Georgia State Building and Loan Association v. Grant

• Decision Date: 13 April 1903
• Citation: 34 So. 84,82 Miss. 424
• Court: Mississippi Supreme Court
• Parties: GEORGIA STATE BUILDING AND LOAN ASSOCIATION v. EVERARD M. GRANT ET UX

34 So. 84

82 Miss. 424

GEORGIA STATE BUILDING AND LOAN ASSOCIATION v. EVERARD M. GRANT ET UX

Supreme Court of Mississippi

April 13, 1903

March 1903

FROM the chancery court of, first district, Hinds county. HON HENRY C. CONN, Chancellor.

Grant and wife, appellees and cross-appellants, were complainants in the court below; the building and loan association appellant and cross-appellee, was defendant there.

Grant and his wife, in March, 1896, took ten shares of stock in the Georgia State Building & Loan Association. In April, 1896 they borrowed $ 400 of said association, and to secure this loan they assigned to the association the ten shares of stock, and gave a deed of trust on lands in Hinds county Miss., where they lived. The stock contract is evidenced by a certificate, which is distinct from the loan contract. In December, 1896, Mrs. Terry and her husband, who owned ten shares of stock in the said association, borrowed of it $ 600, and to secure this loan they assigned their stock to the association, and gave a deed of trust on lands in Hinds county, Miss. After the making of these contracts, Mr. and Mrs. Terry sold their property on which this deed of trust had been given and their stock to Mrs. Grant, upon the consideration of a certain amount of cash paid and the assumption by Mrs. Grant of the debt to the association. The contracts in both cases provided for the payment of six per centum interest and six per, centum fixed premium on amount advanced. According to the contracts, these loans were payable in Savannah, Ga., but according to the by-laws of the association all payments may be made to local agents at the option of the borrower. There is also a provision in the bylaws that the local agent is to be the agent of the borrower, and not of the association. All payments of these loans were in fact made to the local agents of the association at Jackson, Miss. The contracts for the loans were made at Jackson, and the mortgages were on lands in Hinds county. There is a stipulation in the Terry contract, which is set out in the opinion of the court, by which the association agreed that, when the loans were paid up with six per centum interest and the premium, the interest should not exceed the highest rate of interest allowed by the law of the state where the contract was made or the sum advanced. After this contract was made, the association adopted an amendment to its by-laws providing that, where the contract of the loans of the association are governed by the laws of the state that limits the interest that may be charged as interest and premium, only so much of premium will be taken as profits as will, with interest collected, conform to the highest rate of interest allowed in such states on the sum advanced.

Grant and his wife filed the bill in this case, seeking to cancel the bonds and notes in the two loans, and to satisfy the liens of the trust deeds given to secure the loans, upon the grounds that both contracts were usurious, illegal, and void; the charge in the bill being that the payments made, in the way of dues on stock, interest, and premium, on the principal of the debts overpaid them, and left a balance due complainants. Answers were tiled denying the charge of usury, and insisting that the contracts are solvable in the state of Georgia, and denying that they are usurious even under the laws of Mississippi. On the final hearing the chancellor held that the contracts were to be governed by the laws of the state of Mississippi; that they were usurious; that all partial payments made by way of interest and premium should be credited on the principal of said debts; that the amount paid on the expense account and charges for fines and withdrawal fees should not be credited on the principal of the debts; and referred the case to a commissioner to state the account on this basis. The commissioner made his report, to which both complainants and defendant excepted. The court overruled the exceptions, and rendered a decree fixing the amounts due in each case, and ordered the lands sold to pay it. From this decree defendants appealed to the supreme court, and complainants prosecuted a cross-appeal.

Affirmed.

Williamson, Wells & Croom, for appellant and cross-appellee.

The two contracts involved in this suit are not usurious, whether controlled by the laws of Mississippi or Georgia. The statute of Georgia and the decisions of the supreme court of that state, construing the statute with reference to the contracts of the appellee association, uphold the legality of these contracts. R.v.G. S. B. & L. A., 102 Ga. 126; Laws Ga., 189091, p. 176; Cook v. B. & L. Ass'n, 104 Ga. 814.

But treating them as Mississippi contracts made between a nonresident building and loan association and citizens of this state and solvable under the laws of Mississippi, they are not usurious. While the rate of interest is fixed by the by-laws at six per centum per annum, and the premium at fifty cents per share of the stock loaned on, so written in the contracts, yet it is stipulated by the contracts and in the by-laws made a part of the contracts, that upon the maturity of the contract total payments of installments, interest and premiums shall not exceed the amount of the advance with interest thereon at the highest contractual rate per annum by the statute of the state. These contracts were made and the by-laws existed with these provisions in them, before the decision in the Sokoloski and Shannon Cases, holding that fixed premiums and interest exceeding ten per centum are usurious, and before there was any agitation in the courts of these questions, of usury as to building and loan association contracts. This provision in the contract and by-laws of the association refutes the charges in the bill that the contracts were fraudulent and made to avoid the usury laws of Mississippi. There is no proof to sustain the charge in the bill, and the court will not prestone a state of facts that makes the contract usurious, but on the contrary, will presume that the contract was made in good faith and is legal, if on any view it can be construed to be legal. Brown v. Freeland, 5 Ga., 181; Wilkins v. Riley, 47 Miss. 306.

In the case of Godman v. B. & L. Ass'n, 71 Miss. 310, this court holds that a member may bind himself to a building and loan association contract, and will be held to its performance.

In the case of Loan Ass'n v. McElroy, 72 Miss. 434, a borrowing stockholder, who has paid legal interest on his loan, may compel application of interest and premium, so paid, as legal dues and interest, and pay him the balance, but without withdrawing and ceasing to be a member, he cannot have a cancellation of his loan contract, but continues liable for dues and legal interest and for fines properly assessed against his stock.

Appellees never ceased to be members, did not withdraw from the association, but filed this bill to cancel their contracts. The very contracts in this case stipulated how all excess of interest and premium paid shall be applied, viz.: to the principal. In the contracts presented to this court, in Sokoloski, Shannon, and other cases, decided by this court, no such stipulations were in the contracts, the Shannon Case being a contract in appellant association, was made just after the association came into this state and was made without stipulations in the contract or in the by-laws. The record in that case presented a very different state of facts from the instant case. In the Shannon Case, the fact that it was a Georgia contract was relied on. The court held simply that the mere stipulation in the contract and bylaws that it should be a Georgia contract did not make it so, when all the facts showed the intention of the parties that it should be a Mississippi contract. The intention of the contracting parties in the two contracts now before the court was unquestionably that the interest and premium should not exceed the legal rate of interest either in Georgia or Mississippi. The intention was to comply with the law, and to make a legal contract.

The association could not, under these contracts, legally insist upon more than ten per cent of interest and premium upon the advance or loan, and the borrower did not agree to pay a greater rate than ten per cent. Surely such a contract will not be held usurious and void, where neither party intended to receive or pay usury, and none was stipulated for.

The proof in this case shows that the appellant is strictly a building and loan association dealing only with its members for their benefit, and that it is a successful association, maturing its stock regularly. The longest period of stock has run before maturity being 108 months, many having been matured in a shorter time.

Taking this period as a basis, appellees would have paid on the Grant loan $ 1,080.00, to mature the stock of ten shares, when the loan would have been paid and Mrs. Grant would have received upon her six investment shares, $ 600.00 in cash, the maturity of the four shares being applied to the settlement of the $ 400.00 loan.

The actual cost to Mrs. Grant for her loan would be $ 80.00.

A calculation as to the Terry loan demonstrates a like happy result. The maturity of her ten shares would have yielded her $ 400.00 in cash and the payment of the $ 600.00 loan.

In construing these contracts the court cannot in justice ignore the fact that the stock...