War Finance Corporation v. Thornton
| Decision Date | 19 July 1929 |
| Docket Number | 26645 |
| Citation | 226 N.W. 454,118 Neb. 797 |
| Parties | WAR FINANCE CORPORATION ET AL., APPELLANTS, v. HENRY M. THORNTON ET AL., APPELLEES |
| Court | Nebraska Supreme Court |
APPEAL from the district court for Scotts Bluff county: EDWARD F CARTER, JUDGE. Affirmed.
AFFIRMED.
Syllabus by the Court.
This court will not determine the constitutionality of a legislative act unless such determination is necessary to the proper disposition of an action pending before it.
Unless it is clearly disclosed that the Legislature intended a legislative act to operate retrospectively, it will be held to operate prospectively only.
Section 5952, Comp. St. 1922, chapter 178, Laws 1927 held not to operate retrospectively.
" A mortgage which, by its express terms, requires the mortgagor to pay the maximum legal rate of interest on the debt which it secures, and, in addition, to pay the taxes upon the mortgagee's interest in the mortgaged premises, ‘ is usurious.' " Stuart v. Durland, 115 Neb. 211, 212 N.W. 31, 53 A.L.R. 739.
Appeal from District Court, Scotts Bluff County; Carter, Judge.
Mortgage foreclosure action by the War Finance Corporation and others against Henry M. Thornton and another. From a decree awarding plaintiffs only part of relief sought, plaintiffs appeal. Affirmed.
Morrow & Morrow and Kennedy, Holland, De Lacy & McLaughlin, for appellants.
William H. Heiss, Jr., contra.
This is an action for the foreclosure of a real estate mortgage. The defense of usury was interposed and sustained. Decree was entered for plaintiffs for the balance due on the principal of the notes secured by the mortgage. Plaintiffs have appealed.
The notes provided for interest from their date at 10 per cent. per annum, being the maximum legal rate, and the mortgage contained a clause which required the mortgagors to pay, in addition to the interest, all taxes and assessments levied upon the real estate and all other assessments levied upon the mortgage, or the note which the mortgage was given to secure.
In Stuart v. Durland, 115 Neb. 211, 212 N.W. 31, this court held: "A mortgage which, by its express terms, requires the mortgagor to pay the maximum legal rate of interest on the debt which it secures, and, in addition, to pay the taxes upon the mortgagee's interest in the mortgaged premises, is usurious." The above holding was by this court reaffirmed in Quesner v. Novotny, 116 Neb. 84, 215 N.W. 796; Dwyer v. Weyant, 116 Neb. 485, 218 N.W. 140; and Dawson County State Bank v. Temple, 116 Neb. 727, 218 N.W. 737.
To avoid the effect of these decisions, plaintiffs cite and rely upon section 5952, Comp. St. 1922, chapter 178, Laws 1927. The title of the latter act is: "An Act to amend section 5952, Compiled Statutes of Nebraska for 1922, relating to revenue, to declare an emergency and to repeal said original section." The original section 5952 of the Compiled Statutes was a part of the revenue law which provides for the assessment of real estate and real estate mortgages, and requiring the interest of the mortgagee in the mortgaged premises to be separately assessed, and also contained the following provision: The only change made in this statute by the amendment of 1927 was to add immediately after the words, "negotiability of any note secured thereby," the following five words: "nor render such note usurious."
Notwithstanding the usury statute (Comp. St. 1922, sec. 2838) provides that if a greater rate of interest than that allowed by law shall be contracted for or received or reserved, plaintiff shall recover only the principal without interest and defendant shall recover his costs, and if the interest shall have been paid, judgment shall be for the principal, deducting the interest, plaintiffs in the instant case contend that section 5952, Comp. St. 1922, as amended, has the effect of destroying the defense of usury, in so far as it relates to obligations secured by real estate mortgages containing the tax clause above quoted, and that the amended statute is applicable to preexisting contracts, as well as to those made subsequent to its enactment.
Defendants contend that in the enactment of chapter 178, Laws 1927, a number of constitutional provisions were violated, and for that reason said chapter is void and can afford no relief to plaintiffs in this action.
It is a well-settled rule that courts will not determine the constitutionality of legislative acts unless such determination is necessary to a proper disposition of the cause before the court. In Morse v. City of Omaha, 67 Neb. 426, 93 N.W. 734, it is held: "The appellate court will not pronounce a statute unconstitutional and void where a determination of the case does not require that the constitutionality of the statute be determined." In State v. Fulton, ante p. 400, it is held: "This court will refuse to pass upon the constitutionality of a statute unless it is necessary to a proper disposition of an action pending in this court."
In 12 C. J. 780, sec. 212, it is said: "It is a well-settled principle that the constitutionality of a statute will not be determined in any case, unless such determination is absolutely necessary in order to determine the merits of the suit in which the constitutionality of such statute has been drawn in question." The reasons given for the rule are stated in Ex parte Randolph, 20 F. Cas. 242, No. 11558, in the following languages: "The decision of a question involving the constitutionality of an act of congress is one of the gravest and most delicate of the judicial functions, and while the court will meet the question with firmness, where its decision is indispensable, it is the part of wisdom, and a just respect for the legislature renders it proper, to waive it, if the case in which it arises can be decided on other points." In Hoover v. Wood, 9 Ind. 286, the reason for the rule is stated as follows: It follows that, if the instant case may be properly decided upon other questions than the constitutionality of the statute, the latter question will not be considered.
A well-recognized rule of statutory construction, and one firmly established in this jurisdiction, is that a statute will be held to operate prospectively and not retrospectively unless the legislative intent or purpose that it should operate retrospectively is clearly disclosed. The following are some of the decisions of this court supporting the rule announced: Blunk Bros. v. Kelley, 9 Neb. 441, 4 N.W. 57; State v. City of Kearney, 49 Neb. 337, 70 N.W. 255; McIntosh v. Johnson, 51 Neb. 33, 70 N.W. 522; Commercial Bank of St. Louis v. Eastern Banking Co., 51 Neb. 766, 71 N.W. 1024; Adair v. Miller, 109 Neb. 295, 190 N.W. 865; State v. Federated Merchants Mutual Ins. Co., 117 Neb. 98, 219 N.W. 847.
After a careful examination of chapter 178, Laws 1927, we discover nothing to indicate an intent of the legislature that said act should operate other than prospectively. It follows that if said chapter 178 is valid, which we do not determine, it can operate only prospectively. Since the contracts involved in this action were executed long prior to the passage of chapter 178, it cannot operate to determine whether said contracts are usurious. The decision of this case, therefore, is governed by the rule announced in Stuart v. Durland, supra, and the cases reaffirming the doctrine therein announced.
I am unable to agree with the reasons assigned in the majority opinion and dissent from the affirmance of the judgment of the district court pursuant thereto.
In stating this conclusion, as well as in the further observations I shall make, I do so with a just appreciation of the pronouncement to which I except, and the favorable consideration which the undoubted learning of its author, as well as the well-founded reputations of each and all who supported it at its adoption by this court, entitle it to receive. In this spirit, in support of my views, I submit the following for the consideration of this court:
It must be conceded that chapter 178, Laws 1927, under consideration is not an act complete within itself. We must consider then this chapter for what it actually is, as a part of complete legislative action. The effect of this law of 1927, it must be admitted, was then to amend a single section of a statute comprising a number of sections. If this be true, it seems that the well-settled rule of construction to be applied, to determine the force and effect of the language used, is that all parts of this...
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