Stewart v. Boone County Trust Co.

Decision Date05 November 1935
Docket NumberNo. 23338.,23338.
PartiesCLYDE A. STEWART, APPELLANT, v. BOONE COUNTY TRUST CO., RESPONDENT.
CourtMissouri Court of Appeals

Appeal from Circuit Court of Monroe County. Hon. E.L. Alford, Judge.

REVERSED AND REMANDED.

Cullen, Fauntleroy & Edwards and Rodgers & Buffington for appellant.

(1) Under all the evidence shown by plaintiff the question of usury was one for the jury and should have been so submitted. Bell v. Mulholland, 90 Mo. App. 612, l.c. 619-620; Missouri Discount Corporation v. Mitchell, 261 S.W. 743, l.c. 746; English Lumber Company v. Wachovia Bank & Trs. Co., 102 S.E. 205; Robinson et al. v. Whittier (Wash.), 191 Pac. 763; In re Fishel, Nessler & Co., 192 Fed. 412; In re Nesibovsky, 200 Fed. 562; Cuendet v. Love, Bryan & Co., 57 Fed. 701. (2) It is not necessary to prove an express agreement to pay usury by positive testimony, for such an agreement may be inferred from all the facts and circumstances in the case. Fidelity Loan Guarantee Co. v. Baker, 54 Mo. App. 79; Guenther v. Amsden, 44 N.Y.S. 982; Coleman v. Cole, 158 Mo. 253; Kreibohm v. Yancy, 154 Mo. 67.

Clark, Boggs, Peterson & Becker for respondent.

(1) The trial court correctly ruled that as a matter of law this record discloses no proof of usury and properly directed a verdict for respondent. (a) A lender may charge the borrower compensation for additional services rendered without creating a usurious contract. Bahl v. Miles (Mo. App.), 6 S.W. (2d) 661; Hansen v. Duvall, 333 Mo. 59, 62 S.W. (2d) 732; Webb v. Salisbury, 327 Mo. 1123, 39 S.W. (2d) 1045; Cuendet v. Love, Bryan & Co. (Mo. App.), 57 S.W. (2d) 701; Cable & Reed v. Duke, 132 Mo. App. 334, 111 S.W. 909; Houghton, Rec'r, v. Burden, 228 U.S. 161, 33 Sup. Ct. 491, 57 L. Ed. 780; Cockle v. Flack, 93 U.S. 344, 23 L. Ed. 949; Note, 21 A.L.R. 898; 27 R.C.L. 231, sec. 32; Barras v. Youngs, 185 Mich. 496, 152 N.W. 212; Chaffe v. Hughes, 57 Miss. 259. (b) The contract in the instant case and all of the evidence disclose that the additional charge of five per cent of the amount collected on tax bills was paid for a separate independent service rendered to the borrower by the lender and not for the use of the money. Hansen v. Duvall, 333 Mo. 59, 62 S.W. (2d) 732; Bahl v. Miles (Mo. App.), 6 S.W. (2d) 661; Tobin v. Neuman (Mo. App.), 271 S.W. 842; 27 R.C.L. 223; Grace et al. v. Koppel, 225 Mo. App. 291, 30 S.W. (2d) 182; McFarland v. Gillioz, 327 Mo. 690, 37 S.W. (2d) 911; Bragg v. Specialty Shoe Machinery Co., 225 Mo. App. 902, 34 S.W. (2d) 184; Ismert-Hincke Milling Co. v. Mercurio Bros. Spaghetti Mfg. Co. (Mo. App.), 243 S.W. 408; Tobin v. Neuman (Mo. App.), 271 S.W. 842; Spain v. Talcott, 152 N.Y.S. 611; Pulitzer Pub. Co. v. Chitwood (Mo. App.), 9 S.W. (2d) 251; Allen v. Newton, 219 Mo. App. 74, 266 S.W. 327; Cockle v. Flack, 93 U.S. 344, 23 L. Ed. 949; Chaffe v. Hughes, 57 Miss. 259; Re Mesibovsky (1912), 119 C.C.A. 42, 200 Fed. 562; Citizens Bank v. Murphy, 83 Ark. 31, 102 S.W. 697; James Bradford Co. v. United Leather Co., 11 Del. Ch. 46, 95 Atl. 308; Portland Trust Co. v. Havely, 36 Ore. 234, 59 Pac. 466, 61 Pac. 346; Hopkins v. Baker (Va.), 2 Pat. & H. 110; Note, 21 A.L.R. 898; Cuendet v. Love, Bryan & Co., 57 S.W. (2d) 701.

HOSTETTER, P.J.

This action was begun in the Circuit Court of Boone County on the 30th day of June, 1933, and the venue was subsequently changed to the Circuit Court of Monroe County where it was tried before the judge and a jury on April 16, 1934.

The action is one in replevin to recover a certain promissory note and two tax bills, described in the petition, which had been assigned to the defendant trust company, as collateral security on a loan.

The petition is in conventional form and the answer is a general denial.

The collateral was held by defendant trust company as security for a loan made to the plaintiff, and the issue involved is a charge that usurious interest was exacted by the bank on the loan and the recovery of the collateral is sought under the provisions of section 2844, Revised Statutes Missouri 1929 (Mo. Stat., Ann., sec. 2844, p. 4633).

The plaintiff for a number of years had been engaged in the contracting business and had paved or otherwise improved a number of streets in the City of Columbia, Missouri. In the latter part of 1927, he was awarded the contract to improve Stewart Road in said city, running through a residential district in a subdivision laid out by J.A. Stewart. The street had been previously paved. After plaintiff had secured the contract for improving Stewart Road, he solicited a loan from defendant, Boone County Trust Company for the necessary funds to make such improvement, with the understanding that he would assign the special tax bills against the abutting property issued for such improvement as collateral security for such loan. The Trust Company agreed to furnish the money, but required him to enter into a written contract in which it agreed to loan him the necessary funds up to $20,000 for the construction of such improvement. The loan was to be evidenced by promissory notes bearing eight per cent interest per annum. A written contract was prepared by the defendant and signed by both parties, covering the transaction between them. The pertinent portions of such contract, insofar as it affects the issues in this cause, are as follows:

"Sec. 6. Party of the first part agrees to allow the said second party five per cent for all money collected on said tax bills, and second party agrees to apply the balance as collected on said notes in payment thereof, and that if there be a balance over the amount of said notes after paying principal and interest, to pay same to the party of the first part.

"Sec. 9. Should any of said tax bills remain due and unpaid and it should become necessary to file suit or to incur other expenses in the collection of same, or in reducing the lien thereof to judgment, the party of the first part will pay all expenses so incurred. It is further understood that the party of the second part is in no way obligated for the collection of all or any one of said tax bills."

The evidence disclosed that on the completion of the work and the issuance of the special tax bills for same, the plaintiff assigned them, together with a promissory note of J.A. Stewart, which the defendant required as additional security, and delivered the tax bills and such note to the defendant; that when defendant became possessed of said tax bills, which was in October, 1927, it notified the various property owners by postal card where the special tax bills were and that payment could be made to the defendant Boone County Trust Company at its banking house in said City; that the taxpayers or property owners, upon receipt of the notice appeared promptly, for the most part, and paid their respective tax bills; except that in some few cases the property owners delayed and, accordingly were required to pay some interest in addition to the face of the special tax bill, which constituted a lien against their respective properties.

It was also shown in evidence that the Trust Company failed in many instances to promptly credit the payments received on the tax bills on the plaintiff's notes, but carried a deposit account, on its books, of these collections and delayed crediting the payments in many instances as long as three weeks or more.

It was testified to by J.A. Stewart, the father of plaintiff, that he remonstrated with the officers of the Trust Company about this practice of delaying the credit entries on the notes, but did not obtain satisfaction.

The evidence further disclosed that the actual amount deducted from the payments made by the various property owners on the tax bills to cover the five per cent allowance, provided for by said section 6 of the written contract hereinbefore set out, was $800.55.

It further appeared that defendant notified plaintiff, shortly prior to the institution of this suit, that it intended to foreclose on the promissory note and the two tax bills involved in this suit and that it bid in the collateral in question and that it is still in the possession of defendant; that all the tax bills, with the exception of the two involved in this action, were collected between the first day of November, 1927, and the 9th day of January, 1931, and that the defendant bank did not charge any commission upon the collection made on the tax bills issued against the property of J.A. Stewart, the endorser of plaintiff's contract.

The money collected from the tax bills proved to be insufficient to cover plaintiff's notes and the interest thereon and J.A. Stewart, his father, advanced some $1800 to supply the deficiency.

It was also in evidence that the property in the tax district was valuable residential property and the owners thereof financially responsible.

J.A. Stewart's testimony, which was confirmed by the bank books, further showed that the collections made by the Trust Company on these tax bills from October 31, 1927, for the remaining two months of that year, amounted to $9067.50 and for the whole of 1928, the collections on the tax bills amounted to $6248.93, the most of which was paid in during the first three or four months of that year; that the collections for 1929 amounted to $3293.97 and that the collections were very small in 1930, the last collection being made on October 10, 1930, and that the total collections on the tax bills were $19,160.49.

The testimony further showed that all of the tax bills were collected by the Trust Company except the two involved in this suit and that only a few of them delayed payment beyond the time they should have paid, but when they did pay, they, of course, paid interest which had accrued on their original tax bills.

The two tax bills which are involved in this suit were against the City of Columbia, both dated October 5, 1927, both bearing...

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