Appeal from circuit court, Clay county; Felix G. Taylor, Judge.
BATTLE, J.
B. F. Nance and the Southern Savings Fund & Loan Company instituted an action against the Planters' Mutual Insurance Association upon an insurance policy executed by the defendant to Nance, on the 15th day of April, 1896, in which it insured a certain dwelling house of Nance for $1,500 against fire, for the term of three years. They alleged in their complaint that Nance, on the 9th of June, 1896, executed to Charles B. Stark, trustee for the Southern Savings Fund & Loan Company, a mortgage on the property upon which the dwelling house was located; that the defendant on the 2d day of May, 1896, entered into a contract with the Southern Savings Fund & Loan Company to the effect that, in case any loss should occur under the contract for insurance, the defendant would pay to it, as mortgagee or beneficiary, as its interest might appear; that Nance was indebted to the loan company in the sum of $975; that the dwelling house was destroyed by fire on the 28th of January, 1897; that Nance forthwith gave notice of the loss, and would have proved the same, had the plaintiffs not been prevented by the written refusal of the defendant to pay either of them.
To this complaint the defendant filed an answer, the substance of which we give in the language of the abstract of the appellant, as follows: "It admitted the contract of insurance with Nance, but it denied the execution of said mortgage to the appellee, the Southern Savings Fund & Loan Company, and alleged that the said Nance executed a mortgage on the 9th day of June, 1896, to Charles B. Stark, of the city of St. Louis, as trustee. It admits it entered into a contract with the appellee, the Southern Savings Fund & Loan Company, to the effect that, in case any loss should accrue under said contract of insurance, it should pay the said appellee as its interest might appear. The defendant denies that the sum of $975 is due from the said Nance to the said appellee, and it says that if the said Nance was indebted to the said company in any sum whatever, by virtue of said mortgage, it was not due and payable at the time of the commencement of this suit, nor was it due and payable at the time of the filing of said complaint, and it says that the said appellee could not recover in said cause: First. Because the said debt from said Nance to said appellee, if any, was not due and payable. Second. Because it is expressly stipulated in said contract of insurance No. 1,340 `that there was a premium note for $73.75 due December 1, 1896, which said note at the time of said alleged fire and loss was past due and unpaid, and under the terms of said policy this contract was thereby rendered null and void.' Third. Because it expressly provided in said insurance contract `that, should any loss or damage accrue to the property insured in such case, — that is, where a note or any part thereof remains past due and unpaid at the time of said loss or damage, — then said contract shall be null and void, and if any
loss accrue to the property insured, and said note for $73.75 was past due and unpaid at the date of such alleged loss, then said contract of insurance is null and void,' and the plaintiffs are not entitled to recover on the same; and it further states that the said appellee at the time of such alleged loss had knowledge of the fact that said note of $73.75 was due and unpaid long before the time of said alleged loss; that said insurance contract, by reason thereof, was null and void, and that no recovery could be had thereon. Fourth. The defendant also alleges that the plaintiff, the Southern Savings Fund & Loan Company, cannot maintain this action because said policy of insurance sued on was assigned to it merely as collateral security on the mortgage on said property and the real estate on which it was situated, and it was expressly provided in said insurance contract `that, should any loss or damage accrue to said property insured, the mortgagee shall not be entitled to demand or recover any part of the amount until he, she, or they have enforced and collected such a portion of the debt as can be collected out of the primary security to which this contract is collateral,' and the defendant says that said Southern Savings Fund & Loan Company has not exhausted its security, and that the value of the real estate upon which it holds said mortgage is largely greater than the amount claimed by it under this contract, and is amply sufficient to protect said plaintiff, the Southern Savings Fund & Loan Company, against any loss by reason of said fire. Fifth. The defendant, further answering, states that the note and mortgage executed by B. F. Nance to the plaintiff, the Southern Savings Fund & Loan Company, on the 9th day of June, 1896, and the mortgage executed by B. F. Nance to said Charles B. Stark as trustee of the same date, and to secure said note, being the note and mortgage upon which the plaintiff sues herein, are both usurious and void, and both said note and mortgage were executed in this state, and are Arkansas contracts, and are to be construed in accordance with the laws of this state; that in said note and mortgage the said B. F. Nance agrees to pay the said plaintiff, the Southern Savings Fund & Loan Company, interest at the rate of $5 per month on $1,000, which amounts to 6 per cent. per annum, and he also agrees to pay on said note and mortgage a premium of $6 per month on the $1,000, which amounts to 7½ per cent. per annum on said amount, thus making interest charged on said note and mortgage amount to 13½ per cent. per annum; that the monthly payment of $6 as a premium mentioned in said note and mortgage is only an additional interest charged, and is a mere sham, device, and subterfuge to cover up the charge of usury; that the said Southern Savings Fund & Loan Company unlawfully and corruptly demands, exacts, and receives of and from the said Nance interest on $1,000 at the rate of 13½ per cent. per annum, and is therefore usurious and void, and the said company is not entitled to recover thereon."
The plaintiffs filed a demurrer to so much of the answer as sets up usury, which was sustained by the court. After this they filed a supplemental complaint, in which they alleged that the loan company had collected $250 upon the mortgage by accepting a deed to the mortgaged premises at that price, and had thereby exhausted all security for the payment of the debt of Nance, except the policy sued on; and the defendant answered and denied these allegations.
A jury was impaneled to try the issues in the case, and the plaintiffs introduced and read as evidence the policy sued on, which contained the following clauses: "Planters' Mutual Association of Arkansas * * * by this contract of insurance, in consideration of note for seventy-three and 75/100 dollars, due Dec. 1, 1896, and the stipulations herein contained, do insure B. F. Nance against loss or damage by fire * * * to the amount of fifteen hundred dollars, as follows: On his dwelling house, $1,500, situate on lots Nos. 10, 11, & 12, block No. 401, Corning, county of Clay, Arkansas; * * * and the said association hereby agrees to make good unto the said assured, his executors, administrators, and assigns, all such immediate loss or damage, not exceeding the amount of the sum insured, nor the interest of the insured in the property, nor to exceed three-fourths of the cash value of any building or other property, at the time of loss, as shall happen by fire * * * to the property above specified, from the fifteenth day of April, one thousand eight hundred and ninety-six, at 12 o'clock noon, to the fifteenth day of April, one thousand eight hundred and ninety-nine, at 12 o'clock noon, except such portions of the above-mentioned period of time as this association shall hold against the assured any promissory note past due and unpaid, in whole or in part, given by the assured for the assessment charged for this contract or any part thereof, and during such portion of time this contract shall be null and void, and so continue until such promissory note is fully paid. * * *
"The amount of loss or damage to be estimated according to the actual cash value of the property at the time of the loss, and to be paid in ninety days after notice and due and satisfactory proof of the same shall have been made by the assured and received at the association's principal office, at Little Rock, Ark., in accordance with the terms and provisions of this contract hereinafter named. * * *
"When a membership contract is issued upon the interest of a mortgagee or other creditors, or is held as collateral security to a mortgage or any other debt or demand, the assured shall not be entitled to demand or recover any part of the amount insured until he, she, or they shall have enforced and collected
such portion of the debt as can be collected out of the primary security to which this contract is collateral. * * *
"It is mutually agreed that no suit or action against this association upon this contract shall be sustainable in any court of law or equity, unless commenced within six months after the loss or damage shall occur; and, if any suit or action shall be commenced after the expiration of said six months,...
