Long v. Greene County Abstract & Loan Co.

• Citation: 158 S.W. 305
• Parties: LONG et al. v. GREENE COUNTY ABSTRACT & LOAN CO. et al.
• Decision Date: 28 June 1913
• Court: United States State Supreme Court of Missouri

158 S.W. 305

LONG et al. v. GREENE COUNTY ABSTRACT & LOAN CO. et al.

Supreme Court of Missouri, Division No. 1.

June 28, 1913.

Rehearing Denied July 10, 1913.

1. USURY (§ 92) — REMEDIES — STATUTES.

Rev. St. 1909, § 7182, provides that no person shall take usury for the loan of money or other commodity, and that any person who violates the prohibition may be sued for any and all sums of money paid in excess of the principal and legal rate of interest of any loan or, in case of borrower's death, by the administrator of his estate, and shall be adjudged to pay the costs of suit, including a reasonable attorney's fee to be determined by the court. Held, that such section provides an adequate remedy at law where usury has been taken and the lender is solvent; the debtor being authorized to sue from time to time to recover the usury paid or let the usurious contract remain in force until fully executed, and then sue for and recover all sums paid by him above the rate of interest authorized.

2. USURY (§ 93) — USURIOUS CONTRACT — RESCISSION — CANCELLATION.

Where an alleged usurious contract was not claimed to have been the result of mutual mistake of the parties, but it was alleged that the usurious provision was inserted as a fraudulent imposition on complainants' ignorance, complainants were not entitled to maintain a bill to have the contract reformed but should have sued for rescission and cancellation.

3. REFORMATION OF INSTRUMENTS (§ 21) — GROUNDS — FRAUD.

Fraud is not a ground for reforming a contract but is a ground for the cancellation thereof.

4. USURY (§ 95) — CANCELLATION OF CONTRACT — CONDITIONS TO RELIEF — RETURN OF CONSIDERATION.

Complainants could not maintain a bill for the cancellation of usurious notes secured by deed of trust without tendering a return of the consideration they had received therefor, so as to place the defendants in statu quo.

5. USURY (§ 95) — CANCELLATION OF CONTRACT — TENDER.

That a lender of money secured by usurious notes and a deed of trust refused a conditional tender by complainants to pay did not entitle them to a cancellation of the instruments without paying the amount actually due thereon, since while the tender, if kept good, may stop interest, it does not extinguish the debt, and if not kept good it is not available even to stop interest.

Bond, J., dissenting.

Appeal from Circuit Court, Greene County; Alfred Page, Judge.

Action by Oscar Long and others against the Greene County Abstract & Loan Company and others. Judgment for plaintiffs, and defendants appeal. Reversed and dismissed.

This was a suit instituted in the circuit court of Greene county by the plaintiffs, having for its object the injunction of defendant from selling two certain lots of ground situate in block H in Eagle Heights Place, Springfield, Mo.

A demurrer was filed to the bill by defendants, which was by the court overruled; and, they declining to plead further, judgment was rendered in favor of plaintiffs enjoining the sale of the lots and reforming the contract, eliminating therefrom all usurious interest from the evidence of the debt and securities of the loan, purging the first note and deed of trust of all usury, and canceling the second note and deed of trust because they were wholly based upon usury, otherwise leaving the loan and the securities thereof in full force and effect, except the monthly payments provided for in the deed of trust were to begin with and date from the rendition of the judgment and not from the date of the notes and deeds of trust. From this judgment of reformation and cancellation the defendants in due time and in proper form appealed the cause to this court.

This state of the record calls for a careful consideration of the bill or petition filed in the trial court and upon which the judgment was predicated; and, before we can do that intelligently, the bill will have to be set out, which, omitting formal parts, is as follows:

"Comes now the plaintiffs in the above-entitled cause and state that the defendant the Greene County Abstract & Loan Company is a corporation duly organized and acting as such under the laws of the state of Missouri, and that the defendant W. E. Freeman is the duly qualified and acting sheriff of Greene county, Mo. Plaintiffs further state that on or about the 17th day of January, 1908, they borrowed of and from the Greene County Abstract & Loan Company of Springfield, Mo., the sum of $400, and no other or further sum, and agreed to secure the same by deed of trust upon the following described lots and parcels of land situated in the county of Greene and the state of Missouri, to wit: Lots 2 and 3 in block H in Eagle Heights Place, an addition to the city of Springfield, Mo. That, at the time of securing said loan and making said agreement for the execution of the deed of trust upon the real estate hereinbefore described, the defendant the Greene County Abstract & Loan Company caused and procured the plaintiffs to make and execute a deed of trust upon said premises, which was so drafted and prepared as to demand and require of the plaintiffs a sum of money in payment of said loan of $400, which was largely in excess of said amount and extortionate and usurious in this: That said deed of trust called for and required payment of a certain installment note, bearing date of January 17, 1908, amounting in the aggregate to $612, payable in 72 monthly installments of $8.50 each, beginning on the 1st day of March, 1908, and payable on the first day of each and every succeeding month thereafter for a period of 71 months until the whole of said sum of $612 should be paid off and discharged, and that it was expressly provided by the terms of said installment note that each and every one of said installments should, unless paid at maturity thereof, bear interest at the rate of 8 per cent. per annum. Plaintiffs further state that, at the time when the deed of trust last hereinbefore referred to was executed, the defendant the Greene County Abstract & Loan Company caused and required plaintiffs, without any consideration whatsoever therefor, to execute an additional deed of trust bearing date on the 17th day of January, 1908, and recorded in Book 209, p. 434, in the recorder of deeds' office of Greene county, Mo., for the purpose of securing a pretended, but wholly fictitious, indebtedness of $50 evidenced by the promissory note of the plaintiffs for that amount, due in six years after date, and bearing interest at the rate of 8 per cent. per annum after the maturity thereof. Plaintiffs further state that either of the defendants the Greene County Abstract & Loan Company or the defendant T. J. Murray is the holder and pretended owner of said notes for the sum of $612 and $50, respectively, and they are ignorant as to which of said two defendants is the pretended owner and holder of same, but they allege the fact to be that one or the other of said two defendants is such pretended owner and holder.

"Plaintiffs further state that the defendant W. E. Freeman is as aforesaid the acting sheriff of Greene county, Mo., and claims to be acting trustee under the terms and provisions of the last deed of trust hereinbefore described given as aforesaid to secure the payments of the said note for $50. That under and by virtue of provisions mentioned and described of said last deed of trust it is provided that, if default be made in the payment of the principal or the interest or any part thereof of the note or notes secured by the first deed of trust hereinbefore described for the sum of $612, and if such defaulted payments are made by the beneficiary of said second deed of trust, the indebtedness secured by said second deed of trust should at the election of holder of said note or notes immediately become due and payable, and the trustee named in the said second deed of trust hereinbefore mentioned should proceed to sell the land therein described upon the same terms and conditions as if default had been made in the payment of the indebtedness secured by said second deed of trust.

"Plaintiffs further state that under the claim and pretense that default has been made in the payment of certain of the installments past due and secured by the first deed of trust hereinbefore mentioned, and that the same have been paid by the beneficiary in said second deed of trust, and that the original trustee in both of said deeds of trust has refused to act in the foreclosure of the same, the beneficiary in said last-mentioned deed of trust has caused and procured the defendant W. E. Freeman to assume the duties of acting trustee under the terms of said second deed of trust, and that said W. E. Freeman has advertised said property hereinbefore described for sale in pursuance of the terms and provisions of said deed of trust, and that he threatens and intends to sell the same at public vendue at the courthouse door in the city of Springfield, Mo., on the 25th day of March, 1909.

"Plaintiffs further state that at the time of the execution of the said two deeds of trust they were and are now ignorant, illiterate, and unaccustomed to business and business transactions involving the title of land and the execution of instruments of writing affecting the same, and that the defendant T. J. Murray was at the time of the execution of said deed of trust and is now the chief managing officer of the defendant the Greene County Abstract & Loan Company, and that said Murray is an attorney at law and well vested in the ways of business and business transactions pertaining to land titles. That the plaintiffs at the time of the execution of said deed of trust were not aware that they were executing instruments which obligated them to pay usurious interest upon the money borrowed as aforesaid by them, but they thought and were caused to believe by the said Murray at the time that said notes were simply evidence of indebtedness for the sum of $400, with interest thereon at the...