Union Central Life Ins. Co. v. La Follette

• Decision Date: 30 April 1935
• Parties: UNION CENTRAL LIFE INS. CO. v. LA FOLLETTE et al. [*]
• Court: Oregon Supreme Court

44 P.2d 165

150 Or. 455

UNION CENTRAL LIFE INS. CO. v. LA FOLLETTE et al. ^[*]

Supreme Court of Oregon

April 30, 1935

In Banc.

Appeal from Circuit Court, Marion County; L. G. Lewelling, Judge.

Suit by the Union Central Life Insurance Company against Joseph W. La Follette, Gladys La Follette, Susie La Follette, and others. From an adverse decree, named defendants appeal.

Affirmed.

B. S. Martin, of Salem (J. A. Jeffrey, of Portland on the brief), for appellants.

Philip Hammond and W. Lair Thompson, both of Portland (Philip Hammond and McCamant, Thompson & King, all of Portland, on the brief), for respondent.

BAILEY Justice.

The principal question concerned in this appeal is whether or not the transaction between the plaintiff and the defendants La Follette, involving a loan of $13,000 secured by a mortgage on real property, provided for a usurious rate of interest.

On or about, May 20, 1930, the defendant Joseph W. La Follette and his wife and two daughters procured from the plaintiff a loan of $13,000, and about the same date the La Follettes executed and delivered to the plaintiff twenty-one promissory notes. The first of these notes was for $482.81, payable December 1 1930, and the next six were due and payable on December 1 for six succeeding years after the date of the first note. The first of these six obligations was for $1,653.93, and each of the succeeding five notes of that group was for $35 less than the one preceding it. The other fourteen notes were for the sum of $943.93 each, and they were payable one a year beginning December 1, 1937.

Each of these notes contained at the top thereof a statement as to the authority of the agent of the insurance company. All the notes were dated May 20, 1930, and were identical in language, except as to the amount of each note and the date of its maturity. Following is the form of the notes, omitting signatures and the statement concerning the agent's authority:

"$1,653.93 Portland, Oregon, May 20, 1930.

"On the first day of December, 1931, for value received, I promise to pay to the order of The Union Central Life Insurance company of Cincinnati, Ohio, sixteen hundred fifty-three and 93/100 dollars, at the home office of said company in Cincinnati, Ohio, with interest at the rate of 10 per centum per annum, after maturity, until paid.

"If this note is sent to the John F. Kaufman & Sons bank at Portland, Oregon, or to any other bank, for collection, I agree to pay exchange and collection expenses, and this note shall not be deemed paid until the money is actually received by said company.

"The right is reserved to prepay this note at any time at the home office of said company in Cincinnati, Ohio, by payment of its present worth as ascertained by discounting it at the rate of 6 per centum interest, compounded annually provided all prior notes have been paid.

"The right is further reserved to pay in full the unpaid principal in this series of notes, with interest accrued plus 8 months' additional interest if paid prior to 5 years from the first interest pay day, and plus 4 months' additional interest if paid within the following 10 years, and with no additional interest if paid thereafter.

"This note is one of a series of notes evidencing a loan upon the amortization plan, and is secured by a mortgage or deed of trust of even date. In the event of default in the payment of this note, or default in the payment of taxes upon the premises described in said mortgage or deed of trust or default in the payment of fire insurance premiums or a breach of any of the other covenants contained in said mortgage or deed of trust, the holder of this note and the remaining unpaid notes of said series may, without notice, elect to declare the entire indebtedness evidenced by said notes, due and payable, and many proceed by foreclosure or by sale under the power contained in said instrument to enforce the collection thereof.

"In case this note is placed in the hands of an attorney for collection, I agree to pay all costs of collection and a reasonable attorney's fee."

The mortgage given to secure payment of these notes, as far as material here, provided:

"This conveyance is intended as a mortgage to secure the payment of a debt evidenced by certain promissory notes of even date herewith, $13,000.00 of which is principal, executed by the mortgagor and payable to the said The Union Central Life Insurance Company, or order, at its home office in Cincinnati, Ohio, and more fully described as follows:

"The first note being for four hundred eighty-two and 81/100 dollars, the 2nd note for $1,653.93; 3rd note for $1,618.93; 4th note for $1,583.93; 5th note for $1,548.93; 6th note for $1,513.93; 7th note for $1.478.93, and the remaining 14 notes for nine hundred forty-three and 93/100 dollars each; the first note being payable on December 1, 1930, and one of the remaining notes being payable on the same day in each of the succeeding 14 years, or prior to maturity in accordance with stipulation therein, with interest after maturity at the rate therein specified. ***

"Fifth.-That the failure to pay when due, any sum secured hereby or any renewal hereof, or the failure to comply with any of the covenants or agreements hereof, shall cause the entire debt secured hereby at once to become due and payable, at the option of the mortgagee, without notice. ***

Suit was instituted December 5, 1932, to foreclose the mortgage, at which time the first note of $482.81 had been paid and $225 had been paid on the principal and interest of the second note, leaving a balance due thereon of $1,520.57, with interest from June 25, 1932, this $225 having been paid in $25 and $50 installments beginning February 27, 1932, and continuing to June of that year. Taxes on the mortgaged real property for the year 1930, amounting to $266.01, and for 1931, in the sum of $190.36, were unpaid and delinquent.

The plaintiff in its amended complaint asked judgment against the defendants in the following several sums, to wit: $1,520.57, with interest at 10 per cent. from June 25, 1932; $12,256.07, with interest at 7 per cent. from December 1, 1931; $266.01, representing the 1930 taxes paid by plaintiff of June 30, 1933, with interest thereon at 10 per cent. per annum from the date of payment; for the further sum of $9 for a continuation of the abstract, and for reasonable attorneys' fees and plaintiff's costs and disbursements.

The defendants by their answer admit many of the material averments of the amended complaint, while denying others, and set forth three alleged separate defenses, the first of which is to the effect that the defendants are in better position to look after and manage the farm lands than a receiver would be, and that therefore no receiver should be appointed. The second defense is to the effect that the mortgaged property will from year to year become more valuable, and they ask that the mortgage be not foreclosed, alleging that within a reasonable time the defendants will be financially able to pay in full all the rightful claims and demands against them. By the third affirmative answer the defendants attempt to allege that by fraud and deceit the plaintiff had procured the defendants to sign contracts for a usurious rate of interest.

Little attention need be paid to these separate defenses except the one averring that the rate of interest charged is usurious, for the reason that the only evidence introduced by the defendants was that of Joseph W. La Follette, who testified that he had executed the notes and mortgage and that the only money received by the defendants was $13,000. In answer to the question as to whether or not he had read the notes and mortgage, he said, "I read the first note; the one for part of a year-four hundred eighty-two dollars, or something that way"; and that he believed he read the mortgage, "part of it."

Before proceeding further, it would be well to mention that appearing in numerous places in appellants' brief are statements which they seem to assume to be either admitted by the pleadings or supported by the evidence. Allegations in an answer, denied by the reply and concerning which no evidence is introduced, cannot be considered as proof of any fact. The statements mentioned are of that character.

There also appear numerous references to the original complaint filed by the plaintiff, which was not introduced in evidence by the defendants as an admission against plaintiff's interest. The amended complaint superseded all that went before it, and the former pleadings are not a part of the judgment roll and not here before us for consideration. Prudential Savings & Loan Association v. Stevens, 144 Or. 298, 14 P.2d 296, 23 P.2d 901. The cases relied upon by the defendants on this point, to wit, Sayre v. Mohney, 35 Or. 141, 56 P. 526, and Johnson v. Sheridan Lumber Co., 51 Or. 35, 93 P. 470, merely hold that when amended pleadings have been filed the earlier pleadings may be introduced as admission against the interest of the party filing the same, but these precedents do not support the defendants' contention that they may otherwise be considered.

The plaintiff introduced in evidence as an aid to the court a compilation showing the method followed in determining the amount of principal and interest included in the different notes. This tabulation, slightly rearranged by the insertion of numbers and total amounts of the notes in order to make it more readily understood, is as follows:

No. of Year due Amount Applied on Applied on Balance of

note principal interest principal

1 1930 $ 482.81 $ 0 $482.81 $13,000.00

2 1931 1,653.93 743.93 910.00 12,256.07

3 1932 1,618.93 761.01 857.92 11,495.06

4 1933 1,583.93 779.28 804.65 10,715.78

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