McGovern v. Federal Land Bank of St. Paul

• Decision Date: 21 February 1941
• Docket Number: 32366.
• Citation: 296 N.W. 473,209 Minn. 403
• Parties: McGOVERN et al. v. FEDERAL LAND BANK OF ST. PAUL.
• Court: Minnesota Supreme Court

296 N.W. 473

209 Minn. 403

McGOVERN et al. v. FEDERAL LAND BANK OF ST. PAUL.

No. 32366.

Supreme Court of Minnesota.

February 21, 1941

Appeal from District Court, Olmsted County; Vernon Gates, Judge.

Action by James McGovern and others against the Federal Land Bank of St. Paul, to set aside the foreclosure of a mortgage and to have it adjudged usurious. From a judgment for defendant plaintiffs appeal.

Affirmed.

See also, 207 Minn 261, 290 N.W. 575.

Syllabus by the Court .

1. The Federal Farm Loan Act exempts real estate mortgages, executed to defendant pursuant to its provisions, from the tax imposed by Mason Minn.St.1927, § 2323.

2. Under the federal farm loan act mortgages received by defendant must contain provisions for an increase in interest rate to eight per cent. per annum after default in payment of any installment. Such increase in interest after default may not be held unlawful or usurious. The state usury statutes are not applicable to notes or mortgages executed under the federal farm loan act.

3. The findings of fact cannot be attacked as not supported by the evidence where there is no settled case or bill of exceptions.

4. The order refusing to settle a case made long after the entry of the judgment cannot be reviewed on appeal from the judgment.

Fraser & Fraser, of Rochester, for appellants.

John Thorpe, Robert J. Barry, Michael A. Schmitt, and John F Lord, all of St. Paul, for respondent.

HOLT Justice.

In this action by plaintiffs to set aside the foreclosure of a mortgage on their home and have it adjudged usurious, the judgment was entered for defendant from which plaintiffs appeal.

Of the assignments of error, only two are available to plaintiffs, for there is no settled case or bill of exceptions.

The first assignment open to plaintiffs on this record is that the court erred in refusing to vacate the foreclosure because no registry tax was paid upon the mortgage. The admissions in the pleadings and the court's findings show that the tax was not paid; but it also appears therefrom that defendant was organized and operates under the Federal Farm Loan Act of Congress, approved July 17, 1916 (12 U.S. C.A. §§ 636 to 1129); that in making the loan to plaintiffs defendant made it under the act mentioned. Our mortgage registry tax is a revenue measure (Mason Minn.St.1927, § 2323). First State Bank of Boyd v. Hayden, 121 Minn. 45, 140 N.W. 132. The federal farm loan act, 12 U.S. C.A. § 931, made this mortgage immune from state tax. And we think these two decisions of the Supreme Court of the United States conclusively determine the first assignment of error against plaintiff: Federal Land Bank v. Crosland, 261 U.S. 374, 43 S.Ct. 385, 67 L.Ed. 703, 29 A.L.R. 1; Pittman v. Home Owners' Loan Corp., 308 U.S. 21, 60 S.Ct. 15, 84 L.Ed. 11, 124 A.L.R. 1263. The mortgage was duly recorded and entitled to be foreclosed.

The other assignment of error is that the court erred in holding that the provision for interest at a higher rate after default than before did not forfeit all interest. To the answer were attached copies of the promissory note, also of the mortgage, the reamortizing agreement executed by the parties, and all the instruments required by statute for the foreclosure of mortgages by advertisement, together with the date of record of each instrument in the office of the register of deeds of Olmsted county. The court found the allegations of the answer true. It thus appears from the record that on December 7, 1922, plaintiffs obtained a loan of $5,900 from defendant and agreed to repay the same with five and one-half per cent interest under an amortization plan evidenced by plaintiffs' promissory note, payable in equal semi-annual payments of $191.75 each. In 1933 the federal farm loan act was amended so as to permit a reduction of interest to three and one-half per cent. And January 1, 1934, pursuant to such amendment, the parties executed a written agreement stating the amount then unpaid on the debt to be $6,157.96, and reamortized said sum payable in semiannual installments thereafter in the sum of $198.25 each. Default occurred in the condition of the mortgage and defendant because thereof commenced publication of the notice of foreclosure on March 22, 1937, wherein the amount claimed to be due was stated to be $7,714.81. The federal farm loan act contains this provision: ‘ Every borrower shall pay simple interest on defaulted payments at the rate of 8 per centum per annum’, etc. 12 U.S. C.A. § 771, subdiv. 9. This mortgage conforms to this provision of the law containing this clause: ‘ If the said parties of the first...