The Midland Savings and Loan Company v. Solomon

• Decision Date: 11 March 1905
• Docket Number: 14,027
• Citation: 79 P. 1077,71 Kan. 185
• Parties: THE MIDLAND SAVINGS AND LOAN COMPANY v. JOSEPH S. SOLOMON et al
• Court: Kansas Supreme Court

79 P. 1077

71 Kan. 185

THE MIDLAND SAVINGS AND LOAN COMPANY v. JOSEPH S. SOLOMON et al

No. 14,027

Supreme Court of Kansas

March 11, 1905

Decided January, 1905.

Error from Allen district court; J. F. THOMPSON, judge pro tem.

Judgment reversed.

SYLLABUS

SYLLABUS BY THE COURT.

1. BOND AND MORTGAGE--"Proper Law of the Contract" May be Stipulated. The parties to a lawful bond for the payment of money may stipulate that it shall be payable in, and be governed by the laws of, a state of their choice; and if such a stipulation be made fairly, and in good faith, it is a duty of the courts of another state in which suit may be brought to recover on the bond to give effect to it.

2. BOND AND MORTGAGE--Location of the Mortgaged Property Immaterial. The fact that, as an incident to such bond, the obligor has secured it by a mortgage upon real estate located in the foreign state, where suit is brought to enforce it, does not abrogate the stipulation, and the bond must nevertheless be interpreted by the law of the state where it is payable.

3. BOND AND MORTGAGE--Duty of Courts of This State, Regardless of the Usury Law. The courts of this state should not refuse, on the ground of a supposed public policy, to enforce collection of sums due on a lawful bond solvable by the laws of a foreign state, and not given in evasion of the usury laws of this state, merely because, if construed by the laws of this state, the rate of interest would be higher than that allowed by the laws here.

A. J. Bryant, for plaintiff in error; Campbell & Goshorn, of counsel.

J. B. Atchison, and Ewing, Gard & Gard, for defendants in error.

BURCH J. All the Justices concurring.

OPINION

BURCH, J.

The district court sustained a demurrer to a petition for recovery upon a bond and mortgage given to a Colorado building and loan association. It must have done so either upon the ground that the contract was in fact a Kansas contract, and therefore discharged under the laws of this state relating to usury, or because the usury laws of this state are applicable to it even though it be a Colorado contract. The mortgage covers real estate in Allen county. It recites that the mortgagor is a resident of that county, and it was acknowledged in that county; but the sums to become due upon the bond are made payable in Colorado. It expressly provides that its conditions are to be performed in the state of Colorado, and that it shall in all respects be governed by, and entitled to the benefits of, the laws of that state; and the petition expressly alleged that the bond and mortgage were delivered to the plaintiff in that state.

Since the instruments in suit were delivered in Colorado, the contract was made there. (Briggs v. Latham, 36 Kan. 255, 13 P. 393, 59 Am. Rep. 546.)

"Delivery is an essential part of the execution of any instrument. It is not enough to sign and seal a bond. It is effectual only when it is delivered to the party interested in it, or to some one for him. The bond might have been signed wherever it was most convenient for the obligor to give attention to it, but it was an ineffectual and useless paper until delivery by the obligor. The delivery was made in Delaware, where it was to be performed. It was made a binding obligation; its execution was completed in that state." (Baum v. Birchall, 150 Pa. 164, 169, 24 A. 620, 30 Am. St. Rep. 797.)

The contract having been made in Colorado, and the sums due upon it having been made payable there, the presumption of law is that it is solvable by the laws of that state. That presumption, however, is a rebuttable one, and if nothing further appeared the court would have the right to take into consideration extraneous facts in ascertaining the true intention of the parties. But an express provision of the contract makes it subject to, and entitled to the benefits of, the laws of Colorado. Presumably the parties knew what they desired, and understood the force of the language they used; and having agreed upon the matter, and reduced their agreement to writing, further inquiry, except, of course, for fraud and the like, is precluded.

"The contract must be adjudged by its express terms, no matter where the parties were when it was made. And when those terms are clear, explicit, involved in no doubt whatever, they must prevail, and it is the duty of the courts to enforce them according to their literal meaning." ( Bennett, Appellant, v. Building & Loan Assn., 177 Pa. 233, 238, 35 A. 684, 685, 34 L. R. A. 595, 55 Am. St. Rep. 723.)

"There is no reason why their making their contract in one state instead of in the other, nor why their making it payable in one state instead of in the other, should have a controlling influence over the question. Doing either will, in the absence of other evidence, serve to show their purpose and control the result. But not so when they otherwise distinctly provide or when from other facts their intention can be more satisfactorily ascertained." (Dugan v. Lewis, 79 Tex. 246, 253, 14 S.W. 1024, 1026, 12 L. R. A. 93, 23 Am. St. Rep. 332.)

"Where, however, the parties to the contract have themselves expressly declared that their contract shall be held and construed as made with reference to a certain jurisdiction, that shows by what law they intended the transaction to be governed. And, as said by Phillimore, 4 Int. Law, 469: 'It is always to be remembered that in obligations it is the will of the contracting parties, and not the law, which fixes the place of fulfilment--whether that place be fixed by express words or by tacit implication--as the place to the jurisdiction of which the contracting parties elected to submit themselves.' 'In every forum,' said Chief Justice Marshall, in Wayman v. Southard, 23 U.S. 1, 10 Wheat. 1, 48, 6 L.Ed. 253, 'a contract is governed by the law with reference to which it is made.' There is no room for inference or presumption as to what that intention was when it is expressed in the contract. Pritchard v. Norton, 106 U.S. 124, 1 S.Ct. 102, 27 L.Ed. 104." ( Union Central Life Ins. Co. v. Pollard, 94 Va. 146, 26 S.E. 421, 151, 26 S.E. 421, 422, 36 L. R. A. 271, 64 Am. St. Rep. 715.)

"When the intention of the parties to a contract, as to the law governing the contract, is expressed in words, this expressed intention determines the proper law of the contract and, in general, overrides every presumption." (Dicey, Confl. Laws, 567.)

(See, also, 9 Cyc. 665; 22 A. & E. Encycl. of L. 1325.)

The fact that the mortgaged land lies in a state different from that in which the contract is to be performed will not override express stipulations relating to the law by which it is to be governed. Such a circumstance may be important when the contract is open to interpretation, but otherwise it is not controlling. (Loan Association v. Forter, 68 Kan. 468, 75 P. 484.)

"Here two preliminary questions arose, the first of which was whether the lex loci of the contract of 1815 was Rhode Island or Kentucky. By the usury laws of the latter, the contract, and all the securities given for it, are void, both for principal and interest. By the laws of the former, although it is prohibited to take more than six per cent. interest, and a penalty imposed for the offense, the act does not render the contract void, certainly not for the principal sum. . . . With regard to the locality of the contract of 1815, we have no doubt, that it must be governed by the law of Rhode Island. The proof is positive that it was entered into there, and there is nothing that can raise a question but the circumstance of its making a part of the contract that it should be secured by conveyances of Kentucky land. But the point is established, that the mere taking of foreign security does not alter the locality of the contract with regard to the legal interest. Taking foreign security does not necessarily draw after it the consequence that the contract is to be fulfilled where the security is taken. The legal fulfilment of a contract of loan, on the part of the borrower, is repayment of the money, and the security given is but the means of securing what he has contracted for, which, in the eye of the law, is to pay where he borrows, unless another place of payment be expressly designated by the contract. No tender would have been effectual to discharge the mortgage, unless made in Rhode Island. On a bill to redeem, a court of equity would not have listened to the idea of calling the mortgagee to...