Dodds v. Pyramid Securities Co., Inc.

• Decision Date: 03 April 1933
• Docket Number: 29784
• Citation: 147 So. 328,165 Miss. 269
• Court: Mississippi Supreme Court
• Parties: DODDS v. PYRAMID SECURITIES CO., INC., et al

147 So. 328

165 Miss. 269

DODDS v. PYRAMID SECURITIES CO., INC., et al

No. 29784

Supreme Court of Mississippi

April 3, 1933

Division A

1 USURY. Notes covering loan negotiated in Louisiana notwithstanding notes and trust deed securing loan from Louisiana corporation were executed in Mississippi, held governed by Louisiana law relating to usury (Revised Civil Code, Louisiana article 2924).

Borrower of money was Louisianan corporation. At time all its active officers were residents of Louisiana where negotiations were begun, conducted, and concluded. Notes and trust deed securing loan were executed, and money paid over In Mississippi. The notes were payable to, and at the office of a Louisiana corporation, with its office in Louisiana.

2 CORPORATIONS. Louisiana corporation which loaned money pursuant to negotiations through office in Louisiana, though loans were.secured by Mississippi realty, held not doing business in Mississippi so as to preclude foreclosure of trust deed without compliance with statute (Code 1930, section 4140).

Louisiana corporation, which loaned money secured by trust deed, had its office and principal place of business in Louisiana. It was engaged in the mortgage loan business, and made loan secured by mortgage on land located in Mississippi, but it had no officers or agents within the state, and did not solicit through agents loans in Mississippi.

HON. D. M. RUSSELL, Chancellor.

APPEAL from chancery court of Harrison county HON. D. M. RUSSELL Chancellor.

Suit by Mrs. Asenath Genella Dodds against the Pyramid Securities Company, Inc., and others. From a decree dismissing the bill of complaint, the complainant appeals. Affirmed.

Affirmed.

Ford, White & Morse and J. L. Taylor, all of Gulfport, for appellant.

Appellant contends that more than twenty per cent interest was charged and the contract was void and unenforceable.

When the appellee actually loaned twelve thousand, five hundred dollars and received a contract for fifteen thousand dollars this was exactly twenty per cent of the principal amount to say nothing of the interest contracted to be paid; but figuring it as first set out in detail and worked out according to the contract it appears to be more than twenty per cent.

A lender of money at extortionate rate of interest under contract void as against public policy cannot maintain a suit in equity against one placed in charge of the business for an accounting where he must call in directly or indirectly the aid of the illegal contracts to make out his case.

Woodson v. Hopkins, 85 Miss. 171; sec. 1946, Code 1930.

There can be no question that appellant bad the legal right to bring the suit for she had foreclosed her vendor's lien, and was the purchaser and thus had an interest in the subject-matter.

McAllister v. Jerman, 32 Miss. 142, 59 Miss. 42 and 62 Miss. 536.

Under chapter 90, Laws of 1928, in force at the time the loan complained of was made, the appellant, being a foreign corporation had not domesticated or been authorized to do business in the state of Mississippi, was not permitted to bring or maintain, any action or suit in any of the courts of this state. But it did, in a quasi-judicial proceeding, foreclose or attempted to make a foreclosure sale, invoking the laws of the state of Mississippi in so doing.

If the contract be an illegal contract and void, and the appellee, being a foreign corporation not having complied with Chapter 90, Laws of 1928, and the appellant having filed a bill asking that the proceedings be enjoined and the contract be declared illegal and void, and the deed of trust and trustee's deed cancelled, then there was before the court the question of an illegal contract and it became necessary for the court to determine whether or not it was a legal contract; and if an illegal contract and void, then to have granted the relief prayed for by the appellant.

Supply Company v. Bluenfield, 125 So. 548.

In the case of M. Levy & Sons et al. v. Jeffords, 141 Miss. 818, 105 So. 1, it was held that the rights and obligations of parties were governed by the laws of the state where the borrower lived, and the question of usury was controlled by the law of that state.

It has been held that a contract for lease of building in Mississippi for theatre purposes was governed by Mississippi laws though rental notes were made payable in Louisiana.

Plaza Amusement Co. et al. v. Rothenberg et al., 131 So. 350.

J. L. Taylor, of Gulfport, and Brady, Dean & Hobbs, of Brookhaven, for appellant.

We submit that it is not even debatable that the interest contracted for by the appellee and Fairview, Inc., exceeded twenty per cent. There is equally no question that appellant has full right to claim the benefit of the statute which as between Fairview, Inc., and appellee would not only work a forfeiture of principal as well as interest, but would entitle Fairview, Inc., to recover every cent paid by it on this oppressive contract.

McAllister v. Jerman, 32 Miss. 142; Chaffe v. Wilson, 59 Miss. 42; Boyd v. Warmack, 62 Miss. 536; Wilczinski v. Smith, 110 Miss. 251, 70 So. 347.

Of course it is true that isolated transactions do not constitute doing business.

Long Beach Canning Co. v. Clark, 141. Miss. 177, 106 So. 646; Commercial Bank v. Auze, 74 Miss. 609, 21 So. 754.

But the record here shows a course of dealing extending over several years, involving at least twenty-seven wholly separate Mississippi transactions, in addition to sixteen others. It was functioning in its corporate powers in the state, within the rule laid down in Peterman Construction & Supply Company v. Blumenthal, 125 So. 548.

Appellee was doing business in Mississippi. It was offered opportunity to accept another item. It now claims to own the property then offered as security. Every intermediate step between offer and foreclosure was a step to acquiring that property. Each of those steps was a Mississippi transaction, without reference to where planned.

Donaldson v. Thousand Springs Power Co., 29 Ida. 735, 162 P. 334; Lowenmeyer v. National Lumber Co. (Ind.), 125 N.E. 67; Moore v. Racine Rubber Co., 238 S.W. 381; Dahl Implement & Lumber Co. v. Campbell, 178 N.W. 197.

Fairview, Inc., was incorporated for the purpose of marketing the property purchased from appellee and which bore the same name, and although the corporation of Fairview, Inc., took out a Louisiana charter, it domesticated in Mississippi, and was in its purpose, operations and in effect a Mississippi corporation. Appellee was likewise operating extensively in Mississippi. The sale by appellant to Fairview, Inc., with retention of vendor's lien, was a Mississippi transaction. The lien was in danger of being foreclosed in Mississippi. The officers of Fairview, Inc., sought assistance from a company operating in Mississippi. The deal was closed in Mississippi by a Mississippi attorney.

Rushing & Guice, of Biloxi, for appellees.

The judgment of the court below should be sustained because the facts before the court did not show that the contract attacked was a contract for interest in excess of twenty per cent.

Section 1946 of the Code of 1930, being a highly penal statute, must be strictly construed and, unless proof of its violation was with clearness and certainty, that more than twenty per cent was either contracted for or received then a bill of the nature of the bill in this case was properly dismissed.

Byrd v. Newcombe Lumber Co., 118 Miss. 179, 79 So. 100; Morgan v. King, 91 So. 30; Beck v. Tucker, 113 So. 209; Bond v. Jones, 8 S. & M. 368; Kimbrough et al. v. Carter et al., 92 So. 228; Chaffee et al. v. Wilson et al., 59 Miss. 42; Boyd v. Womack, 62 Miss. 536; Wilczinski v. Smith et al., 70 So. 347.

In the case at bar, the chancellor found, as a matter of fact, that the interest contracted for did not exceed twenty per cent.

The evidence wholly failed to show that there was any violation of the law to the extent that the whole of the principal should be forfeited, and, unless this be true, the appellant could not succeed in her bill because the bill did not carry with it an offer to do equity or a tender of the amount of principal really due less any excess interest that had been paid.

Rush v. Pearson, 45 So. 723; American Freehold Land and Mortgage Co. v. Jefferson et al., 12 So. 464; Purvis v. Woodward, 78 Miss. 922, 29 So. 917; Crittenden v. Reagan, 89 Miss. 185, 42 So. 281; Lewis v. Bogue Chitto, 76 Miss. 356, 24 So. 875.

The judgment of the court below should be sustained because the facts before the court, uncontested and admitted, showed that the contract was a Louisiana contract, which, under the provision of article IV, section 1, of the Constitution of the United States of America, should be decided under the laws of Louisiana.

Full faith and credit shall be given in each state to the public acts, records and judicial proceedings of every other state.

Article 4, Section 1, of the Constitution of the United States.

With respect to mortgages of land, though the mortgage itself must be such as will constitute a transfer of title under the lex situs, the question as to whether the debt secured thereby (if contracted in another state) is a valid consideration to support the mortgage (for instance, whether it is usurious) is to be determined by the law which properly governs the validity of the debt.

Minor, in his Conflict of Laws, Section 11, page 31; Fessenden v. Taft, 65 N.H. 39, 17 A. 713, 714; Klinck v. Price, 4 W.Va. 4, 6 Am. Rep. 268; Bowles v. Field, 78 F. 742; 39 Cyc. 905.

Usury inheres in the loan, and not in the security given to insure its payment. The loan being separate and independent from the security given for its payment, the situs of the property given...