFFIN et al.

39 S.W. 656

BUILDING & LOAN ASS'N OF DAKOTA v. GRIFFIN et al.

Supreme Court of Texas.

March 15, 1897.

Error to court of civil appeals of Fifth supreme judicial district.

Suit by Richard Griffin and another against the Building & Loan Association of Dakota. The judgment of the trial court was reversed by the court of civil appeals, and both parties bring error. Reversed.

C. W. Starling, for Building & Loan Ass'n. Seay & Seay, for Griffin et al.

BROWN, J.

This suit was instituted by Griffin and wife against the loan association and C. W. Starling, as trustee, seeking an injunction to restrain them from selling a certain piece of real estate under a power conferred by deed of trust executed by Griffin and wife to secure the loan company in the payment of the obligation hereinafter stated. Plaintiffs allege that the premises about to be sold constituted their homestead, and were not subject to the lien in the deed of trust, and that the loan for which they were about to be sold was usurious, and upon which they had paid the sum of $641.70; the sum loaned being $1,300. The defendants answered, denying that the premises were the homestead of the plaintiffs at the time the loan was made; and alleged that the plaintiffs represented the premises not to be their homestead, and at the time designated other lots as their homestead, and were, therefore, estopped from asserting homestead rights, if any existed. The defendant building and loan association reconvened, praying for a foreclosure of the deed of trust to the amount of $1,300, with interest thereon at 6 per cent. per annum from the time default in payment of interest had occurred; and also pleaded that plaintiffs had subscribed for 26 shares of stock in said association, and that there were dues and fines unpaid which, according to the terms of the said stock and the by-laws of the association, constituted a lien upon the said stock; and asked for a foreclosure of the lien on the stock. Defendant also set up that the contract was to be performed in South Dakota; that under the laws of that state it was not usurious. Upon the trial the court directed a verdict sustaining the deed of trust and the plea of usury, giving to the building and loan association judgment for $658.30, after crediting the original loan with the amounts paid by the plaintiffs, and also foreclosed the lien in favor of the loan association on the premises in question for the sum of $658.30, from which judgment the loan company appealed.

The facts found by the court of civil appeals are substantially as follows: About November 30, 1890, Griffin subscribed for 20 shares of stock in the building and loan association of Dakota as an investment, and on the 30th of August, 1892, he subscribed for 6 shares of the said stock, each of the shares of stock of the nominal value of $100; and on August 30, 1892, he borrowed of the said association the sum of $1,300, entering into a bond to pay to the association the sum of $2,600 at its home office in Aberdeen, S. D. The bond recited that Griffin had bid the sum of $1,300 as a premium for the advancement of the $1,300 by way of anticipation of the value, at their maturity, of the 26 shares of capital stock. The bond provided that if Griffin and wife should pay or cause to be paid to the association, at its home office, on or before nine years from the date thereof, the sum of $2,600, with interest on $1,300 at the rate of 6 per cent. per annum from the 1st day of September, 1892, until paid, or should cause to be paid unto the said association, at its home office, the sum of $15.60 on the 1st day of each and every month thereafter as monthly dues on the said 26 shares of the capital stock of said association, and shall well and truly pay or cause to be paid all installments and interest on the $1,300, and all fines which should become due on the said stock, until said stock becomes fully paid, and of the value of $100 per share, and shall then surrender said stock to said association, the obligation given should be void. At the same time—that is, August 30, 1892—Griffin and wife gave a deed of trust on the property in controversy to secure the payment of the said bond, which was duly acknowledged by Griffin and his wife. The deed of trust confers power upon the trustee to sell in case of default in the payment of any interest or monthly dues for the period of six months, and contains the following clause: "And the said party of the first part further agrees that if, by reason of any default in the above conditions, this deed of trust is foreclosed by an action in court, an attorney's fee of ten per cent. of the whole amount due and unpaid shall become due from the said first party to the said third party (the loan company) immediately upon the filing of suit for foreclosure in court, and this deed of trust will stand as security therefor." At the same time Griffin delivered to the association the 20 shares of capital stock which he held before the loan, and the association retained the 6 shares issued to him at that time. At the time of the loan Griffin had paid in on the 20 shares of stock $12 per month for 21 months, making $252; and a membership fee of $20. Afterwards he paid as interest on the money borrowed $6.50, and dues on the 26 shares of stock, $15.50, making $22 monthly for 17 months, aggregating $374, and a membership fee of $6. The amount paid as interest was $110.50; the amount paid as dues on the stock, $518.50; aggregating $629.

The laws of South Dakota in reference to such corporations provide as follows: "No interest, fines or premiums that may accrue to said corporations according to the provisions of this act, shall be deemed usurious and the same may be collected as debts of like amount now by law collectible in this territory." The court of civil appeals found that the contract was usurious; that Griffin had made default in the payment of his dues and interest, except as to the amount stated; and that the association had a lien on the premises specified in the deed of trust, and also that it had a lien upon the stock for the unpaid dues and fines according to its by-laws. Counsel for the loan company, the appellant in the court of civil appeals, made a statement in his brief of the material evidence introduced upon the trial in the district court, in which statement was embraced the bond given by Griffin and wife to the loan company, except the following provision: "That if, at any time, default shall be made in the payment of said interest or the said monthly dues on said stock for the space of six months after the same or any parts thereof shall have become due, * * * that then, in such case, the whole principal sum aforesaid shall, at the election of said association, its successors or assigns, immediately thereupon become due and payable, and the sum of $2,600, less whatever sum has been paid said association as and for the monthly dues on said twenty-six shares of capital stock, at the time of said default, may be enforced and recovered at once as liquidated damages." The appellant assigned as error, which was embraced in its brief, the action of the district court in directing the jury to give credit to Griffin and wife for the amounts paid as dues on the stock. Counsel for appellees, Griffin and wife, filed a brief in the court of civil appeals, which contained no correction of the statement of the evidence as made by the appellant concerning the contents of the bond; and the provisions of the bond as quoted above were first called to the attention of the court of civil appeals in the motion for a rehearing filed by Griffin and wife in that court. Each party has applied to this court for a writ of error to the court of civil appeals.

The application of Griffin and wife assigns four grounds of error, which we state, in substance, as follows: (1) That the court of civil appeals erred in holding that the appellant had a lien upon appellees' stock in said company for unpaid dues thereon and for fines imposed, and also in foreclosing such lien upon the stock. (2) In holding that Griffin and wife were not entitled to have the amount paid by them to the loan company as dues upon their stock in said company credited on the debt, and in so reforming the judgment of the district court as to deny to the appellees a credit for the amount so paid. The fourth ground assigned calls in question the correctness of the decision of the district court upon the question of homestead in the property sought to be subjected to sale, but this question was not assigned by appellees in the court of civil appeals, and therefore cannot be reviewed in this court.

The building and loan association, in its application for writ of error, specified the following grounds of complaint against the judgment of the court of civil appeals: (1) That the court of civil appeals erred in sustaining the trial court in its instruction that the contract sued on is usurious. (2) That the court of civil appeals erred in not holding that the law of South Dakota should govern in determining whether or not the contract is usurious. (3) The court of civil appeals erred in not allowing appellant an attorney's fee of 10 per cent. of the amount secured by the deed of trust lien, and in not awarding foreclosure for such additional amount.

If Griffin and wife are entitled, under the contract, to have the payments made as dues on the stock deducted from the debt, then the first ground of error presented by them will become unimportant, because the crediting of such payments would necessarily cancel the stock, and leave nothing upon which to foreclose a lien. If the right exists to have the credit placed upon the debt, and the unpaid dues were recovered in this action, the amount would go as a credit upon the debt, and the result would be the same. The loan company insists that we cannot look to that portion of the contract which its counsel omitted from his brief filed...