Fowler v. Equitable Trust Co Equitable Trust Co v. Fowler

• Citation: 141 U.S. 384,12 S.Ct. 1,35 L.Ed. 786
• Decision Date: 26 October 1891
• Docket Number: No. 32,No. 33,32,33
• Parties: FOWLER et al. v. EQUITABLE TRUST CO. EQUITABLE TRUST CO. v. FOWLER et al
• Court: United States Supreme Court

141 U.S. 384

12 S.Ct. 1

35 L.Ed. 786

FOWLER et al. v. EQUITABLE TRUST CO.

No. 32.

EQUITABLE TRUST CO.

v. FOWLER et al.

No. 33.

October 26, 1891.

[Syllabus from pages 384-385 intentionally omitted] By deed, bearing date November 1, 1873, and acknowledged and filed for record February 23, 1874, Edwin S. Fowler—his wife, Sophie Fowler, uniting with him—conveyed to Jonathan Edwards, in feesimple, certain real estate in the city of Springfield, Ill., in trust to secure the payment of the principal and interest of nine bonds, of $1,000 each, executed by Fowler to the Equitable Trust Company, a Connecticut corporation, and payable, principal and interest, at its office in the city of New York; the principal, five years after date, and the interest, semi-annually, at the rate of 7 per cent. per annum.

The deed recited that the bonds were given to secure a loan of $9,000, payable five years after date thereof, with interest at 10 per cent. per annum, of which 7 per cent. per annum was secured by the deed of trust, and was to be paid as in the bond provided; and the balance, to-wit, 3 per cent. per annum, was 'discounted,' and paid at the time of the execution of the deed. In case of default in paying the principal or interest as each matured, or of failure to keep and perform the covenants of the deed, or any of them, the trustee was authorized to sell at public auction, after advertisement, to the highest bidder for cash, and with or without previous entry upon the premises, the right and equity of redemption of the grantors, and out of the proceeds of sale to pay the costs, charges, and expenses of the advertisement, sale, and conveyance, 'including commissions, such as are, at the time of such sale, allowed by the laws of Illinois to sheriffs on sale of real estate on execution,' all sums paid by the trustee for insurance and taxes, with 10 per cent. interest thereon from time of payment, the principal and the accrued interest remaining unpaid at the time of sale, and to Fowler any balance remaining.

The present suit was brought October 26, 1882, to foreclose the defendants' right and equity of redemption, and for a sale of the mortgaged property to raise such sum as might be due the mortgagee.

Fowler, by his answer, put the plaintiff upon proof of the averments of the bill, and made defense upon several grounds But the original answer is important only as alleging that the loan was usurious, and was consummated in the manner it was with intent to evade the statutes of Illinois relating to interest.

The plaintiff filed a general replication; and, subsequently, the defendants, by leave of the court, amended their answer, stating more fully the grounds upon which they based the defense of usury. They also alleged that the contract of loan was and is a New York contract, and that by the statutes of that state it was usurious, in that the interest contracted to be received by the plaintiff, having regard to the amount actually advanced by it, was in excess of 7 per cent. per annum,—the rate established by the laws of New York. Of those statutes they claimed the benefit.

By a decree passed October 20, 1884, the court below found the amount due from Fowler to be only $2,980.67 on the bonds, and $270.94, insurance and taxes paid by the plaintiff, with interest thereon; in all, $3,251.61. At the foot of that decree were these orders:

'And thereupon the complainant entered its motion for a rehearing before a full bench.

'Whereupon, on said 20th day of October of the year last aforesaid, [1884,] came the complainant, by its solicitor, and filed in the clerk's office of said court its motion and petition for a rehearing in this cause, which motion and petition are as follows,' etc.

Following the above, in the transcript, are the written motion and petition for rehearing.

On the 8th of June, 1885,—the succeeding term,—the cause was set for hearing on the 29th of that month before what is called a full bench. Then appears an order, under date of June 30, 1885, entered as of October 31, 1884, granting the rehearing asked. To that order the defendants excepted.

By the final decree of January 11, 1887, the sum of $8,150.79 was adjudged to be due the trust company, of which $7,809.69 was found to be the sum actually advanced by it to Fowler and $341.10 was the amount of insurance and taxes on the property paid by the company, with interest on each sum, from date of the decree, at the rate of 6 per cent. per annum. The mortgaged property was ordered to be sold to raise the above aggregate amount found to be due, with such interest, and the costs of the suit. From that decree each party has prosecuted an appeal; the defendants insisting that no decree, for any amount, should have gone against them, while the plaintiff insists that the decree should have been for a larger amount.

W. L. Gross, for Equitable Trust Company.

[Argument of Counsel from pages 388-391 intentionally omitted] R. G. Ingersoll and Wm. Richie, for the Fowlers.

[Argument of Counsel from pages 391-393 intentionally omitted] Mr. Justice HARLAN, after stating the facts in the foregoing language, delivered the opinion of the court.

1. The appellant Fowler contends that, as no order was made at the term when the first decree was entered continuing until the succeeding term the motion and petition for rehearing, the decree of October 20, 1884, became final, and, consequently, the order at the June term, 1885 entered as of October 31, 1884, which granted a rehearing, as well as the decree January 11, 1887, are to be treated as improvidently made, or as nullities. We do not concur in this view. It is not disputed that if, in October, 1884, a rehearing was granted, and the clerk omitted to enter an order to that effect, it would have been within the power of the court, at the succeeding term, by an order nunc pro tunc to make the record speak the truth. But as the order granting a rehearing was entered under date of October 31, 1884, the presumption must be indulged, in support of the action of a court having jurisdiction of the parties and the subject-matter, nothing to the contrary affirmatively appearing,—that the facts existed which justified its action; and, therefore, that the court granted the application for a rehearing at the term at which the first decree was rendered. Stockton v. Bishop, 4 How. 155, 167; Townsend v. Jemison, 7 How. 706, 718. Besides, the exception taken by the defendants to the proceedings of June 30, 1885, was not, in terms, that the order, then formally made, was directed to be entered as of October 31, 1884, but that it granted a rehearing. If they intended to deny that the rehearing had been in fact ordered at the previous term of the court, the point should have been distinctly made upon the record. sum due to sum person or corporation. contend that the contract of loan was a New York contract, and void under the laws of that state; and that neither the debt thus created, nor the mortgage given to secure the bonds, can be recognized, nor any recovery thereon had, in Illinois or elsewhere, for principal or interest. This contention rests upon the statute of New York, in force when the debt was created, providing that all bonds, bills, notes, assurances, conveyances, and all other contracts or securities whatsoever, whereupon or whereby there shall be reserved or taken, or secured, or agreed to be reserved or taken, any greater sum or greater value, for the loan or forbearance of any money, goods, or things in action, than at the rate of 7 per cent. per annum, shall be void. 1 Rev. St. N. Y. pt. 2, c. 4, tit. 3, § 5; 2 Rev. St. (Banks & Bros.' 6th Ed.) 1164-1166. The suggestion that by the contract of loan a rate of interest was reserved in excess of that allowed by the laws of New York is based upon the ground that, although the bonds in suit call only for 7 per cent. interest a much larger rate was in fact exacted and secured by the company, taking into consideration the amount of the loan, and the sum actually received, under the contract.

By the thirteenth section of a statute of Illinois in force on and after February 12, 1857, entitled 'An act to amend the interest laws of this state,' it was provided: 'Where any contract or loan shall be made in this state, or between citizens of this state and any other state or country, bearing interest at any rate which was or shall be lawful according to any law of the state of Illinois, it shall and may be lawful to make the amount of principal and interest of such contract or loan payable in any other state or territory of the United States, or in the city of London, england; and in all such cases such contract or loan shall be deemed and considered as governed by the laws of the state of Illinois, and shall not be affected by the laws of the state or country where the same shall be made payable.' Gross, St. Ill. 1869, p. 371, c. 54, § 13.

And by another act, in force on and after February 16, 1857, entitled 'An act for the encouragement and security of loans of money,' it was provided: 'Sec. 14. It shall be lawful for any person or corporation borrowing money in this state to make notes, bonds, bills, drafts, acceptances, mortgages, or other securities, for the payment of principal or interest at the rates authorized by the laws of this state, payable at any place where the parties may agree, although the legal rate of interest in such place may be less than in this state; and such notes, bonds, bills, drafts, acceptances, mortgages, or other securities shall not be regarded or held to be usurious; nor shall any securities taken for the same or upon such loans be invalidated in consequence of the rate of interest of the state, kingdom, or country where the paper is made payable being less than in this state, nor of any usury or penal law therein. Sec. 15. No plea of usury nor defense founded upon an allegation of usury shall be sustained in any court in this state,...