Kinney Loan & Finance Co. v. Sumner

Citation65 N.W.2d 240,159 Neb. 57
Decision Date02 July 1954
Docket NumberNo. 33521,33521
PartiesKINNEY LOAN & FINANCE CO. v. SUMMER.
CourtSupreme Court of Nebraska

Syllabus by the Court.

1. A general demurrer admits all allegations of fact in the pleading to which it is addressed, which are issuable, relevant, material, and well pleaded; but does not admit the pleader's conclusions of law or fact.

2. A general demurrer tests the substantive legal rights of parties upon admitted facts, including proper and reasonable inferences of law and fact which may be drawn from facts which are well pleaded. If the petition states facts which entitle the plaintiff to relief, whether legal or equitable, it is not demurrable upon the ground that it does not state facts sufficient to constitute a cause of action.

3. In passing on a demurrer to a petition, the court must consider an exhibit attached thereto and made a part thereof, if the allegations stated therein either aid the petition in stating a cause of action or charge facts going to avoid liability on the part of the defendant.

4. Ordinarily, foreign law or valid rights based thereon will be given effect or enforced under the doctrine of comity unless opposed to the settled public policy of the forum.

5. Bona fide contracts which are valid and enforceable in the state where made and to be performed do not in the absence of any statute requiring the application of a contrary rule offend the public policy of a forum although they reserve a rate of interest which would be usurious with penalizing consequences even to the extent of forfeiture of principal and interest if made in the law of the forum.

6. When a valid contract made and to be performed in one state is secured by a mortgage or other lien on land or personal property situated in another state, the question of whether the interest reserved is usurious should generally be determined by the law of the former state because the mortgage is simply collateral to the principal obligation.

7. The phrase 'a regulatory small loan law similar in principle to this act' appearing in section 45-158, R.R.S.1943, means a law resembling our own installment loan act in origin, purpose, and result, which licenses, controls, and regulates those engaged in loaning money at conventional higher rates of interest in order to combat the reservation of extortionate and oppressive rates.

8. Section 45-158, R.R.S.1943, comprehensively defines the public policy of this state with regard to enforceability therein of loans lawfully made and to be performed outside this state, and avoids the consequences of Personal Finance Co. v. Gilinsky Fruit Co., 127 Neb. 450, 255 N.W. 558, 256 N.W. 511.

McGinley, Lane, Powers & McGinley, Ogallala, Van Pelt, Marti & O'Gara, Warren K. Dalton, Lincoln, for appellant.

Firmin Q. Feltz, Ogallala, Robert A. Nelson, Lincoln, for appellee.

Heard before SIMMONS, C. J., and CARTER, MESSMORE, YEAGER, CHAPPELL, WENKE and BOSLAUGH, JJ.

CHAPPELL, Justice.

Plaintiff, The Kinney Loan and Finance Company, a Colorado corporation, brought this action against defendant George Sumner, now a resident of this state, to replevin a described trailer coach. Defendant's general demurrer to plaintiff's amended petition was sustained, and plaintiff, electing to stand thereon, judgment was rendered in favor of defendant against plaintiff for return of the property taken, or for its value. Therefrom plaintiff appealed, assigning that the trial court erred in so doing. We sustain the assignment.

In Freeman v. Elder, 158 Neb. 364, 63 N.W.2d 327, 328, this court recently reaffirmed that: 'A general demurrer admits all allegations of fact in the pleading to which it is addressed, which are issuable, relevant, material, and well pleaded; but does not admit the pleader's conclusions of law or fact.

'A general demurrer tests the substantive legal rights of parties upon admitted facts, including proper and reasonable inferences of law and fact which may be drawn from facts which are well pleaded. If the petition states facts which entitle the plaintiff to relief, whether legal or equitable, it is not demurrable upon the ground that it does not state facts sufficient to constitute a cause of action.

'In passing on a demurrer to a petition, the court must consider an exhibit attached thereto and made a part thereof, if the allegations stated therein either aid the petition in stating a cause of action or charge facts going to avoid liability on the part of the defendant.'

Bearing those rules in mind, we have examined plaintiff's petition which alleged substantially as follows: That plaintiff is a Colorado corporation duly authorized and licensed by that state under its Money Lenders Act of 1913, and Senate Bill No. 47, both effective at all times involved, which are regulatory small loan laws similar in principle to sections 45-114 to 45-158, R.R.S.1943. Copies of such Colorado laws were attached to and made a part of plaintiff's petition. That on or about May 6, 1953, defendant, being justly indebted to plaintiff on a compromise settlement of a disputed claim, made, executed, and delivered to plaintiff at Greeley, Colorado, his installment promissory note therefor in the amount of $2,712.16, payable at plaintiff's office in Greeley, Colorado, with interest from date until paid, at 2 percent per month, computed upon unpaid balances in installments of $100, to be paid on the 15th day of each month for 11 months beginning June 15, 1953, with the balance due and payable May 15, 1954. That defendant acknowledged on the face of the note that he had received a statement of the loan in conformity with section 5, chapter 108, 1913 Session Laws of Colorado. Also, on May 6, 1953, defendant made, executed and delivered to plaintiff at Greeley, Colorado, where performance was to be completed, a chattel mortgage upon the described trailer coach then located in Lexington, Dawson County, Nebraska, as security for payment of the note. A copy of such chattel mortgage, together with certificate of title to the trailer, was delivered to the county clerk of Dawson County on May 8, 1953, whereupon the chattel mortgage lien was noted upon the certificate of title. Copies of the note and mortgage were attached to and made a part of plaintiff's petition. Nevertheless, that defendant wholly failed to pay any part of even the first installment of $100 due June 15, 1953, whereupon, as provided in the note and mortgage, the entire balance became due and payable at once, the plaintiff elected to so declare the whole amount due, and demanded delivery of the trailer to it, which defendant refused to do, and being entitled to foreclose, this action was brought by plaintiff to obtain possession of the trailer and damages.

Assuming as we must upon demurrer, that such note and mortgage were not usurious under the laws of Colorado where they were made and to be performed, and that they were valid under the laws of that state, the sole question presented here for determination is whether or not they are enforceable in this state simply because they both reserved a rate of interest higher than that permitted by law in this state. The trial court concluded that they were not, but we conclude otherwise.

The general rule is that: 'While no law has of its own force any effect outside the territory of the state or nation from which its authority is derived, foreign laws or rights based thereon will, within certain limits, be given effect or enforced everywhere.' 15 C.J.S., Conflict of Laws, § 3, p. 833. As stated in § 3, p. 836: 'Foreign law or rights based thereon are frequently given effect or enforced under the doctrine of comity under which such recognition or enforcement is permitted.' However, as stated in § 4, p. 853: 'It is thoroughly established as a broad general rule that foreign law or rights based thereon will not be given effect or enforced if opposed to the settled public policy of the forum.' See, also, Restatement, Conflict of Laws, § 612, p. 731; Midland Savings & Loan Co. v. Henderson, 47 Okl. 693, 150 P. 868, L.R.A.1916D, 745, with annotation at p. 750.

Ordinarily, also, in the absence of any statute requiring the application of a contrary rule: 'Usury laws are not so distinctive a part of the public policy of the forum that the courts will, on the ground of public policy, decline to enforce any contract which would be invalid, if tested by them, though valid according to its proper law.' 11 Am.Jur., Conflict of Laws, § 156, p. 458. As stated in § 158, p. 464: 'Contracts which are valid where made do not offend the public policy of a forum, although they provide for a rate of interest which would be usurious with penalizing consequences, even to the extent of forfeiture of principal and interest as to such a contract, if made in the law of the forum.' See, also, 66 C.J., Usury, § 33, p. 158; and International Harvester Co. of America v. McAdam, 142 Wis. 114, 124 N.W. 1042, 26 L.R.A.,N.S., 774, a case frequently cited. As stated in 11 Am.Jur., Conflict of Laws, § 159, p. 465: 'Where a contract made and to be performed in one state is secured by a mortgage or other lien on land situated in another state, the question as to whether the interest provided for is usurious is generally held to be determined by the law of the former, on the ground that the mortgage is merely collateral to the principal obligation. The rule applies with respect to chattel mortgages as well as to mortgages on real estate.' See, also, Annotation, 125 A.L.R. 497.

This court has in effect recognized the foregoing rules as applied to the general usury laws, and has enforced bona fide contracts which were valid under the laws of the state where made and to be performed. Coad v. Home Cattle Co., 32 Neb. 761, 49 N.W. 757, 29 Am.St.Rep. 465; Hewit v. Bank of Indian Territory, 64 Neb. 463, 90 N.W. 250, which, upon rehearing reported at 64 Neb. 468, 92 N.W. 741, was reversed upon other grounds.

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