R.J. & B.F. Camp Lumber Co. v. Citizens' Bank of Valdosta
| Decision Date | 15 July 1914 |
| Docket Number | 433. |
| Citation | 82 S.E. 492,142 Ga. 84 |
| Parties | R. J. & B. F. CAMP LUMBER CO. ET AL. v. CITIZENS' BANK OF VALDOSTA. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
No greater rate of interest than 8 per cent. per annum can lawfully be reserved, charged, or taken, directly or indirectly, by any contract or contrivance whatever, for any loan or advance of money in this state.
Suits for the recovery of usury must be brought within 12 months from the payment thereof.
A petition is not subject to demurrer which alleges, in substance, as follows: The plaintiff borrowed from the defendant bank the sum of $40,000, and agreed to pay for the use of the money the sum of $10,000, and to secure the notes (for $50,000) the plaintiff executed conveyances of certain realty to the president of the bank individually, who in turn conveyed it to the bank, which executed to the plaintiff a bond for title to the land. Subsequently the plaintiff paid to the bank the principal sum due on the notes, with legal interest thereon, but refused to pay the excess interest. Desiring to sell a portion of the realty conveyed to the bank, the plaintiff and the bank entered into a written agreement whereby the bank assented that the plaintiff might sell the realty, and the purchasemoney notes therefor were placed with the bank for collection, with the agreement that if the plaintiff and the bank could not agree as to the payment of the usury alleged to be charged the plaintiff then suit should be brought to determine the question of usury, provided it was brought within 6 months from the date of the agreement. Plaintiff and the bank could not agree as to the payment of the alleged usury; and this suit is filed by the plaintiff against the bank after the expiration of 6 months from the date of the agreement, but within 12 months to recover the amount collected by the bank on the notes left with the bank as collateral security, and for the purpose of canceling the note of the plaintiff made to the bank and all conveyances to secure the same; it being alleged that this note contained only usury, and that the deed to secure the same was infected with usury and void.
Error from Superior Court, Lowndes County; W. E. Thomas, Judge.
Action by R. J. & B. F. Camp Lumber Company and others against the Citizens' Bank of Valdosta. Judgment for defendant, and plaintiffs bring error. Reversed.
The R J. & B. F. Camp Lumber Company, a corporation under the laws of the state of Florida, and George W. Saxon, Frank Roberts W. B. Cate, H. E. Taylor, and J. A. Maultsby, as trustees under a certain deed of trust executed to them by the lumber company for the benefit of its creditors, brought suit against the Citizens' Bank of Valdosta for the recovery of usury and for other relief. The defendant filed its demurrer to the petition, which was sustained, and the plaintiffs excepted. The material allegations of the petition set out, in substance, that the Citizens' Bank of Valdosta had loaned to the R. J. & B. F. Camp Lumber Company the sum of $40,000, but was unwilling to make the loan in consideration of the highest rate of interest the lumber company could legally obligate itself to pay under the laws of Georgia. The bank and the lumber company finally agreed that if the bank would make the loan the lumber company would pay to the bank the sum of $10,000 over and above the legal rate of interest for the advance of the money. The lumber company accordingly executed to the bank 25 promissory notes for the principal sum of $2,000 each, the first of which should be due and payable on the 17th day of July, 1907, and monthly thereafter for 24 months, all of the notes stipulating for the payment of interest from date at the rate of 8 per cent. per annum and 10 per cent. attorney's fees. To secure the payment of the notes the lumber company executed a conveyance in the form of an absolute warranty deed conveying a very large tract of timber lands in South Georgia and Florida; the principal stockholders in the company and their wives joining in the execution of the conveyance. In order to avoid the appearance of charging excessive interest for the advance of the money, and purely as a device to evade the usury laws of the state, the bank required the lumber company and its stockholders and their wives to execute the deed of conveyance to John F. Lewis (the president of the bank) individually, who subsequently transferred the conveyance to the bank to secure the payment of the $50,000; and the defendant bank executed its bond for title to reconvey the property upon the payment of the 25 promissory notes. John F. Lewis did not, in fact, pay or agree to pay the lumber company the consideration, and there was no consideration whatever except the $40,000 loaned by the bank, to secure which the deed was given. The notes covered not only the $40,000 loaned to the company by the bank, but also the $10,000 charged for the advance of the money; the same being over and above the legal rate of interest. Prior to the 18th day of November, 1911, the lumber company paid to the bank 20 of the promissory notes first maturing, amounting in the aggregate to the principal sum of $40,000, with interest on each of them from date at the rate of 8 per cent. per annum, and refused to pay the remaining 5 notes for the aggregate principal sum of $10,000, with interest at 8 per cent. per annum. The lumber company owed large sums to creditors other than the bank, and, in order to secure the payment of them, executed a deed of trust to certain of the creditors, among whom are plaintiffs in this petition. By the terms of the trust deed all the assets of the lumber company, including large bodies of timber land, sawmills, etc., were conveyed to the trustees for the use of the creditors of the company. The trustees, together with the officers of the lumber company, were to operate the company for the benefit of its creditors until they were all paid, etc. During the summer of 1911, by and with the approval of the trustees, the lumber company opened negotiations with the A. G. Garbut Lumber Company, a corporation of Echols county, Ga., for the sale of all the timber on certain lots of land in Echols county, the same being covered by the conveyance executed by the Camp Lumber Company and R. J. & B. F. Camp and their wives to John F. Lewis, which was transferred by the latter to the Citizens' Bank of Valdosta. The Camp Lumber Company finally agreed with the Garbut Lumber Company upon the terms of sale of the timber for the consideration of $21,875, $2,000 thereof to be held up until the termination of a certain suit pending in the superior court of Echols county, wherein L. J. Strickland was plaintiff and the Camp Lumber Company was defendant, which suit involved certain of the timber. The balance of the purchase price, amounting to $19,875, was to be paid by the A. G. Garbut Lumber Company in installments of $2,000 per month, except the last one of $1,875; and the payments were to be represented by notes executed by the Garbut Lumber Company and secured by a mortgage on the timber so conveyed, etc. As the bank held the conveyance executed by the Camp Lumber Company to John F. Lewis and by him transferred to the bank, and was apparently the holder of the legal title to the timber, the Garbut Lumber Company refused to consummate the trade without the consent and approval of the bank and its agreement that it would not molest it in the cutting and removal of the timber. On the 28th day of November, 1911, the bank, the A. G. Garbut Lumber Company, and R. J. & B. F. Camp Lumber Company entered into a written agreement, whereby the bank assented to the trade upon certain terms and conditions in the agreement set forth at great length, the material portions of which will be set out later. In November, 1911, the Camp Lumber Company and the creditors' committee or trustees executed to the Garbut Lumber Company a deed conveying all their right, title, and interest in and to all the timber on the lots of land above alluded to. The Garbut Lumber Company thereupon executed and delivered to the Camp Lumber Company nine promissory notes for the sum of $2,000 each and one note for $1,875, bearing interest at the rate of 8 per cent. per annum, which notes covered the purchase price of the timber, exclusive of $2,000 held by the Garbut Lumber Company under the terms of the agreement, etc. On the same day the Camp Lumber Company transferred and assigned to the bank all of the promissory notes except the first one, maturing, together with the mortgage, in accordance with the terms and conditions of the contract; and the bank has since collected six...
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