Federal Savings & Loan Ass'n of Oklahoma v. Baxter
| Decision Date | 20 June 1939 |
| Docket Number | 27992. |
| Citation | 91 P.2d 760,185 Okla. 311,1939 OK 289 |
| Parties | FEDERAL SAVINGS & LOAN ASS'N OF OKLAHOMA v. BAXTER. |
| Court | Oklahoma Supreme Court |
Syllabus by the Court.
1. The loan contract between a building and loan association and a stockholder consists of the note and mortgage, the by-laws of the association, and the governing statute.
2. In the absence of a permissible statute, a provision, in a promissory note executed by a member of a building and loan association, purporting to designate the maturity date of the borrower's instalment stock certificate or the date when the same should be considered fully paid, constitutes an estimate of such maturity date.
3. Under the record here presented, held evidence of fraud, if competent, is insufficient to defeat the contract sued on.
Appeal from District Court, Hughes County; H. H. Edwards, Judge.
Action by the Federal Savings & Loan Association of Oklahoma against Fred M. Baxter and others to recover on a note and to foreclose a mortgage. From a judgment in favor of the named defendant, the plaintiff appeals.
Judgment reversed and cause remanded, with directions to vacate the judgment.
E. C Stanard, Leonard Carey, and Norton Stanard, all of Shawnee and R. L. Flynn, of Oklahoma City, for plaintiff in error.
Pryor & Sandlin and C. E. Wilson, all of Holdenville, for defendant in error.
On June 20, 1923 Beatrice M. Hall became a member of the Federal Savings & Loan Association of Oklahoma, a domestic building and loan association, plaintiff in error, by having issued to her Certificate No. 245, representing 20 shares of Class A instalment shares of the capital stock of said association of One Hundred Dollars per share.
On the same date the owner of the stock assigned it to the building and loan association as collateral to a loan of $2,000 evidenced by a note executed by Beatrice M. Hall and her then husband, W. F. Hall, whereby the promissors agreed to repay the amount borrowed, and to liquidate the stock obligation by the payment of $10 as monthly dues and the sum of $16.66 interest and premium due monthly upon the sum borrowed in accordance with the by-laws of said association. Among other provisions in the note is the following: "And we promise to pay said Association all of said sums of money, amounting in the aggregate to Twenty-Six & 66/100 Dollars on or before the 20th of each and every month until each of such shares reach the value of $100.00 or said loan shall be otherwise sooner cancelled or discharged."
As security for the payments provided for in the note the makers executed and delivered to the association a mortgage on the real estate involved in this action. The mortgage recited the purchase of the stock and the execution of the note and provided for the liquidation of the stock and the note under the terms provided therein.
Afterward the purchaser of the stock and the makers of the note and mortgagors died and in this action, instituted by the association to recover on the note and to foreclose the mortgage, the defendant in error was made party defendant as the surviving husband and heir of Beatrice M. Hall Baxter, deceased. Others not concerned in this appeal, were made additional parties defendant.
The defendant prevailed in the trial court on the basis of an allegation in his answer, as amended, to the effect that at the time the loan was negotiated it was agreed between the makers of the note and the association, or its representative, that the indebtedness was to be retired in ten years upon payment to the association of $26.66 per month, which sum represented dues and interest; that payments, as indicated, had been made regularly during the ten year period thereby liquidating the debt in full. In support of the allegation of fraud E. I. Wakeman, a witness for the defendant, testified that at the time the loan was under consideration he was the local representative of the plaintiff in Holdenville in the solicitation of loans. Being unfamiliar with the business he had a Mr. Stephenson, a representative of the association from its main office, come to Holdenville and interview Mrs. Hall concerning the making of the loan. In this connection the witness testified:
"Q. You witnessed her signature to all these various written instruments, didn't you? A. I think so.
Q. You were present when she executed all these instruments, were you not? A. Yes, sir.
Q. And she took each instrument and read it, didn't she, before she signed it? A. Yes.
Q. And examined it carefully, didn't she? A. Yes, she took her time to it.
Q. And especially read the note carefully before she signed that? A. Yes.
Q. Now, Mr. Wakeman, if I understand your testimony, you didn't hear very much of the conversation between Kem Stephenson and Mrs. Hall, did you? A. I heard a part of it. There were folks in and out of the office.
Q. You were coming and going and the telephone was ringing and various things like that? A. Yes, sir. I listened to as much of it as I could under those circumstances.
Q. And you don't know what all was said in that conversation do you? A. No, sometimes they would be conversing when I would be talking over the phone.
Q. And you don't make any pretense of remembering what was said in that conversation? A. Not the exact language, I couldn't at this time.
* * * A. I know she was asking about that and it was my recollection that is what was told her, that it was a 120 pay loan, but I can't tell you just what the conversation was, my memory don't serve me fourteen years ago."
Both the witness, and the defendant, testified to a conversation had with a representative of the association in 1933, ten years subsequent to the execution of the note and mortgage. Referring to this conversation the defendant testified as follows:
Kem Stephenson, a witness for the plaintiff, present when the note and mortgage were executed, in his testimony denied that he advised the borrower that the loan contract would mature in any definite number of months.
It is unnecessary to cite authorities in support of the conclusion that defendant's testimony on the question of fraud was wholly insufficient to affect the contract sued upon.
The plaintiff contends that the judgment is contrary to the law and to the evidence; also that the court erred in its instructions to the jury.
Section 9858, O.S.1931, 18 Okl.St.Ann. § 353, which statute was in force at the time the present contract was executed specifically authorized building and loan associations doing business in this state to issue its stock in full paid, prepaid and instalment shares in such amounts and at such times and in such manner as its by-laws may provide. Walker et al. v. Local Building & Loan Association, 176 Okl. 168, 54 P.2d 1078. The statutes are silent on the authority of building and loan associations to issue its stock to mature on any given number of monthly payments. In this situation the general rule is against establishing a fixed maturity date as being contrary to the operating plans and mutual character of building and loan association, 9 C.J. 935. The general rule is set out in 12 C.J.S., Building and Loan Associations, page 433, § 25, as follows: ...
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