Portneuf Lodge No. 20, I. O. O. F. v. Western Loan and Savings Company
| Decision Date | 28 November 1899 |
| Citation | 6 Idaho 673,59 P. 362 |
| Parties | PORTNEUF LODGE No. 20, I. O. O. F. v. WESTERN LOAN AND SAVINGS COMPANY |
| Court | Idaho Supreme Court |
USURIOUS CONTRACTS.-Under the laws of this state an action may be maintained on a usurious contract for the recovery of the principal sum loaned. Such a contract is not void.
SAME-SECTION 1266 OF THE REVISED STATUTES.-KIND OF JUDGMENT TO BE ENTERED UNDER.-The provisions of section 1266 of the Revised Statutes direct the kind of a judgment to be entered in actions on a usurious contract, but does not prescribe any particular action for such contracts.
CORPORATION-ENCUMBERING REAL ESTATE.-Under the provisions of section 2764 of the Revised Statutes a benevolent corporation cannot legally encumber or sell its real property without first obtaining an order for that purpose of the district court of the county in which such real property is situated.
CONTRACTS ULTRA VIRES.-The execution of those usurious or forbidden contracts was not germane or incidental to any powers conferred on said plaintiff corporation by its charter or the laws of this state, but was absolutely prohibited.
CLOUD ON TITLE-CANCELLATION OF MORTGAGE.-Under the facts of this case equity will remove the cloud cast upon the mortgagor's title, it being shown that the mortgagor has paid to the mortgagee the principal sum borrowed and that such contracts were ultra vires.
(Syllabus by the court.)
APPEAL from District Court, Bannock County.
Reversed and remanded.
James W. Eden, for Appellants.
We are aware that such a suit has been before this court in the case of Stevens v. Home Sav. etc. Assn., 5 Idaho 739, 51 P. 779. But there was no demurrer to the complaint in that case, and of course it is not decisive of the points raised by this appeal. It is not our object to question the soundness of the views expressed by this honorable court in the many cases it has decided on the subject of usurious interest contracts, but conceding that this court is right on the subject, we believe that the respondent is not in a position to ask the aid of the law in this case. Contracts for a greater rate of interest than is allowed by law are prohibited because they are considered vicious, and it is not necessary that a penalty be imposed in order to render them illegal. (See Harvey v. Merrill, 150 Mass. 1, 15 Am St. Rep. 159, 22 N.E. 49, 5 L. R. A. 205.) A suit could not be maintained on the original contract except by virtue of section 1266, because it would be in violation of law, all rights and remedies given to violators of sections 1264 and 1265, are named in section 1266, and by that statute each party must be governed. If they have made the bed hard they must lie upon it; it is only the result of their own voluntary action.
Thomas F. Terrell, for Respondent.
Appellants rely upon two assignments of error: 1. The court erred in overruling the demurrer to the complaint; and 2. In sustaining the demurrers to the cross-complaint. It appears however, from the discussion which follows, that only one error is relied upon, to wit: "We contend that the complaint does not state facts sufficient to constitute a cause of action. No particular defects in the complaint are pointed out more than to say that such an action cannot be maintained; and, no reason or authority is offered to uphold the cross-complaint, no reference being made to it in the argument. It is the recognized rule that if a single cause of action is sufficiently stated in the complaint, this objection (general demurrer) will not lie, or rather this ground of demurrer cannot obtain. (Carler v. Wann, ante p. 556, 57 P. 314.) That such an action can be maintained and has been upheld by decisions of this court, we call attention to the following cases: Stevens v. Association, 5 Idaho 739, 51 P. 779; Barnes v. Pitts Agrl. Works, ante, p. 259, 55 P. 237; Gamble v. Canadian etc. Mtg. Co., ante, p. 202, 55 P. 241. And to the following cases under statutes identical to our own: Walker v. English 109 Ala. 369, 17 So. 715; Perkins v. Matteson, 40 Kan. 165, 19 P. 633; Hall v. Hurd, 40 Kan. 740, 21 P. 585; Thomas v. Reynolds, 29 Kan. 304; Boyes v. Summers, 46 Neb. 308, 64 N.W. 1066. As to the sufficiency of each of the causes of action set forth in the respondent's complaint, we invite the attention of the court to the case of Sweet v. Ward, 43 Kan. 695, 23 P. 941, 942. It is conceded that the loan of $ 4,000 evidenced by the note and interest coupons "providing for interest upon interest which was not due at the time they were made," as set forth in the plaintiff's first cause of action, has been passed upon by this court in the case of Vermont Loan etc. Co. v. Hoffman, 5 Idaho 376, 49 P. 314-318. Such interest coupons are therefore null and void; they are not a legal obligation upon respondent; they cannot be enforced by the courts, and if paid must be credited upon any amount unpaid upon the principal. (People's Bldg. etc. As n. v. Bessonette (Tex. Civ. App.), 48 S.W. 52.) This court has held that such stock payments are in fact payments upon the principal. (Fidelity Sav. Assn. v. Shea, ante, p. 405, 55 P. 1022; Stevens v. Association, 5 Idaho 739, 51 P. 779.) The facts stated clearly bring the case within the rule laid down in the following cases: Stevens v. Association, 5 Idaho 739, 51 P. 779; Fidelity Assn. v. Shea, ante, p. 405, 55 P. 1022; Mills v. Association, 75 N.C. 292; Association v. Graham, 7 Neb. 172. The record calls for a construction of section 2764 of the Revised Statutes. (Wilder v. Campbell, 4 Idaho 695, 43 P. 677; People v. Moore, 1 Idaho 662; Barnitz v. Beverly, 163 U.S. 118, 16 S.Ct. 1042.) Respondent is a social and benevolent corporation organized and existing under chapter 8, sections 2760-2766 of the Revised Statutes. All power vested in such corporation must be derived from these sections of the statute, for this is its charter. (Reese on Ultra Vires, secs. 9-12; Chewacla Lime Works v. Dismukes, 87 Ala. 344, 6 So. 122; Sherwood v. Alvis, 83 Ala. 115, 3 Am. St. Rep. 695, 3 So. 307.) The question is, Did the trial court err in refusing to enter a decree canceling the mortgages? We respectfully think it did upon either or both propositions involved in the case, to wit: 1. That each of the mortgages had been fully paid when construed by the decisions of this court; and 2. That neither of the mortgages were executed as required by section 2764 of the Revised Statutes of Idaho. If such mortgages were paid, or were executed in violation of law, in either event they and each of them cast a cloud upon respondent's title, which should be removed by a cancellation of the mortgages, after proper demand in writing. (Hall v. Hurd, 40 Kan. 740, 21 P. 585, 586; Crenshaw v. Hedrick, 19 Tex. Civ. App. 52, 47 S.W. 71; Stevens v. Building Assn., 5 Idaho 739, 51 P. 779; Sweet v. Ward, 43 Kan. 695, 23 P. 941; Barnes v. Agricultural Works, ante, p. 259, 55 P. 237; Steiner v. Ellis (Ala.), 7 So. 803.) This is true whether the mortgages have been paid or are void for want of legal execution. ( New York Nat. Bldg. etc. Assn. v. Cannon, 99 Tenn. 344, 41 S.W. 1054-1056; Hill Estate Co. v. Whittlesey, 21 Wash. 142, 57 P. 345; Bangs v. Windmill Co., 96 Tenn. 361, 34 S.W. 516; Pershing v. Wolfe, 6 Colo. App. 410, 40 P. 856-859; Sporer v. Eifler, 1 Heisk. 636; Story's Equity Jurisprudence, sec. 301.) A warranty deed may be canceled as a cloud on title, though the deed conveys nothing because the description of the land intended to be conveyed is defective. (Jackson v. Tatebo, 3 Wash. 456, 28 P. 916; Kittle v. Bellegarde, 86 Cal. 556, 25 P. 55.)
This suit was brought by the respondent, the Portneuf Lodge, No 20, Independent Order of Odd Fellows, a corporation, under the provisions of section 3364 of the Revised Statutes to compel the cancellation or satisfaction of the two mortgages hereinafter referred to, the surrender of the promissory notes secured by said mortgages, and for judgment for $ 200, the statutory penalty for failing to enter satisfaction of said mortgages of record. The transcript shows that the appellant, Western Loan and Savings Company, and the respondent corporation, on the thirty-first day of May, 1893, entered into a contract, by the terms of which appellant loaned the respondent $ 4,000, to draw interest at the rate of nine per cent per annum, evidenced by a promissory note, with sixty-nine coupon interest notes attached for thirty dollars each, which coupon note called for interest after maturity at the rate of twelve per cent per annum, and the respondent was to pay appellant $ 2,000 premium for the $ 4,000 loan. One mortgage was executed to secure the $ 4,000 loan, and one to secure the $ 2,000 premium. Respondent made numerous payments upon this indebtedness, aggregating the sum of $ 4,026, and thereupon demanded the discharge of said mortgage, which demand was refused. The appellant filed a demurrer to the complaint, which was overruled. The appellant then answered, and filed a cross-complaint, to which plaintiff demurred. The decision of the court on the last-mentioned demurrer was withheld, and the cross-complaint considered denied, with the privilege to answer to conform to the proof, and the court proceeded to try the case. Certain witnesses were sworn and testified on behalf of the plaintiff, and no evidence was offered by the defendant; and, after argument by the respective counsel, the cause was submitted to the court. The trial took place on the twelfth day of December, 1898, and on the sixteenth day of that month the plaintiff moved to strike out paragraphs 1 and 2 of the prayer of the complaint, which motion was granted. Counsel for respondent claims that said motion was...
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