Winfrey v. Strother

• Decision Date: 23 May 1910
• Parties: WINFREY v. STROTHER et al.
• Court: Missouri Court of Appeals

128 S.W. 849

145 Mo. App. 115

WINFREY v. STROTHER et al.

Kansas City Court of Appeals. Missouri.

May 23, 1910.

1. USURY (§ 80)—EFFECT—"PLEDGE"—"COLLATERAL SECURITY."

Rev. St. 1899, § 3710 (Ann. St. 1906, p. 2078), provides that in an action to enforce a lien on personal property pledged or mortgaged, or involving the validity of such lien, proof that the party holding the lien has exacted usurious interest for the debt shall render any mortgage or pledge of personal property, or any lien thereon, invalid. Held, that the delivery of a promissory note as collateral security for a principal note given for the same amount as the balance due on the first note, and executed to plaintiff the day that a payment was made on the first note, was a "pledge" within the meaning of the statute, though it was signed by an additional maker. The authorities have defined "collateral security" as a pledge of incorporeal property as distinguished from chattels. The words necessarily indicate something additional to the principal obligation, and running along with it as security therefor.

2. USURY (§ 80)—PLEDGE TO SECURE USURIOUS DEBT— VALIDITY— "PERSONAL PROPERTY."

Rev. St. 1899, § 3710 (Ann. St. 1906, p. 2078), providing that, in actions for the enforcement of liens upon "personal property pledged or mortgaged" to secure indebtedness, proof that the party holding the lien had exacted usurious interest shall render such pledge invalid, did not use the words "personal property" as distinguished from choses in action, but the words would include incorporeal property, such as a promissory note.

Appeal from Circuit Court, Jackson County; John M. Cleary, Special Judge.

Action by Caleb Winfrey against Ben S. Strother and others. From a judgment for plaintiff, defendants appeal. Reversed.

Sam B. Strother, R. B. Kirwan, and George B. Strother, for appellants. Cook & Gossett, for respondent.

ELLISON, J.

This action is on a promissory note for $5,000. The judgment in the trial court was for the plaintiff.

There are several points presented in this case which were determined in the case of Bowman v. Strother (decided at this term) 128 S. W. 848. We need do no more than refer to that case for a statement of our conclusions.

But defendants have presented in this case a branch of defense which was not in the other, as will appear by the following: On August 4, 1904, defendants Ben S., Nellie M., and Sam B. Strother gave their joint note to plaintiff for $5,445.29, due on the 28th of that month, with interest at the rate of 6 per cent. That note was credited with some interest payments and $445.29 on the principal paid March 30, 1905. And on the day last mentioned the makers of that note, together with W. H. Strother, executed the note in suit for $5,000, with interest at 8 per cent. per annum, payable to plaintiff, and Ben S. Strother indorsed on the back thereof the following: "This note is a collateral note to secure a note dated Aug. 4th, 1904, for $5,445.29, signed by Ben S. Strother, payable to Dr. Caleb Winfrey. [Signed] B. S. Strother." It will be noticed that this last note thus delivered to plaintiff as collateral for the first note is for the same amount as the first note after being reduced by the credit above mentioned, and that it was executed to plaintiff the day of the payment on the first note, and that the makers are the same as of the first note with the addition of W. H. Strother. There was evidence tending to show that the first note was usurious, and for that reason defendant asked the trial court to declare the note in suit void for the reason it was a pledge or security for a usurious contract, within the meaning of section 3710, Rev. St. 1899 (Ann. St. 1906, p. 2078), reading as follows: "In actions for the enforcement of liens upon personal property pledged or mortgaged to secure indebtedness, or to maintain or secure possession of property so pledged or mortgaged, or in any other case when the validity of such lien is drawn in question, proof upon the trial that the party holdin...