New England Mortg. Sec. Co. v. Vader

• Decision Date: 09 August 1886
• Citation: 28 F. 265
• Parties: NEW ENGLAND MORTGAGE SECURITY CO. v. VADER, and Husband.
• Court: U.S. District Court — District of Oregon

28 F. 265

NEW ENGLAND MORTGAGE SECURITY CO. v. VADER, and Husband.

United States Circuit Court, D. Oregon.

August 9, 1886

J. D Fenton, for plaintiff.

L. H Montanye, for defendants.

DEADY J.

This suit is brought by the plaintiff, a corporation formed under the law of Connecticut, against the defendants, citizens of Oregon, to enforce the lien of a mortgage on certain real property. The suit was commenced on August 12, 1885, in the state circuit court for the county of Linn, and afterwards removed here by the plaintiff. Here the plaintiff filed an amended 'complaint,' and the cause was heard on a demurrer thereto.

From the amended bill or complaint it appears that on April 21 1881, the defendants made and delivered their promissory note, payable to the order of the plaintiff, on April 21 1886, for $2,000, 'with interest from date until paid, at eight per centum per annum, as per coupons attached, at the office of the Corbin Banking Company, New York City. ' The note also contained the following stipulations:

'Unpaid interest shall bear interest at ten per centum per annum. On failure to pay interest within five days after due, the holder may collect the principal and interest at once. And in case suit is instituted to collect this note, or any portion thereof, I promise to pay such additional sum as the court may adjudge reasonable, as attorney's fees in said suit.'

And also made and delivered to the plaintiff their six coupon or interest notes, for the interest to accrue on said principal note, for the sums and payable as follows: One for $110.68, payable January 1, 1882; four for $160 each, payable, respectively, January 1, 1883, 1884, 1885, and 1886; and one for $49,32, payable April 21, 1886. There is now due on the principal note and the last two coupons the sum of $2,320, with interest on $2,000 thereof at 8 per centum per annum from January 1, 1886, and on said coupon notes from the date when they became payable at 10 per centum per annum, in United States gold coin, no part of which has been paid.

On April 21, 1881, the defendants, to secure the payment of said note and coupons, and all sums of money thereby agreed to be paid, executed to the plaintiff a mortgage on a certain tract of land, situate in Lane county, Oregon, containing 640 acres; which mortgage contained the following stipulations: (1) That if said defendants fail to pay any of said interest when due, the same shall bear interest at the rate of 10 per centum per annum; (2) the defendants will pay all taxes and assessments levied on said real property before the same becomes delinquent, and, if not so paid, the holder of the mortgage may, without notice, declare the whole sum thereby secured due at once, or may elect to pay said taxes and assessments, and be entitled to interest on the same at the rate of 10 per centum per annum, for which the mortgage shall be a security; (3) if the defendants fail to pay any of said money within five days after the same shall become due, or to conform to or comply with any of these stipulations, then the whole amount secured by the mortgage shall become due at once; and (4) that on filing of a bill to enforce the lien of said mortgage the plaintiff therein shall recover a reasonable attorney's fee, to be taxed by the court, for which the mortgage shall stand as security.

For the years 1883, 1884, and 1885 taxes were levied on said land by Linn county amounting to $106.11, which became delinquent, and were a lien thereon, and have since been paid by the plaintiff; and by a stipulation filed April 13, 1886, it was agreed that on the argument of the demurrer the court may consider the liability of the defendants to pay the taxes mentioned, and in so doing may consider the bill and the original mortgage, and 'allow or disallow such claim for taxes' as it may be advised.

The grounds of the demurrer as maintained on the argument are substantially these: (1) The plaintiff has not the capacity to maintain this suit; (2) the notes are made payable in New York, in violation of the usury laws of that state, and are therefore void; (3) the agreement to pay interest on the interest notes after maturity is an agreement to pay compound interest, and is therefore void; (4) the agreement to pay the taxes is either without consideration or usurious, and therefore void.

On the argument it was admitted that the defendants, having dealt with the plaintiff as a corporation, are so far estopped to deny its corporate existence; but it is contended that it does not appear that the plaintiff complied with the law of this state concerning foreign corporations doing business herein, before making this loan. Sections 7 and 8 of this law (Laws Or. p. 617) provide that a foreign corporation, before doing business in this state, must make and have 'recorded, in the county clerk's office of each county where it has a resident agent,' a power of attorney, by which some citizen and resident of the state is appointed the attorney of such corporation, on whom process may be served in actions against it. It appears from the bill that the plaintiff, before doing business in this state, had its power of attorney recorded in Yamhill county, by which a citizen and resident of this state was appointed its 'resident agent' within the state, pursuant to said law.

The objection made by the defendants to this method of complying with the law seems based on the assumption that the corporation is required to have this power of attorney recorded in each county of the state in which it may do business or make a loan; and that as it does not appear to have been recorded in Linn county, where the defendants lived when this note and mortgage were made and the business presumably transacted, they are void. The statute, it will be observed, does not require the power to be recorded in each county where the corporation may do business, but only in the county where it may have 'a resident agent.' But the bill does not state whether the plaintiff has a resident agent anywhere in the state. The existence of such agent should precede the record of the power, while in this case the power purports to create the 'resident agent,' but not the attorney for the service of process.

It has been held in this court that it is unnecessary for a plaintiff corporation to allege a compliance with this law in the first place. Such compliance will be presumed, and if a defendant wishes to avail himself of any omission or defect in this respect, he must plead it in abatement. However, the statute does not apply to this corporation. The corporations mentioned in the title of the act are 'insurance, banking, express, or exchange corporations. ' It has been held both in this and the state court that the general words of sections 7 and 8 of the act must, under section 20 of article 4 of the state constitution, which requires the subject of an act to be expressed in its title, be restrained to the corporations mentioned in the title. Oregon & Wash. T. & I. Co. v. Rathbun, 5 Sawy. 32; Singer Manuf'g Co. v. Graham, 8 Or. 17. The plaintiff is neither an 'insurance, banking, express, or exchange' corporation.

As to the second point, it is admitted that the rate of interest allowed by the statute (June 27, 1879) of New York is only 6 per centum, and that this court will take judicial knowledge of the laws of that state. Owings v. Hull, 9 Pet. 624; Bennett v. Bennett, 1 Deady, 309. The argument in behalf of the defendants on this point is that, by making this note payable in New York, the parties to the contract made that the place of performance, including the rate of interest payable by the law thereof. There is some confusion and contradiction in the writers and authorities on this subject, but the current of the later ones establish the just and convenient rule for the solution of the problem, namely, the place of performance depends on the intention of the parties to the contract. Where a note made in one place is made payable in another, prima facie the place of payment is the place of performance, and the law of the latter, for the purposes of payment and its incidents, applies to the transaction.

But this fact is by no means conclusive evidence that such was the intention of the parties; and the contrary may be inferred from the immediate circumstances, or shown by extraneous evidence. Whart. Confl. Laws, Sec. 505. And even when the place of payment is to be taken as the place of performance, for the purposes of payment, and matters incidental thereto, including days of grace, the rate of interest, where none is specified in the contract, and the like, it may satisfactorily appear from the circumstances of the case that it was not the intention of the parties that the rate of interest should be governed by the law of such place. And, generally, 'the law of the place where the contract is made is to determine the rate of interest, when the contract specifically gives interest.' 2 Kent, comm 460; Story, Confl. Laws, Sec. 305. And this conclusion must be based on the fact that an agreement for a specific rate of interest on a loan constitutes a part of the obligation of a contract which is always measured or tried by the lex loci contractus and not the lex loci solutionis; and, for the purposes of this question, it is said by an eminent writer that 'the true view seems to be that the place of performance of an obligation for the payment of money is the place where the money is used' and put at risk. Whart. Confl. Laws, Sec. 508. Again, when the rate of interest is different in the place where a note is made and where it is payable, and two conflicting laws are thus brought to bear on the same point, the court will apply that law to the transaction which will best support...