Spithover v. Jefferson Building & Loan Ass'n.

• Decision Date: 14 December 1909
• Parties: SPITHOVER v. JEFFERSON BUILDING & LOAN ASS'N.
• Court: Missouri Supreme Court

125 S.W. 766

225 Mo. 660

SPITHOVER v. JEFFERSON BUILDING & LOAN ASS'N.

Supreme Court of Missouri, Division No. 2.

December 14, 1909.

Rehearing Denied February 12, 1910.

1. WITNESSES (§ 154) — COMPETENCY.

As to the transaction between a woman and a building and loan association, by which it awarded a loan to her, its president and secretary are competent witnesses for it against her, though her husband, who acted for her, is deceased.

2. BUILDING AND LOAN ASSOCIATIONS (§ 26) — BY-LAWS — AUCTIONS OF FUNDS.

The by-law of a building and loan association, providing for making loan by auctioning its funds, on a certain night in each month, to the bidder of the highest premium, and that no loan shall be made to a second bidder on the same evening for a premium lower than the successful bid, does not prevent a second auction of funds on the same evening.

3. STATUTES (§ 84) — SPECIAL LAWS — RATE OF INTEREST.

Rev. St. 1889, § 2814, providing that no premiums, fines, or interest on such premiums that may accrue to a building and loan association on its loans shall be deemed usurious, does not contravene Const. art. 4, § 59 (Ann. St. 1906, p. 197), prohibiting local or special laws fixing the rate of interest; and therefore a contract for premium does not violate the general statute against usury.

Appeal from St. Louis Circuit Court; Matt G. Reynolds and Wm. McKinsey, Judges.

Action by Rose Spithover against the Jefferson Building & Loan Association. Judgment for defendant. Plaintiff appeals. Affirmed.

Plaintiff's husband was deceased at the time of the trial.

Jas. J. O'Donohoe, for appellant. Kinealy & Kinealy, for respondent.

GANTT, P. J.

The plaintiff was the owner of 10 shares of stock of the par value of $240 each in the defendant corporation and building association, organized under the laws of this state, and on the 30th day of June, 1892, she borrowed from it the sum of $2,400, and together with her husband, Henry Spithover, executed to the defendant a bond wherein they acknowledged themselves indebted to the association in the sum of $2,400, with $10 per month interest from date and a premium of $8.40 for a preference in obtaining the loan, and conditioned that they would pay to the association $28.40 every month as the dues on the stock, interest, and premium on the loan, and also that they would promptly pay all fines assessed against them and taxes and assessments levied upon the real estate described in the deed of trust securing the bond. And that if at any time they should permit the dues, interest, premium, or fines to remain unpaid for six months, then the whole debt should become due at once at the option of the association, and the deed of trust might be enforced for the payment of the debt. At the same time, as further security for the bond and debt, plaintiff and her husband executed to Julius E. Greffet as trustee a deed of trust upon the lot of ground in city block 2332 of the city of St. Louis, having a front of 25 feet on the north line of Madison street. The deed of trust provided that in case the dues, interest, premium, or fines should become in default for six months, or if at any time, such dues, interest, premium, and fines accumulate so as to equal the sum of six months' dues, interest, premium, and fines, or if the plaintiff failed to pay the taxes on the property or to keep the same free from mechanics' liens, the trustee might proceed to sell the property for the purpose of paying the amount due.

At the time of the execution of this bond and deed of trust, plaintiff also pledged her 10 shares of stock to the association. The last payment made by the plaintiff and her husband on account of the loan was in February, 1900, and because of the default in payments, the association caused the property to be sold, after advertising the same, on the 2d day of March, 1901, and it was purchased by the association for $2,250. On the 28th of August, 1905, plaintiff instituted this suit claiming that the loan made to her was usurious, and that she had in reality paid back all that was due from her, and consequently there was no default on her part at the time of the sale of the property by the trustee, and in her petition she prays that an accounting may be had between the parties, and that she may be given judgment against respondent for the amount found to have been paid in by her, and also the amount that the property brought at the foreclosure sale, together with interest thereon at 6 per cent. per annum less the amount of the loan to her with 5 per cent. interest thereon.

The grounds upon which plaintiff seeks recovery are set forth in her petition as follows: "Plaintiff states further that defendant charged plaintiff 35 per cent. of said loan of twenty-four hundred dollars as and for a premium, and that said premium is unreasonable, extortionate, oppressive, illegal, and usurious; and article 10 of chapter 12 of the Revised Statutes of Missouri of 1899 [Ann. St. 1906, pp. 1083-1102], particularly section 1362 thereof, and article nine of chapter 42 of the Revised Statutes of Missouri of 1889, especially section 2814 thereof, under which said loan was pretended to be let, and by virtue of which it (defendant) was incorporated, are all in conflict with and in contravention of section 53 of article 4 of page 80 of the Constitution of the state of Missouri [Ann. St. 1906, p. 197], and especially that part of said section of said article, which provides: `The General Assembly shall not pass any local or special law fixing the rate of interest,' and in violation of sections 5973 and 5975 of chapter 90, pp. 1428 and 1429, of the Revised Statutes of Missouri of 1889, and in conflict with section 3708 of chapter 40 of the Revised Statutes of Missouri of 1899 [Ann. St. 1906, p. 2077]. That the Constitution and statutes aforesaid were all in full force and effect at all of the dates herein named. Plaintiff further states that said loan was not awarded by means of an auction, and there was no competitive bidding therefor; on the contrary, defendant charged said premium through private contract with plaintiff and by an arbitrary demand of said 35 per cent. per annum."

On the part of the defendant the evidence tended to prove that at a regular monthly meeting on June 8, 1892, the executive committee presented an application from the plaintiff and her husband for a loan of $2,200 more or less to purchase a lot on the north side of Madison between Nineteenth and Twentieth streets, and erect thereon a two-story brick stable with four living rooms above. The president, Mr. Hercules, offered $2,200 more or less for sale to the highest bidder, and 35 per cent. premium was offered by Mrs. Spithover, there being no other higher bid, the president declared $2,200 more or less sold to Mr. and Mrs. Spithover at 35 per cent. premium. It was then moved and seconded that the loan to Mr. and Mrs. Spithover be granted subject to the approval of the real estate and building committees, and also subject to the borrowers paying into the association two years' dues in advance on the number of shares borrowed on, and this motion was adopted. Section 36 of the by-laws of the defendant corporation was offered by the plaintiff and read in evidence; it was in these words: "The funds of the association will arise from the collection of monthly dues, premiums on loans, fines and other sources. The money thus accumulated shall, the second Wednesday in each month, be put up at auction and awarded to the shareholder who bids the highest premium for the same. Each stockholder is entitled to receive from the association a loan on real estate security of $240 for each share of stock he holds. The successful bidder shall be entitled to take out the premium paid a loan on all the shares he holds. If there is not that much money on hand, the succeeding collections shall be placed to his credit until his loan is all paid off. No loan shall be made to a second bidder on the same evening for a premium lower than the successful bid. The secretary may bid in any loan for any member requesting same and filing his application. All members desiring to take out a loan must file with the secretary an application as prescribed by law." It was admitted that the real estate upon which the loan was secured was the sole and separate property of the plaintiff. Other facts will be noted if necessary, in the course of the opinion.

It is obvious that the plaintiff based her claim for relief upon two substantive propositions, to wit, that the loan which was made to her was not awarded at an auction of the money...