Castleman v. Canal Bank & Trust Co

• Citation: 156 So. 648,171 Miss. 291
• Decision Date: 08 October 1934
• Docket Number: 31304
• Parties: CASTLEMAN et al. v. CANAL BANK & TRUST CO
• Court: United States State Supreme Court of Mississippi

156 So. 648

171 Miss. 291

CASTLEMAN et al. v. CANAL BANK & TRUST CO

No. 31304

Supreme Court of Mississippi

October 8, 1934

Division B

Suggestion Of Error Overruled November 19, 1934.

APPEAL from the chancery court of Humphreys county HON. J. L WILLIAMS, Chancellor.

Suit by Mrs. Pauline Castleman and others against the Canal Bank &amp Trust Company. From an unsatisfactory decree, plaintiffs appeal. Affirmed.

Affirmed.

Louis Cochran, W. M. Denny and Earl Brewer, all of Jackson, and Archer W. Cochran, of Baldwyn, for appellants.

It is to be noted that, without objection, this cause was tried in the lower court under the provisions of the laws of Mississippi, and appeal is made to this honorable court under the laws of this state.

Executions of the notes and mortgages were parts of one and the same transaction. There was no intention of the parties that the execution of the notes should be separate transactions from the execution of the mortgages. They constituted one contract, not two contracts. In case of foreclosure of the mortgages, either through the courts or by sale in pais, it had to be done here and under the laws of this state.

M. Levy & Sons v. Jeffords, 14 Miss. 818, 105 So. 1.

The petition for receivership should have been granted by lower court.

Clark v. Fleming, 130 Miss. 504, 94 So. 458.

Foreclosure sale was void because of failure to have all mortgagors in notice of foreclosure.

Wilkinson v. Federal Land Bank, 151 So. 761.

The foreclosure sale was void because made by one disqualified to act.

White v. Trotter, 14 S. & M. 30, 53 Am. Dec. 112; Lawrence v. Hand, 23 Miss. 103.

Auditor's report shows interest overcharge of over twenty per cent on the twelve thousand five hundred dollar lease.

Section 1946, Code of 1930; Chandlee v. Tharp, 137 So. 542.

The idea of usury is exceedingly repugnant to the law and the penalty prescribed therefor is considered drastic; and it is a fact that if usury existed as alleged that then the lower court had no right to forgive the same and to deny the appellants the remedy thereby resulting from such wrong-doing.

It is the law in this state that interest deducted from a loan at the time said loan is made is usurious.

It has long been settled in this state that interest at the highest contract rate cannot be reserved in advance; and that to do so renders the contract usurious.

Hiller v. Ellis, 72 Miss. 701, 18 So. 95, 41 L. R. A. 707; Palkingharn v. Hendrick, 61 Miss. 366; Carter v. Holloway, 28 So. 941; Hyde v. Finley, 26 Miss. 468; Rovers v. Rivers, 100 So. 285; Sec. 1946, Code of 1930; 39 Cyc., p. 959, sec. III; Southern Land Co. v. Valley Security Co., 137 So. 514; Chandler v. Cooke, 137 So. 496.

Dart & Dart, of New Orleans, Louisiana, and Shands, Elmore & Causey, of Cleveland, for appellees.

This court, in a long line of decisions, has held that where a promissory note is executed in one state, payable in another, the parties thereto will be presumed to have contracted with reference to the law of the state of payment; and therefore the nature, validity, interpretation, and effect of the note will be governed thereby. This presumption, however, is not absolute, and will be controlled by the actual truth of the case, when ascertained; or, in other words, by the intention of the parties, to be collected from the contract itself, and all the surrounding circumstances.

Brown v. Freeland, 34 Miss. 181; Greenlee v. Hardin, 157 Miss. 229, 127, So. 777; Dodds v. Pyramid Securities Co., 165 Miss. 269, 147 So. 328; Armistead v. Blythe, 20 So. 298.

True there was no specific plea that this contract is governed by the law of Louisiana, but as appears from the objections of counsel, and rulings of the chancellor all through the record, it was contended by the appellee that the law of the state of Louisiana applied, and not the law of the state of Mississippi. The necessity for pleading the Louisiana statute is dispensed with by section 1598 of the Mississippi Code of 1930.

Floyd et al. v. Vicksburg Cooperage Co., 156 Miss. 567, 126 So. 395.

We respectfully submit that no complaint can be justified on account of the refusal of the court to appoint a receiver to take charge of the McDaniel's property, pendente lite.

Since the rendition of the opinion in the Wilkinson case, the Legislature has amended 2167 so as to make it clear what the Legislature intended, that only the name of the original mortgagor shall be given.

None of the objections urged to the foreclosure sale are tenable.

Nash v. Stanley, 168 Miss. 691, 152 So. 294; Powell v. Tomlinson, 129 Miss. 658, 92 So. 583; Biles v. Walker, 121 Miss. 98, 83 So. 411; Bates v. Strickland, 139 Miss. 636, 103 So. 432.

Unquestionably this loan was a Louisiana contract, and the laws of usury of the state of Louisiana are controlling.

Dart Louisiana General Statutes, secs. 664 and 665; Mutual National Bank v. Regan, 3 So. 407; Lichenstein v. Lyons, 40 So. 454; Roux v. Witzman, 51 So. 205.

The audit contains no such statements as that more than twenty per cent was contracted for, which is the only matter to be considered, as the record shows that not one cent of either principal or interest on this indebtedness was ever paid.

A sale of property for a fixed price based on a calculation of interest greater than that allowed by law, where there is no fraud or error, will not be regarded as in violation of the usury law.

Rosabeela B. Mills v. Elisha Crocker, 9 La. Ann. 334.

We have before shown in a way which we think will be satisfying to the court, that this was a Louisiana transaction. If so, the addition of the commission would not render the note usurious.

Mutual National Bank v. Regan, 3 So. 407; Chadwick v. Menard, 28. So. 933; Lichenstein v. Lyons, 40 So. 454; Roux v. Witzmann, 51 So. 205; Dodd v. Pyramid Securities Co., 165 Miss. 277; Doyle v. L. Herzog & Bros., 115 Miss. 154, 75 So. 760; Burt v. Breashears, 118 Miss. 339, 79 So. 182.

Argued orally by Louis Cochran, and Earl Brewer, for appellant, and by A. W. Shands, for appellee.

OPINION

Griffith, J.

On July 16, 1925, the Canal Bank & Trust Company, of New Orleans, sold the property known as the McDaniel plantation, in Humphreys county, Mississippi, to S. and P. Castleman, residents of that county, at an agreed purchase price of one hundred twenty-five thousand dollars. The property was then incumbered by a first mortgage held by the Mississippi Fire Insurance Company for about thirty-seven thousand five hundred dollars. As a part of the purchase price the Castlemans assumed this first mortgage and gave the bank a series of eight notes to evidence the balance. In 1928 the insurance company determined to foreclose its first mortgage unless paid, and Castleman, being unable to make the payment, applied to the bank for assistance. As a result of the negotiations between the parties, it was arranged that the insurance company would foreclose, the bank would buy at the foreclosure, would then make another conveyance to the Castlemans, and they, in turn, would execute a deed of trust with new notes, all in such form that the entire indebtedness and security could be transferred to a farm mortgage company and thus relieve the bank of it. In order to make it possible to discount this large indebtedness to a mortgage company, it was deemed advisable that a profit or bonus or discount to the prospective mortgage company should be provided, in the sum of twelve thousand five hundred dollars.

The agreed arrangements were carried out, except in the particular last above mentioned. In calculating the amount of balance due, with interest, on the previous Castleman purchase-money notes, so far as unpaid, plus the fire insurance company's first mortgage notes with interest, plus the twelve thousand five hundred dollar bonus, the aggregate amount was found to be one hundred forty-one thousand four hundred twenty-six dollars and thirty cents, and on December 28, 1927, the Castlemans executed three notes to cover, with interest at seven per cent.; and as of the same date they gave a deed of trust on the property to secure the payment of the said notes, and all the previous purchase-money notes were canceled and surrendered.

The mortgage company which the parties had in mind as the prospective purchaser of these notes and the deed of trust securing the same was the Canal Mortgage Company, Inc., of New Orleans, and the notes and deed of trust were drawn payable to that company or bearer. The notes appear on their face to have been executed in New Orleans, and were payable at the Canal Bank & Trust Company in New Orleans, and the deed of trust carried the following express stipulation "All rights of the note holders shall be admeasured by the laws of the state of Louisiana, which are hereby expressly adopted to control this entire transaction." When the notes and deed of trust were delivered to the bank, it was found that an error in the calculation of the aggregate amount due had been made in preparing the notes and deed of trust; this error being in the sum of five thousand two hundred twenty-three dollars and twelve cents, and this was at once credited upon the first note, thus making the total amount of the notes one hundred thirty-six thousand two hundred three dollars and eighteen cents. The bank failed to obtain a purchaser of the notes and deed of trust, and later the notes were credited with the aforesaid bonus of twelve thousand five hundred dollars, which reduced the principal of the notes to one hundred twenty-three thousand...