Nakdimen v. Brazil

• Decision Date: 15 October 1917
• Docket Number: 155
• Citation: 198 S.W. 524,131 Ark. 144
• Parties: NAKDIMEN v. BRAZIL
• Court: Arkansas Supreme Court

198 S.W. 524

131 Ark. 144

NAKDIMEN v. BRAZIL

No. 155

Supreme Court of Arkansas

October 15, 1917

Appeal from Sebastian Chancery Court, Fort Smith District; W. A Falconer, Chancellor; modified and affirmed.

Decree affirmed.

Oglesby Cravens & Oglesby, for appellant.

1. As between appellant and the loan company the only questions involved are the right of plaintiff to pay off the mortgage the amount he should pay, and, if paid, his right to be subrogated to all the interest and equities of Brazil.

The issue between plaintiff and Brazil is whether plaintiff is compelled to pay not only the $ 15,000 loan with interest but also to pay the monthly installments due by Brazil on the stock. It is the contention of plaintiff that under his purchase contract he only assumed and agreed to pay the $ 15,000 borrowed by Brazil. The option, the deed and all the testimony sustains this contention. He is not liable for the stock payments due, but only for the loan and interest.

The court erred in its ruling as to the stock payments; they should be charged to Brazil.

2. It also erred in decreeing specific performance as to the land in Oklahoma. It has no jurisdiction over the lands. But if it did it was error to enter judgment for $ 3,000 as the value of the land and requiring plaintiff to pay if he did not execute a deed in forty days.

3. The court erred in the amount decreed to be paid the loan company, as he was only liable for the $ 15,000 and interest to March 28, 1916. It was certainly error to require plaintiff to pay the $ 618.75 stock installments and the fines.

Kimpel & Daily, for R. E. Brazil.

1. The burden is upon him who alleges fraudulent representations to establish same by evidence that is clear and convincing. None are proven. He agreed to pay off the mortgage according to its terms and recitals, and not merely $ 15,000. The words are descriptive merely of the obligation, and can not be considered as limiting the amount. 75 S.W. 661, 105 Iowa 122; 130 Mass. 460. See also 51 Conn. 11; Jones on Mortg. (5 ed.), § 735; 3 Id. (7 Ed.), § 739a.

The loan was to be paid by maturing the stock. Plaintiff knew this.

2. The court had jurisdiction over the persons who were parties, and properly directed a deed to be executed or pay the $ 3,000, the value of the land. It was the duty of the court to administer complete relief. Story, Eq. Jur. (13 Ed.), par. 1291, also pars. 743-4; 55 Ark. 639; 6 Cr. 160; 24 Oh. St. 474; 37 N.Y. 499; 45 Ark. 212; 45 Ark. L. R. 360; 194 S.W. 234, and many others.

3. The testimony shows the Oklahoma lands were worth $ 3,000.

4. The findings of the chancellor will not be disturbed on appeal unless clearly against the weight of the evidence.

John F. Lawrence and A. J. Bryant of Colorado for the loan company.

1. This was a Colorado contract and must be construed by the laws of that State. The bond and mortgage cover the loan with interest thereon and all stock dues and fines, etc. Dues, fines and expense charges are allowed by the laws of Colorado. Colorado statutes, §§ 1, 2, 6 and 7; Thompson on Building & Loan Assn., pp. 272-410; 99 Mo. 96; 93 N.Y. 474-480-1; 25 Oh. St. 186-205, 206-7; 19 W.Va. 769; 47 Pa.St. 352; 57 N.W. 142; 140 Ind. 662; 77 N.W. 889.

2. When one buys property subject to a recorded mortgage he is charged with notice of the contents of the mortgage contract. 2 Jones on Mortg. (7 ed.), § 739-a; 105 Iowa 122; 74 N.W. 750; 19 N.E. 382; 13 Id. 476. Nakdimen was bound by the record and also had actual notice and was bound. He also assumed and agreed to pay the mortgage according to its terms, and is estopped to set up usury or other invalidity. 2 Jones on Mortg. (7 ed.), §§ 735-6-A, 744-5; 45 Ark. 301; 48 Id. 258; 66 Id. 121; 46 S.W. 370; 49 Id. 353; 81 N.W. 308, etc.

3. The contract will be construed with reference to the law of the place where it is to be performed, or with reference to the law which the parties stipulated shall govern. The contract is valid in Colorado, and its laws govern. 71 Kan. 185; 79 P. 1077; 110 F. 859; 101 Id. 12; 33 S.E. 355; 181 U.S. 227; 69 S.W. 312; 84 Id. 717; 137 Ala. 119.

4. In the absence of fraud and mistake, a building and loan contract must be considered as a whole and as the rate of interest finally to be paid is necessarily contingent upon the profits ultimately to be realized, a claim of usury can not be founded upon such a contract by a member of the association. 39 Okla. 12; 26 N.J.Eq. 355; 19 S.W. 917-18; 63 Id. 979; 1 Wallace, 540; 49 S.W. 633; 181 U.S. 227; 116 F. 735.

5. The findings and decree are fully sustained by the testimony.

OPINION

MCCULLOCH, C. J.

Brazil owned a valuable piece of real estate in the city of Fort Smith, and on January 3, 1916, mortgaged the same to the Midland Savings & Loan Company, a building and loan association, incorporated under the laws of the State of Colorado and doing business at the city of Denver, to secure a loan of money in the sum of $ 15,000 made by said association to Brazil upon shares of stock in accordance with its plan of lending money to its shareholders. The mortgage recited that Brazil was the holder of 225 shares of stock of a certain class in the association and had obtained a loan of $ 15,000 thereon, and the condition of the mortgage was that the mortgagor should pay "the principal sum of $ 15,000, with interest thereon, and the premium bid for obtaining said loan at the office of the said party of the second part in Denver, Colorado, according to the tenor and conditions of a certain first mortgage bond of even date herewith, for the said sum, interest and premium, executed and delivered by the said second party, contemporaneously with the instrument."

The note or bond secured by the mortgage also contained a recital as to the loan of $ 15,000, and the pledge of said shares of stock as collateral security for the loan and the obligation of the mortgagor to pay to the association "the sum of two hundred forty-eight and 75/100 dollars monthly, on or before the last day of each month, of which sum one hundred twenty-three and 75/100 dollars is the monthly installment due upon said shares of stock above described, and the sum of one hundred twenty-five and no/100 dollars is the monthly interest due upon said principal sum, also such fines as may accrue upon delinquent monthly payments upon said stock and interest, according to the by-laws and resolutions of said company governing the same, said interest and fines to be credited on the debt, until said principal shall have been paid in full, by said shares of capital stock having matured to their par value, or until otherwise paid as herein provided."

The bond also contained the following stipulation with reference to repayment of the loan prior to the final maturity of the shares of stock:

"The undersigned may fully repay this bond at any time before the stock and loan have been carried eighty-five months, by returning to the company the full amount, or balance then due, of said principal sum, together with all interest and fines delinquent and due, and all amounts due for insurance, abstract, taxes and other advances made by the company, then due and unpaid, with interest thereon from the time of payment at 10 per cent. per annum, and repayment charges, if any; and in case of such repayment, if the owner wishes to cancel the certificate, the loan shall be entitled to a credit of the withdrawal or cash surrender value of said shares of stock, as provided by the rules and regulations of the company, and by the certificate itself, on surrender thereof."

Brazil sold and conveyed the property to Nakdimen, the latter assuming payment of said mortgage as a part of the consideration for the conveyance. The deed to Nakdimen bears date of March 23, 1916, and contains the following recital:

"This deed is given subject to the mortgage for $ 15,000 in favor of the Midland Savings & Loan Company of Denver, Colorado, which the said grantee assumes and agrees to pay."

There was an option contract between Brazil and Nakdimen, the precise date not being stated, but the deed was made pursuant to the contract, which contains a similar recital with respect to the assumption of the mortgage debt. The other considerations for the conveyance were also set forth in the contract, among which was an agreement on the part of Nakdimen to convey to Brazil a certain tract of land situated in the State of Oklahoma. A controversy subsequently arose between Nakdimen and the building and loan association concerning the amount necessary to discharge the mortgage debt, the former claiming the right to satisfaction of the debt by payment of the sum of $ 15,000, and the latter insisting on additional payments of accumulated interest and monthly dues on the shares of stock. Nakdimen failed to convey the Oklahoma land to Brazil in accordance with the terms of his contract and also withheld the sum of $ 625 of the cash consideration to be paid in addition to the other considerations referred to.

This action was instituted in the chancery court by Nakdimen against Brazil and the building and loan association, in which he claims that according to his agreement with Brazil he was only to pay to the building and loan association the sum of $ 15,000, and offered to pay that sum and asked that the total sum due by Brazil to the building and loan association be ascertained by the court and a decree rendered against Brazil for the excess, the same to be deducted from the balance in his hands due Brazil under the contract of purchase. Brazil filed a separate...