Flinn v. Mechanics' Bldg. Ass'n

• Decision Date: 01 April 1902
• Citation: 67 S.W. 729,93 Mo.App. 444
• Parties: FRANCES H. FLINN, Appellant v. MECHANICS BUILDING ASSOCIATION, Respondent
• Court: Missouri Court of Appeals

67 S.W. 729

93 Mo.App. 444

FRANCES H. FLINN, Appellant v. MECHANICS BUILDING ASSOCIATION, Respondent

Court of Appeals of Missouri, St. Louis

April 1, 1902

Appeal from Hannibal Common Pleas.--Hon. David H. Eby, Judge.

AFFIRMED.

Judgment affirmed.

John L RoBards for appellant.

The lawful rate of interest agreed in the bond to be paid on the loan was six per cent per annum, payable monthly; and for all monthly payments made by appellant, she was entitled, as was testified by the secretary of respondent, to have credited for the average time with the interest thereon at the agreed rate on the loan by the respondent, a solvent, going concern and title thereto, could only be acquired by such application and the excess appellant is entitled to recover. Strohen v. Franklin Sav. & L. Assn., 115 Pa. St. 273; Sess Acts, 1891, p. 169; Loan Co. v. Stone, 46 S.W. 67. (2) "The plaintiff has a right to have this sum of $ 8.08 credited properly on the debt, if it was usurious." Ferguson v. Soden, 111 Mo. 208; Bank v. Miller, 73 Mo. 187; Bank v. Slemmons, 34 Ohio St. 142; Edinger v. Mo. Guar. S. & B. Assn., 83 Mo.App. 615. (3) "If said premium should be fixed by a rule of the association or by any other manner than as the statute provides, then it was an illegal charge and usurious, and should be credited as a payment on the stockholder's loan." Price v. Empire Loan Assn., 75 Mo. 551; Vandergrift v. Swinney, 158 Mo. 527. (4) "All in excess of that rate is money paid to him, is money received by him in violation of law, to which he has no legal right, and which the other party is entitled to recover back, in an action of assumpsit, as money had and received to his use. Williar v. The Baltimore Butchers L. & A. A., 3 Law & Eq. Rep. 410-13. (5) The moment usurious interest is taken, the right of the debtor to have the same credited on the principal is vested by express statute. The application is then made and the debt pro tanto reduced. "The law considers the borrower rather as a victim than an aggressor. The statute prohibits usury, in order to protect needy and necessitous persons from the oppression of usurers, who are eager to take advantage of the distresses of others, who violate the law to take advantage of their ruin. In such case the maxim potior est conditio defendentis has never been applied. Wheaton v. Hibbard, 20 Johns. 293. (6) She was unable to give bond to enjoin the sale. "The case here is that the defendant held the plaintiff by the wrists. . . . He was practically confronted with the question whether or not he should pay the defendants the amount exacted or suffer the serious consequences to be reasonably apprehended by a refusal to do so. The payment under such circumstances, it seems to us, would be under an urgent necessity, under a kind of moral duress. Duress may be shown with respect to real property as well as personal, so as to render payment on account of it involuntarily and permit it to be recovered back." Wells v. Adams, 88 Mo.App. 215; Longmire v. Ogilvie, 49 Minn. 564; Pemberton v. Williams, 87 Ill. 15; White v. Hazelman, 34 Pa., St. 142; Meredith v. Meredith, 79 Mo. 636; Hensenger v. Dyer, 147 Mo. 219. (7) "Where money is wrongfully and illegally exacted it is received without any legal right or authority to receive it, and the law at the very time of payment creates the obligation to refund it. A notice to recover back the money does not even in such cases create the right to recover it back; that results from the illegal exaction of it." Bank v. Bank, 31 U.S. 8. (8) "To make the payment a voluntary one the parties should stand upon an equal footing." Close v. Phipps, 7 M. & Gr. 586; Parker v. Railroad, 7 M. & Gr. 252; Wilkerson v. Hood, 65 Mo.App. 491-4.

Thomas H. Bacon for respondent.

(1) The mortgage executed February 27, 1890, is not void for usury. Thompson on Building Ass'n (2 Ed. 1899), p. 520, sec. 259. Neither is the note void for usury. Montarry v. Rock, 10 Mo. 506; Ferguson v. Soden, 111 Mo. 208. In Missouri, usury avoids only pro tanto to amount of usury. It imparts no gangrenous infirmity to the remainder of the contract. The deal does not collapse. The contract is not revolutionized. Neither will the court treat the contract as a wreck and save only such features as are favorable to the borrower or favorable to the stockholder, and repudiate every feature favorable to the association. Payments on the shares of stock are not payments on the loan. Brown v. Archer, 62 Mo.App. 277; Sappington v. Loan, etc., 76 Mo.App. 242; Thompson on Building Associations (2 Ed. 1899), p. 428, sec. 210. "The borrower's liability on his stock and his liability on his loan being different, payments on his stock are not ipso facto payments on the mortgage debt or loan." "In order to effectuate an application of such payments an election is required by some party entitled to it. Such payments are not to be treated as partial payments." Tilley v. American, etc., 52 F. 619; Seibel v. Victoria, etc., 43 Ohio St. 71. "Where a loan is made by an association on a pledge of its own shares the statutory rule for computing interest on partial payments has no application to the monthly dues paid on the shares so pledged and such payments do not bear interest or in any way reduce the amount on which interest is to be paid." There was no evidence whatever tending to prove duress. According to plaintiff's account the secretary plied by hypothetical questions, was beguiled or decoyed into a hypothetical answer that, on the contingency named, "the law must take its course." This was no threat, and even if it were a threat, a threat of the law is never duress. Wolfe v. Marshall, 52 Mo. 167; Dausch v. Crane, 109 Mo. 323; Robins v. Latham, 134 Mo. ___; Morgan v. Joy, 121 Mo. 677.

GOODE, J. Bland, P. J., and Barclay, J., concur.

OPINION

GOODE, J.

The appellant, Frances H. Flinn, sued to recover the sum of twelve hundred and sixty-five dollars and thirty cents, alleged to have been unlawfully exacted from her by the respondent as nominally, premiums, but in fact usurious interest on a loan made to her by the respondent in February, 1890. The sum really in controversy is eight hundred and eleven dollars and seventy cents, which appellant claims was extorted from her by a threat to foreclose a deed of trust given on her property to secure the loan after she had paid the full amount she had borrowed, together with all legal charges thereon.

In our opinion, the disposition of this appeal depends entirely on whether appellant paid the sum of money last mentioned voluntarily, or under circumstances which constituted duress; not that we hold she did not owe any part of the sum, or that all of it consisted of usurious interest for lack of competitive bidding to fix the premium when the loan was made; but because we are of the opinion that whatever portion of it was usury can not be recovered if it was paid voluntarily. Ransom v. Hays, 39 Mo. 445; Kirkpatrick v. Smith, 55 Mo. 389; Peters v. Lowenstein, 44 Mo.App. 406. That was unquestionably the law of this State prior to the enactment of the statute of 1891 (R. S. 1899, secs. 3709, 3710) but appellant claims that statute changed the rule. It did change it so far as it undertook to; that is, to the extent of providing that usurious interest which has been paid shall be credited on the principal debt, when usury is pleaded as a defense to an action, so that the creditor may recover judgment for no more than the amount due on the principal debt with legal interest after deducting therefrom all usurious payments. The statute further provides that in an action for the enforcement of a lien on personal property pledged or mortgaged to secure indebtedness, or, in a case where the validity of such a lien is drawn in question, proof that the party holding the lien has received or exacted usurious interest renders the lien void.

Neither of those provisions reaches this case or enables a party to voluntarily pay usury and thereafter maintain an action to recover back the money paid, but leaves that matter as it was before; wherefore a debtor from whom a creditor seeks to collect usurious interest must resist the attempt and in default of so doing, has no standing to get back his money unless he is excused from resisting payment because of duress.

The question then is, was the money which appellant seeks to recover extorted from her by the respondent by conduct and under circumstances which amounted to duress? There may be such duress of property or goods as will entitle a person, thereby coerced into making payment, to reimbursement, as where an owner is compelled to yield to an extortionate demand to obtain possession of his property. Wilkerson v. Hood, 65 Mo.App. 491. But the circumstances under which appellant paid this money as testified to by herself, do not lend the slightest countenance to the notion that she was duressed or coerced; but on the other hand show a purely voluntary payment.

As this is the pivotal point of the case, her version of the affair is the best means of deciding it and had better be given together with some preliminary statements. She was a music teacher in the city of Hannibal, and had been paying rent for a long while, and desiring to purchase a home at a moderate cost and near the business part of the city, she applied to Llewellyn W. Boswell, who is a lawyer and real estate agent, and also secretary of the Mechanics Building Association, to find her such a property. Thereafter he submitted a proposition to sell her a home at about the cost she desired, owned by Mrs. Mary J. Rhodes. Appellant had but little money to pay on the purchase price and Boswell suggested to her that she pay two hundred dollars in cash and borrow the balance from the building...