Sherwood v. Wilkins

• Decision Date: 14 May 1898
• Citation: 45 S.W. 988,65 Ark. 312
• Parties: SHERWOOD v. WILKINS
• Court: Arkansas Supreme Court

45 S.W. 988

65 Ark. 312

SHERWOOD v. WILKINS

Supreme Court of Arkansas

May 14, 1898

Appeal from Cross Circuit Court in Chancery FELIX G. TAYLOR, Judge.

Decree reversed and cause remanded.

Watson & Fitzhugh and T. E. Hare, for appellants.

Where a mortgage provides that, on default of any payment of interest, the whole sum shall become due, and the mortgage may be foreclosed, limitations begin to run when the note matures according to its terms, and not on default in payment of interest. 116 Cal. 232; ib. 220. It is no defense that the Freehold Company is a foreign corporation, and has not complied with § 11, art 12, of the constitution. 60 Ark 325. To charge appellant with usury, knowledge on their part of the usurious contract must be proved. 54 Ark. 40; ib. 573; 38 S.W. 15.

Norton & Prewett, for appellees.

If the lending company was innocent of the usurious nature of the contracts which were being made for it, this fact was peculiarly within its knowledge, and if it would use such innocence as a defense, it must show it. 19 Ark. 146; 32 F 122; 17 S.E. 455; 1 N.W. 613; 2 A. 374. In this case knowledge was imputable to the lending company. 38 S.W. 1113 51 Ark. 534.

OPINION

HUGHES, J.

The bill in this cause was filed in the circuit court of Cross county to foreclose a trust deed executed by the appellees to Sherwood, as trustee, to secure their three notes, payable to appellants, the American Land-Mortgage Freehold Company, Limited, as follows: One note for $ 166, due December 26, 1886; one note for $ 166, due December 26, 1887; one note for $ 168, due December 26, 1888. Attached to the last-mentioned note was an interest coupon for $ 13.31, due at the same time with the note, to-wit: December 26, 1888. All of said notes and the trust deed were executed on the 26th day of December, 1883. The bill was filed December 22, 1893. The trust deed and notes were filed as exhibits to the bill.

The defendants by their answer set up three defenses: (1) Usury; (2) the statute of limitation of five years; (3) that the complainant, the Freehold Company, was a foreign corporation, and had not complied with section 11, article 12, of the constitution of the state of Arkansas, providing that foreign corporations shall do no business in this state except while it maintains therein one or more known places of business, and an authorized agent or agents, in the same, upon whom process may be served.

The testimony adduced by the defendants failed to establish the first defense.

As to the second defense, to-wit, the statute of limitations of five years, it is conceded that the bar had attached as to the two notes for $ 166 each, one due December 26, 1886, and the other due December 26, 1887.

As to the third and last note, to-wit: the one for $ 168, due December 26, 1888, and the interest coupon for $ 13.31, due on the same date, the bar had not attached, as the five years from the maturity of the note and coupon last referred to did not expire until four days after the bill was filed. Defendants claim, however, in their answer, that, even as to this last note, the statute of limitations is a good defense, because, under the terms of the trust deed, the plaintiffs had a right of action upon all of said notes upon the failure of the defendants to pay the one maturing in 1886, at maturity. We think it clear, however, that this contention cannot be maintained. The language of the trust deed is that, "should said first parties fail to pay any of said money hereby secured, either principal or interest, when the same becomes due, or to conform to, or to comply with, any of the foregoing conditions or agreements, the principal sum of money hereby secured may, without notice to said first party, at the option of the said third party (the Freehold Company) or his assigns, and at his option only be declared due and payable at once," etc. In the absence of proof to show the appellant company had exercised this option, it will not be seriously contended in this court that the statute of limitations began to run before the maturity of the notes, according to their tenor. It has been expressly...