Western Storage & Warehouse Co. v. Glasner

• Decision Date: 29 March 1902
• Citation: 68 S.W. 917,169 Mo. 38
• Parties: WESTERN STORAGE & WAREHOUSE CO. v. GLASNER et al.
• Court: Missouri Supreme Court

68 S.W. 917

169 Mo. 38

WESTERN STORAGE & WAREHOUSE CO. v. GLASNER et al.

Supreme Court of Missouri, Division No. 1.

March 29, 1902.

PLEDGE OF WAREHOUSE RECEIPTS—BROKEAGE—COMPOUND INTEREST—USURY—EFFECT —KNOWLEDGE OF LENDER — SUBSEQUENT MORTGAGEES—RIGHTS—ESTOPPEL.

1. The fact that a note provided for the compounding of interest every six months, contrary to Rev. St. 1899, § 3711, which prohibits the compounding of interest oftener than once a year, did not make a pledge given to secure the note void.

2. Under Rev. St. 1899, § 3709, providing that usury may be pleaded as a defense in civil actions, and the party guilty of exacting usurious interest shall in no case recover judgment for more than the principal with legal interest after deducting all payment of usurious interest, whether paid as commissions or brokerage or a payment on the principal or as interest on the indebtedness, and section 3710, providing that in actions for the enforcement of liens on personal property or in any case when the validity of such lien is drawn in question proof of usurious interest shall render such lien invalid, a pledge of warehouse receipts to secure a loan with interest at 8 per cent. per annum and 2 per cent. commission to the agent of the lender was void, the interest being in excess of the legal rate of 8 per cent. allowed by section 3706.

3. Such lien was void though the lender got no part of the amount collected by her agent as brokerage, and did not even know of it.

4. Where a mortgagor could plead usury to avoid a pledge, creditors of the mortgagor could set up the same plea.

5. Where a pledge for warehouse receipts was void on account of usury, subsequent mortgagors of the same property were not estopped from denying the validity of the pledge because of a provision in the mortgage that it was subject to all outstanding claims, charges, and liens, as the pledge, being void as to the pledgor, was also void as to his creditors.

6. Where the pledgee of the warehouse receipts brought replevin against the storage company, gave a bond, took the property, and sold it, the fact that one of the holders of a chattel mortgage on the same property, who had previously brought replevin without bond, agreed with a prospective purchaser not to bid at the sale, and to take one-half of the property off his hands, did not estop the holders of the chattel mortgage from afterward denying the validity of the pledge.

Error to circuit court, Clay county; E. J. Broaddus, Judge.

Bill of interpleader by the Western Storage & Warehouse Company against A. H. Glasner and others and S. J. Smith and B. Hoyt. From a judgment for Smith and Hoyt, Glasner and others bring error. Modified.

This is a bill of interpleader. The case made is this: Oliver & O'Bryan were wholesale liquor dealers in Kansas City. Mrs. S. J. Smith is a resident of Connecticut, and for years has been lending money in Kansas City, through her brother, B. Hoyt, who has full power to act for her, and in many cases, as in this instance, made loans for her without her knowledge. On June 6, 1893, Oliver & O'Bryan borrowed $1,600 from Mrs. Smith, through Hoyt, and on June 8, 1893, they borrowed $2,200 more. The $1,600 loan was for ninety days, with interest from maturity. The $2,200 was for 4 months, with interest at the rate of 8 per cent. per annum, payable semiannually, and if not so paid to be compounded. The $1,600 note was secured by the pledge of a warehouse receipt issued by the Western Storage & Warehouse Company for 40 barrels of whisky stored with said company by Oliver & O'Bryan and owned by them. The $2,200 note was secured by a similar receipt for 55 barrels of whisky. At the time these notes were given, Hoyt agreed that, although they purported to be payable in ninety days and four months respectively, they should be renewed from time to time as they fell due, so that the loans should stand for one year. As compensation for his services in making said loans, examining the title and the whisky, and attending to the proposed renewals, Hoyt charged and Oliver & O'Bryan paid a sum equal to 2 per cent. of the amount loaned. The interest, at the rate of 8 per cent. per annum, from the date to the maturity of these notes, was deducted from the amount specified in the notes when the loan was made. Mrs. Smith never paid her brother anything at any time for acting as her agent in lending her money. He got his pay from the borrowers. Thereafter, on March 13, 1894, Oliver & O'Bryan gave a chattel mortgage on all of said 95 barrels of whisky, with other security named, to Robert S. Patterson and the M. N. Monarch Company, to secure certain indebtedness due by Oliver & O'Bryan to them. This mortgage recited that, as to the whisky aforesaid, the mortgage was "subject to claims, charges, and outstanding liens against said whisky." On the same day, March 13, 1894, Oliver & O'Bryan gave a second chattel mortgage on the same whisky and other property to the plaintiffs in error, Glasner et al., to secure what they owed them. This mortgage also, after describing this whisky, contained a provision that the mortgage was "subject to claims, charges, and outstanding liens against said whisky," and also that it was subject to the first chattel mortgage to Patterson and the Monarch Company. Afterwards, Patterson and the Monarch Company for value assigned their claim to the whisky to one of the plaintiffs in error (acting for them all), who was also one of the beneficiaries under the second mortgage, subject, however, to the second mortgage. Oliver & O'Bryan were unable to meet their obligations; so on May 18, 1894, the holders of the second mortgage began a replevin suit, without bond, against the storage company, to recover possession of the whisky. Thereafter, on the 7th of June, 1894, Mrs. Smith began a replevin suit for the whisky against the storage company. She gave bond, took the whisky, and sold it. When the first replevin suit came on for trial, and when it appeared to the court that there were two replevin suits pending against the storage company for the same whisky, the court stopped the trial of the replevin suit and ordered the storage company to file a bill for an interpleader against Mrs. Smith and the holders of the second mortgage, the plaintiffs in error herein. This was done, and this is the case now at bar. Mrs. Smith claims title by virtue of the pledge to her of the warehouse receipts for the whisky. The holders of the second mortgage, Glasner et al., claim title under their mortgage, and claim that Mrs. Smith's loan was tainted with usury, which renders her pledge void under the statute. To parry this, Mrs. Smith claims: First, that the 2 per cent. paid to her brother was only a reasonable compensation to her brother for his services, with which she had nothing to do, and hence there is no usury and her pledge is not void; and, further, that the holders of the second mortgage cannot be heard to plead usury, because they expressly took their mortgage "subject to claims, charges, and outstanding liens against said...