Lewis v. Farmers' Loan & Building Ass'n.

• Decision Date: 20 June 1904
• Citation: 81 S.W. 887,183 Mo. 351
• Court: Missouri Supreme Court
• Parties: LEWIS v. FARMERS' LOAN & BUILDING ASS'N OF LIVINGSTON COUNTY.

81 S.W. 887

183 Mo. 351

LEWIS v. FARMERS' LOAN & BUILDING ASS'N OF LIVINGSTON COUNTY.

Supreme Court of Missouri, Division No. 1.

June 20, 1904.

BUILDING ASSOCIATION—MORTGAGE—PREMIUM FOR LOAN—USURY—PURCHASER OF EQUITY DEFENSE OF USURY BY PURCHASER.

1. Rev. St. 1889, § 2812, relative to building associations, provides that the shareholder who shall bid the highest for the preference of loan shall receive it; and section 2814 provides that no premium shall be deemed usurious. Held, that where a sum was exacted as a premium, though not put up at competitive bidding, the note given for the loan was to that extent usurious, and the premium should be applied as a credit on the note of the borrower as of its date; Rev. St. 1899, § 3709, providing that usurious interest shall be credited on the principal.

2. Where a building and loan association, on making a loan and taking a note and mortgage to secure it, exacted a usurious premium, which was made a part of the principal of the note, and the borrower conveyed the land mortgaged by a deed reciting that the property was conveyed subject to a mortgage for the amount of the loan, not including the premium, and the grantee knew nothing of the premium, so that it was not estimated in fixing the price of the land on the sale, the grantee might set up the usury as against the association.

Appeal from Circuit Court, Adair County; Nat M. Shelton, Judge.

Suit by John R. Lewis against the Farmers' Loan & Building Association. From a decree in favor of plaintiff, defendant appeals. Affirmed.

J. M. Davis & Sons, for appellant. Wilson & Clapp and Campbell & Ellison, for respondent.

BRACE, P. J.

On the 31st day of October, 1892, Henry N. Carver and William H. Clem executed and delivered to the defendant loan and building association their promissory note in words and figures as follows, to wit:

"$1600.00

                        "Chillicothe, Mo. 31st October, 1892
                

"One day after date I promise to pay to the order of the Farmers' Loan and Building Association, of Livingston County, Missouri, Sixteen Hundred Dollars, for value received, with interest from date at the rate of six (6) per cent. per annum payable on the last Monday of each month, and I promise to pay to said association, my monthly dues and premiums of Eight Dollars, each month, as stock holder in said association, upon Eight shares of stock, as per certificate No. 276, I, with all penalties assessed on my said stock, according to the constitution and by-laws of said association.

                     "Henry N. Carver, William H. Clem."
                

And on the same day said Carver and Clem duly executed and delivered their deed of trust of the same date, whereby they conveyed the following described tract of land, situate in the county of Sullivan, and state of Missouri, to wit: "All of lot eleven in block thirteen of the town of Haley City, except one foot off the west side of said lot, and also eight shares of stock in said association, as per certificate No. 276, Series I, with all the rights, privileges, and appurtenances thereunto belonging or in any wise appertaining, in trust, however, for the following purposes," to John M. Voris, trustee, to secure the payment of said promissory note, and whereby the said trustee was empowered, in case of default, to sell said property "at public vendue for cash at the courthouse door in the city of Chillicothe, Livingston county, Missouri, first giving thirty days' notice of the time, terms, and place of sale and of the property to be sold by advertisement in some newspaper published in said city of Chillicothe," etc. Afterwards, by deed dated March 10, 1893, the said Clem conveyed his interest in said real estate to Joseph Carver. Afterwards, by deed dated January 24, 1898, the said Henry N. Carver and Joseph Carver conveyed said real estate to John M. Jacobs. This deed contained the following clause: "This deed is subject to a mortgage held by the Chillicothe Building and Loan Association. Principal twelve hundred dollars to be paid in monthly installments of sixteen dollars per month. There have been sixty-five months paid, including January 1898." Afterwards, by deed dated August 29, 1898, the said Jacobs conveyed said real estate to the plaintiff, John R. Lewis; this deed contained the following clause: "This deed is made subject to a mortgage held by the Chillicothe Building & Loan Association, principal twelve hundred dollars to be paid in monthly installments of sixteen dollars per month." Afterwards, by deed dated August 6, 1901, the said John M. Voris, trustee, by deed of that date conveyed said real estate to the defendant building and loan association. This deed recited default in the payment of said note and interest and monthly dues secured by said deed of trust, and was made in pursuance of a sale made thereunder at public vendue to the highest bidder "at the courthouse door in the city of Milan, county of Sullivan, Mo.," on the 29th of July, 1901, 30 days' notice of which had been given by advertisements published "in the Weekly Chillicothe Crisis and the Milan Republican, weekly newspapers printed and published in the city of Chillicothe and Milan, counties of Livingston and Sullivan, respectively," and at which sale the association became the purchaser for the sum of $560. In pursuance of like notice published in the Chillicothe Crisis, the eight shares of stock as per certificate No. 276, Series 1, mentioned in said promissory note and deed of trust, were, on the 31st of July, 1901, sold by the said trustee at public vendue to the highest bidder at the courthouse door in the city of Chillicothe, and the defendant became the purchaser thereof at the sum of $800. Afterwards, to the October term, 1901, of the Sullivan county circuit court, this suit was brought by petition in the nature of a bill in equity, in which the plaintiff prays "for an accounting; that stock certificate No. 276, issued for eight shares of stock in said association, be canceled, and plaintiff credited on the note of Carver and Clem with the value thereof; that the defendant be required to credit said note with all proper credits, including the four hundred dollars unlawful and usurious premium charged and taken by defendant and made a part of said note; that the trustee's sale be set aside, and the deed of trust from John M. Voris, the trustee, to the defendant, be set aside, and for naught held; that the deed of trust be adjudged satisfied and canceled, and the said lot eleven free from any incumbrance by reason thereof; that plaintiff have judgment against the defendant for the sum...