Columbian Building & Loan Ass'n v. Rice
| Decision Date | 18 March 1904 |
| Citation | 47 S.E. 63,68 S.C. 236 |
| Parties | COLUMBIAN BUILDING & LOAN ASS'N v. RICE et al. |
| Court | South Carolina Supreme Court |
Appeal from Common Pleas Circuit Court of Cherokee County; Klugh Judge.
Action by the Columbian Building & Loan Association, of Richmond, Va., against Seal Rice, Alfred Smith, and Henry Jackson, as trustees of Mt. Olive African Methodist Episcopal Zion Church. From the decree, defendants appeal. Affirmed.
Hall & Willis, for appellants. Stanyarne Wilson and J. E. Webster for respondent. wOODS, J.
The defendants, trustees of Mt. Olive African Methodist Episcopal Zion Church, subscribed to two shares of stock in the Columbian Building & Loan Association, a Virginia corporation, and as such subscribers borrowed money from the association, giving a mortgage on the church property to secure the loan. They now plead usury as a defense to this action to foreclose the mortgage, and set up a counterclaim for the penalty of receiving usurious interest.
The first inquiry is whether the contract falls under the law of South Carolina or of Virginia, for it is conceded that, if the law of this state is applicable, the transaction must be held usurious. The master and the circuit judge both held that the contract was to be performed in the state of Virginia, and construed in accordance with the laws of that state. It is incumbent upon the defendant to overturn this finding of fact by the preponderance of the evidence. The mortgage provides that the payments shall be made to the association "in the manner prescribed by its charter by-laws, rules and regulations." Section 7, art. 6, of the bylaws requires: "All money due from the members of the association, or from it to the members, shall be payable at the home office in Richmond, Va." Provision is made in the by-laws for the organization of local boards in towns where sufficient stock is held to make such organization desirable. Section 4, art. 11, which relates to this subject is as follows: "Members may, if they desire, make monthly payments on stock to the local treasurer, but such local treasurer shall be the agent of the members, and not of the association." The defendants insist this is a mere subterfuge to avoid the usury laws of the state, and, even if it is not, the contract is nevertheless to be construed as a South Carolina contract. A contrary view was taken by this court in Pollock v. Association, 51 S.C. 420, 29 S.E. 77, 64 Am. St. Rep. 683, Turner v. Association, 51 S.C. 37, 27 S.E. 947, and Tobin v. McNab, 53 S.C. 75, 36 S.E. 827. It is true, in Meares v. Finlayson, 55 S.C. 105, 32 S.E. 986, Chief Justice McIver expressed dissatisfaction with the decision of Pollock v. Association, supra, but expressly said that the point we are now considering was not involved in the case he had under discussion. In the later case of Association v. Powell, 55 S.C. 320, 33 S.E. 355, the provisions of the mortgage and of the by-laws, so far as they relate to this question, were practically the same as those involved in this case; and it was there held by a unanimous court that the contract was to be performed in Georgia, and the laws of that state must govern its validity and construction. The defendants rely upon the case of Mortgage Co. v. Bates, 58 S.C. 552, 36 S.E. 917, as holding a different doctrine; but in that case the facts were not the same as in this, and the circuit judge found as one of the facts that the parties had contracted with reference to the laws of this state. This finding was sustained as not being against the preponderance of the evidence. The finding of fact was the other way in this case, and, as we have seen, this court has heretofore sustained the same finding on similar evidence. The rights of the parties to this contract must therefore be adjudicated under the laws of Virginia.
The plaintiff offered in evidence the statutes of Virginia and the decisions of the Court of Appeals of Virginia, from which it appeared that this contract would not be adjudged usurious in that state. Objection was made to this evidence on the ground that these statutes had not been pleaded. The general rule is that the existence and terms of the statute of another state cannot be proven unless alleged. Rosemand v. Ry. Co., 66 S.C. 98, 44 S.E. 574. It is true, usury is an affirmative defense, and it was not, therefore, necessary for the plaintiff to anticipate it and set up the Virginia statutes in his complaint; but, when the counterclaim for usury was put in, the plaintiff was bound to set up in reply its defenses to that plea. Having failed to set out in reply the existence of Virginia statutes on this subject, or their terms, evidence as to such statutes should have been excluded. The case is to be considered, then, as if the court had before it a contract whose validity and effect as to the plea of usury were to be considered under the laws of Virginia, without any pleadings or evidence as to those laws. In such case there is certainly no presumption that the law of usury is the same in that state as in this. Such a presumption would be altogether unreasonable, for some states have no statute law on the subject, and in the others the enactments are very diverse. Virginia having been once subject to the laws of England, in the absence of proof the presumption is that the common law prevails, and that there is no legal limitation to the rate of interest in that state. Rosemand v. Ry. Co., supra; Brown v. Wright, 21 L. R. A. 471, note. This being so, the error in admitting proof of the Virginia statutes was harmless.
In insisting that the statute law of this state must be applied the defendant relies on Gist v. Telegraph Co., 45 S.C. 370, 23 S.E. 152, 55 Am. St. Rep. 763, in which this language is used: ...
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