Missouri Real Estate Syndicate v. Sims

• Decision Date: 10 February 1904
• Citation: 78 S.W. 1006,179 Mo. 679
• Parties: MISSOURI REAL ESTATE SYNDICATE v. SIMS.
• Court: Missouri Supreme Court

78 S.W. 1006

179 Mo. 679

MISSOURI REAL ESTATE SYNDICATE v. SIMS.

Supreme Court of Missouri, Division No. 1.

February 10, 1904.

USURY—BONUS FOR FORBEARANCE—CHARACTER OF DEFENSE—AVAILABILITY TO CREDITOR — MORTGAGES — AGREEMENTS FOR EXTENSION —RIGHTS OF ASSIGNEE—REMEDIES—ELECTION.

1. Where an agreement for extension of a note secured by a deed of trust did not appear on the face of the record, but the holder of the note, who made the agreement for the extension, himself became the purchaser of the property, his title was subject to attack, and could be set aside in equity by the owner of the equity.

2. One whose property has been sold under deed of trust in violation of an agreement for extension is not limited to a suit in equity to set aside the title of the purchaser with knowledge of the agreement, but may bring an action at law against the maker of the agreement for damages for its breach.

3. A contract between the holder of a note and the owner of the property, subject to a deed of trust securing its payment, whereby an

extension of time of the note is secured, is a contract effecting an incumbrance on land, and, as such, passes to an assignee, who takes the property subject to the incumbrance before the expiration of the period for extension.

4. Where a petition states a contract by the plaintiff and defendant, and the payment of the full consideration by the former to the latter, and the breach of the contract by defendant, the statute of frauds, if available as a defense, must be pleaded by defendant.

5. Where a note, on its face, bore all the interest that the law allowed, an agreement for the payment of a bonus for forbearance was an agreement for the payment of usury; and, though the agreement should be complied with by the holder of the note, he could not recover the bonus.

6. Usury laws are solely for the protection of the debtor, and he and his privies alone can interpose the defense of usury, so that, if the debtor makes payments in accordance with the terms of the usurious contract, the creditor cannot retain the payment, and say, when sued for breach of the contract, that it was usurious and illegal.

Appeal from Circuit Court, Greene County; Jas. T. Neville, Judge.

Action by the Missouri Real Estate Syndicate against J. M. Sims. From a judgment for defendant, plaintiff appeals. Reversed.

Heffernan & Heffernan and Gideon & Gideon, for appellant. Benj. U. Massey, for respondent.

VALLIANT, J.

This is an appeal from the judgment of the circuit court on sustaining a demurrer to the plaintiff's petition, the plaintiff declining to plead further. The cause stated in the petition is an action at law for damages for the breach of a contract to extend a mortgage note. The substantial averments in the petition are to the effect as follows: On December 12, 1894, one Geo. P. Miller, being then the owner of certain real estate in the city of Springfield, executed his note for $4,000, due in two years, bearing 8 per cent. interest from date, payable to one George Lawrence, and a deed conveying the real estate to one James Bray, as trustee, to secure the note. That afterwards Miller conveyed the property to one Kerr, subject to the deed of trust, and Kerr conveyed it in like condition to a corporation called the Springfield Milling Company. That in 1895 the holder of the $4,000 note sold it to the defendant, Sims. That while the defendant was the owner of the note, and the Springfield Milling Company the owner of the property subject to the deed of trust, the latter made a contract with the former to extend the note for a period of five years from the date of its face maturity (that is, from December 12, 1896, to December 12, 1901); the consideration for the extension being $100, which the milling company then and thereupon paid the defendant. That afterwards the milling company sold the property to one Coombs, who assumed the payment of the note, and Coombs sold it to other parties, who also assumed the payment of the note, and they on February 16, 1899, sold it to the plaintiff for $6,000, subject to the deed of trust. That plaintiff bought with knowledge of the contract for the extension, and with the knowledge and consent of the defendant, and, after so purchasing, the plaintiff, with the knowledge, consent, and approval of the defendant, put extensive and valuable improvements specified on the property, and made a lease for a term of 10 years of the third floor of the building, with like knowledge and consent of the defendant; he in fact signing the lease, and agreeing that his deed of trust "should be subject to the terms and conditions of said lease." That afterwards, although the plaintiff had fully complied with all the other terms of the deed of trust, the defendant, in violation of his agreement to extend the note, did in July, 1900, instigate the trustee to sell the property under the terms of the deed of trust, and at the sale the defendant became the...