People's Building, Loan & Savings Ass'n v. Keller

• Decision Date: 18 March 1899
• Citation: 50 S.W. 183
• Court: Texas Court of Appeals
• Parties: PEOPLE'S BUILDING, LOAN & SAVINGS ASS'N v. KELLER.

50 S.W. 183

PEOPLE'S BUILDING, LOAN & SAVINGS ASS'N v. KELLER.

Court of Civil Appeals of Texas.

March 18, 1899.

Error from district court, Wichita county; George E. Miller, Judge.

Action by John F. Keller against the People's Building, Loan & Savings Association. From a judgment for plaintiff, defendant brings error. Affirmed.

L. T. Miller and Pruit & Smith, for plaintiff in error. Edgar Scurry and J. H. Barwise, for defendant in error.

CONNER, C. J.

This was an action brought by defendant in error, John F. Keller, against plaintiff in error, the People's Building, Loan & Savings Association, in the district court of Wichita county, Tex., on October 14, 1897, to have certain sums of money alleged to have been paid by said Keller to said loan association upon an alleged usurious bond and contract entered into by said Keller and said loan association on the 31st day of August, 1892, applied on the principal sum due on said indebtedness, and to have judgment canceling said bond, and a lien by deed of trust given therefor, and for costs and general relief. It is alleged in the petition of plaintiff below, among other things: "That heretofore, to wit, on the 31st day of August, 1892, plaintiff made, executed, and delivered to the defendant, at Wichita Falls, Wichita county, Texas, his certain obligation and contract in writing; and on the same date plaintiff entered into a verbal and parol contract with defendant, by the terms of which said written and verbal and parol contract plaintiff promised and agreed with defendant to pay to it in monthly payments of $22 per month. * * * That said $22 monthly payments are made up as follows, $5 is termed `interest payment,' and $5 is termed `premium payment,' and $12 is termed `stock payment'; and the $3 quarterly payment is made up as follows, $3 per quarter, and termed `dues payment.' * * * That the real transaction by and between plaintiff and defendant was and is a loan by defendant to plaintiff of the sum of $1,050, and that said loan was made in the manner and took the form aforesaid for the sole and only purpose of evading the usury laws of Texas. That the pretended stock contract, premium contract, and dues contract, and the pretended stock payment, premium payment, and dues payments, were and are only devices and subterfuges resorted to by the defendant to evade the usury laws of the state of Texas, and to enable the defendant to charge and collect from plaintiff a greater rate of interest than the legal rate of 10 per cent. per annum on the amount loaned, $1,050. That said pretended stock contract and loan were made at the same time, and were one and the same transaction, and were made for the sole and only purpose of obtaining a loan by plaintiff from the defendant; and said stock and loan contracts were not separate transactions, but were one and the same transaction." The petition set out the trust deed, and alleged that on September 22, 1892, and each succeeding month and quarter thereafter, he had paid the monthly payments agreed upon, until the payment in July, 1897, and prayed for a cancellation of the bond, trust-deed lien, etc. Plaintiff in error answered by general denial, and specially setting up the bond and trust deed, application of Keller for stock, etc.; alleging, in substance, that the same constituted the contract of the parties, and that by virtue thereof, under its articles of incorporation, $708 of the amount paid by plaintiff constituted payments on stock purchased, and that plaintiff was still indebted to it in the sum of $625; and prayed for judgment and foreclosure of lien. The case was tried by a jury, who returned the following verdict: "We, the jury, find for the plaintiff." Upon which the court rendered judgment in Keller's favor, canceling the bond, trust-deed lien, and for costs, etc., as prayed for by plaintiff, from which judgment plaintiff in error has duly sued out writ of error, assigned errors, etc.

The following are the facts:

Plaintiff in error at all times herein mentioned was incorporated as the People's Building, Loan & Savings Association, under the laws of the state of New York, and resident therein at Syracuse, but with agents in Texas. In August, 1892, defendant in error applied to one Joseph F. Edwards, an agent of plaintiff in error at Wichita Falls, Tex., for a loan of money, for the purpose of erecting a house on the lots described in his petition. Keller informed such agent that he wanted to borrow $1,200, and to repay it in a fixed time, to wit, within five years, on monthly payments. Keller was informed by Edwards that, before such loan could or would be made to him, it would be necessary for him (Keller) to subscribe for 12 shares of stock of the association, of the face value of $100 per share, and to execute a bond and trust deed on the lot in question to secure the same; and it was finally agreed between Keller and Edwards that Keller would so do, and that Keller should pay the sum of $22 each month, and $3 every three months, during five years. Thereupon Keller made, on written forms of the company, applications for a loan of $1,200, and for 12 shares of stock, of the par value of $100 per share, and executed a bond and trust deed. The bond and trust deed are not set out in full in the statement of facts, the following brief statement thereof only appearing in the record, to wit: "The plaintiff read in evidence the following instruments: (1) The certain obligation and contract in writing referred to in plaintiff's petition, the same being a bond given by said plaintiff to defendant in the sum of $2,400, dated August 31, 1892, conditioned that said plaintiff shall pay to said defendant or assigns the sum of $1,200 in five years from date, and also pay the further sum of $5, contribution of premium, and $5, contribution of interest, each and every month from date; `said payments to commence on or before Saturday, September 24, 1892, and to be continued and made on or before the last Saturday of each and every month thereafter. Then this obligation to be void, otherwise to remain in full force and virtue.' (2) The deed of trust in writing referred to in plaintiff's petition, dated August 31, 1892, in which it is recited that plaintiff and his wife conveyed to one E. A. Walton, trustee, lot No. 3, block 150, in the town of Wichita Falls, Texas, to secure to the defendant the payment of $1,200 in five years from date, and also the payment of $5, contribution of interest, and $5, contribution of premium, each and every month from date of said deed of trust; `said payments of interest and premium to commence on or before Saturday, September 24, 1892, and to be continued to be made on or before the last Saturday in each and every month thereafter, to be paid to the treasurer of defendant according to the conditions of the bond this day executed and delivered by the said J. F. Keller to said party of second part' (defendant association). It was also recited that, if these payments of principal and installments of interest and premium were made as they became due, said trustee was to reconvey the property to the plaintiff, at his expense; but if the plaintiff at any time failed to pay the principal, or any interest or premium money, as the same became due, `then the whole principal sum, and any interest and premium due, shall immediately become due and payable, and said trustee may advertise and sell the property under said deed of trust, and apply the proceeds to the expense of the sale and the payment of said indebtedness, and the residue, if any, to said plaintiff and his wife.' This deed was duly acknowledged by plaintiff and his wife, and delivered to defendant, and recorded in record of trust deeds and mortgages of Wichita county August 31, 1897." Nor are the applications above referred to set out, it being stated merely that defendant offered: "(1) Plaintiff's application to purchase 12 shares of defendant's stock, made on August 22, 1892. (2) Plaintiff's application for loan of money, of $1,200, to defendant, August 22, 1892; agreeing to give defendant a deed of trust to secure said loan on lot 3, block 150, town of Wichita Falls, Texas. (3) Assignment of said 12 shares of stock to defendant as collateral security for said loan; assignment dated October 15, 1892; being the same instrument attached as an exhibit to the deposition of O. N. Whitney. (4) The affidavit of said plaintiff, stating, among other things, that he was the owner of 12 shares of the stock of defendant association, par value $100 per share, dated August 31, 1892." It does not appear in evidence that there was any agreement on Keller's part to make any payments as stock payments, except in so far as it is to be inferred from the fact that one of the by-laws provided that $1 per month should be paid on each share of stock in class A; that class A was the class subscribed for by Keller; that the bond provides for $5 per month as premium, and $5 as interest, and the total monthly payment was to be $22; and the further fact that Keller testified that it was agreed by Edwards "that the stock payments would be repayments of my loan." However, we find that the transaction was intended by Keller and accepted by Edwards as a loan only; that the purchase of the stock by Keller was not as an investment, but as a means to procure the desired loan, and was so understood by Edwards, and that it was agreed at the time between Keller and Edwards that the entire amount of $22 per month was to be applied to the repayment of the loan and its interest; so that if, of this $22 per month, $12 was stock payment, then it was so agreed that stock payments should be applied to Keller's debt. There is no direct evidence, however, that this purpose of Keller, and this agreement as to application of stock payments, were known to any officer or agent of the plaintiff association, other than said Edwards.

Upon the execution of the foregoing contracts, etc.,...