Coleman v. Cole

• Decision Date: 12 November 1900
• Citation: 59 S.W. 106,158 Mo. 253
• Parties: COLEMAN et al., Appellants, v. COLE et al.; WHITE, Assignee AURORA STATE BANK, Interpleader
• Court: Missouri Supreme Court

59 S.W. 106

158 Mo. 253

COLEMAN et al., Appellants, v. COLE et al.; WHITE, Assignee AURORA STATE BANK, Interpleader

Supreme Court of Missouri, First Division

November 12, 1900

Appeal from Lawrence Circuit Court. -- Hon. J. C. Lamson, Judge.

Transferred to St. Louis Court of Appeals.

Cloud & Davis and H. H. Bloss for appellants.

Edward J. White for respondent.

OPINION

MARSHALL, J.

This cause was certified to this court by the St. Louis Court of Appeals on the ground that it "involves the construction of the Constitution of the State of Missouri." The controversy is this: On the twenty-fourth of October, 1892 R. L. McElhaney and N. L. Wickmire, who were respectively the president and secretary of the Davie Mining & Development Company, executed and delivered to the Aurora State Bank their promissory note for one thousand dollars, payable one hundred and twenty days after date, with interest from maturity at eight per cent per annum. The bank exacted forty dollars, usury, as the plaintiffs contend, or discount, as the respondents contend, and placed the nine hundred and sixty dollars balance, to the credit of the Davie Mining & Development Company, and that company afterwards drew that balance from the bank. When this note fell due on the 23d of February, 1893, McElhaney and Wickmire, as such president and secretary, executed a new note to McElhaney as payee, for one thousand dollars, payable ninety days after date, with eight per cent interest from maturity, and McElhaney, Wickmire and the defendant Cole, as individuals signed the following contract, which was indorsed on the back of the note, viz: "Waiving protest, demand, notice and notice of non-payment, for value received, we hereby assign, transfer and indorse the within note to Aurora State Bank and guarantee full payment of the same." This note was delivered to the bank, thirty dollars was exacted by the bank, and the balance of nine hundred and seventy dollars was passed to the credit of the Davie Mining & Development Company, and used to retire the first note above referred to. On the thirty-first of March, 1893, McElhaney and Wickmire as president and secretary and the "Davie M. & D. Co.," executed to McElhaney a note for three hundred and fifty dollars, payable sixty days after date, with eight per cent interest from maturity, and McElhaney, Wickmire and defendant Cole, signed a contract written on the back thereof which was in the same words as those above quoted from the back of the one thousand dollar note. This note was also negotiated to the bank and the bank exacted seven dollars thereon and the balance of three hundred and forty-three dollars was placed to the credit of the Davie Mining and Development Company and was thereafter drawn out of the bank by the mining company. On the twenty-sixth of May, 1893, the defendants Cole and Wickmire executed to the bank their note for thirteen hundred and fifty dollars, payable thirty days after date, with eight per cent interest from date, and deposited as collateral security therefor the one thousand dollar note aforesaid, dated February 23, 1893 and the three hundred and fifty dollar note aforesaid, and also a chattel mortgage "on the Davie M. & D. Co.'s plant," but which is nowhere set out or described in this record. On the twenty-seventh of May, 1893, the defendant Cole executed to the bank a chattel mortgage covering the personal property in controversy here, to secure the note for thirteen hundred and fifty dollars made by him and Wickmire to the bank the day before. The notes were not paid and the bank took possession of the property by virtue of the terms of the mortgage. Thereupon the plaintiffs herein, who were general creditors of Cole, instituted a suit against him on an open account to recover their debt, amounting to $ 601.34, and afterwards sued out an attachment in aid thereof, and had the writ levied on the property in controversy here. The bank interpleaded and claimed the property by virtue of its mortgage. The plaintiffs pleaded that the mortgage was fraudulent as to them for the reason that the debt secured by the mortgage was tainted with usury. The case was tried and resulted in a verdict for the interpleader; the plaintiffs appealed to the St. Louis Court of Appeals, where the judgment was reversed and the cause remanded, that court sustaining the plaintiffs' contention that the mortgage was void because the debt it secured was usurious. [Coleman v. White, 69 Mo.App. 530.] When the cause again reached the circuit court the interpleader filed an amended reply to the plaintiffs' plea of usury, which was, first, a general denial; second, that the Cole note (that dated May 26, 1893) was taken as a payment of the McElhaney and Wickmire notes for $ 1,000, dated February 23, 1893, and of the McElhaney, Wickmire and Cole note for $ 350, dated March 31, 1893, and that Cole was only a guarantor on the $ 350 note, and, therefore, Cole could not plead usury as to either of those notes, and that no interest, usury or other payment had ever been paid on the $ 1,350 note made by Cole on May 26, 1893, and hence the plaintiffs as attaching creditors of Cole could not plead such usury for want of privity between them and Cole and for want of privity between Cole and the parties who paid the usury; third, that the parties who paid the usury had waived the defense of usury; and, fourth, that the act of April 21, 1891 (Laws 1891, p. 171), relating to usury and chattel mortgages was unconstitutional, because in conflict with sections 28 and 53 of article 4 of the Constitution of Missouri. Upon motion of the plaintiffs the court struck out all of the amended reply except the general denial, and the interpleader properly saved exceptions to the ruling. The case was tried on the issues remaining. At the instance of the plaintiffs the court instructed the jury that if the bank exacted or received interest at a rate exceeding eight per cent per annum on the $ 1,000 or the $ 350 notes, and if the Cole note and mortgage were received in lieu or settlement of those notes their verdict should be for the plaintiffs, and the court refused to instruct the jury, as the interpleader requested, that the taint of usury as to the $ 1,000 and $ 350 notes did not vitiate the Cole note and mortgage if it was given and accepted in full payment and discharge of the usury-tainted notes; that usury could only be interposed as a defense by the principal debtor or those in privity with him by blood, contract or representation and that in this case Cole did not stand in privity with the makers of the original notes and hence neither he nor his attaching creditors, the plaintiffs, could interpose that defense to the mortgage. The jury found for the plaintiffs, and in due time the interpleader filed a motion for a new trial. The court sustained the motion for a new trial, stating the reasons for so doing to be: "It appearing to the court that on the trial of the interplea the jury were instructed by the court as to what their finding from the evidence should be,...