Court Opinion

ID: 4732471
Source: CourtListenerOpinion
Date Created: 2021-08-12 02:56:53.283463+00
Date Added: 2024-06-11T08:08:06.626389
License: Public Domain

Morris, J.
(dissenting) — I .am unable to concur in the majority opinion, and will.state my reasons for not doing so.
In order to determine whether or not. this contract was usurious, it is necessary to review the situation of the parties at the time of the execution of .the contract, with a view of ascertaining its true import and the. intent of the parties. In addition.to the facts recited in the.contract, it appears that these two mortgages were being, foreclosed. The day of trial had been set for June 17, and the parties were then in court awaiting' the calling of the case, when D. H. Lee, the moving spirit in the appellant co.mpany, with his attorney, .conceived the idea of an adjustment of the difficulties facing the company which would enable it to extricate itself from *387the financial and other entanglements in which it was then floundering. At this time the company, in addition to facing the loss of its property through this foreclosure, was involved in much litigation growing out of its handling of the lands involved in the mortgages. Some of these suits had resulted in judgments against the company. Others were still pending, and in one of them a receiver of all the assets of the company had been appointed. Its pressing obligations, including the costs in the receivership suit, exceeded $40,000. Unless something cóuld be done to extricate the company from these difficulties, it faced a loss of its interest in these lands which, since their purchase and the giving of the mortgages, had become very valuable. Mr. Lee believed if the company could' continue to handle these lands by placing low and salable values upon the lots into which portions of it had been platted, in a comparatively short time sales could be made aggregating enough money to enable the company to pay off all claims against it. Accordingly overtures were made to respondents to abandon the foreclosure, which resulted in the contract sued upon. Under this contract the company went ahead, and in the course of time succeeded in meeting all its obligations. It now refuses to keep its contract under a plea of usury.
It is apparent, I think, from these facts that the equities of the case are all with respondents. By delaying foreclosure of these mortgages, the company was able to put these lots on the market with releases as sold, until it had accumulated enough money to meet its obligations and save for itself a property of value which otherwise, the chances are, would have been lost. Ordinarily the plea of usury is made by a borrower who has been made the victim of oppression, and whose" necessities have been so taken advantage.of by another as to deprive him of that freedom in contracting which the law requires and place him at the mercy of his creditor." It would hardly seem-as though such, a situation was before us. This scheme was the proposal of- the bor*388rower for its own protection, which has resulted, as it anticipated, to its great advantage. Section 6 of this contract provides that it shall be void if the court shall order a sale of the lands in the receivership proceeding. This was a contingent event beyond the knowledge or control of either party, and which might or might not happen. This $5,000 was not payable absolutely upon the happening of a certain event, but was contingent upon the receiver not being ordered to make a sale of these lands. In other words, the contract and each and all of its provisions were dependent upon the action of the court in the receivership proceeding; and, as we understand the law, when the payment of interest is subject to a contingency wholly or in part, so that the lender’s profit is put in hazard, the interest so contingently payable need not be limited to the legal rate, providing the parties are contracting in good faith and without intention to avoid the usury statute, and that the same rule governs where only part of the legal interest is in hazard. In the case of Lay v. Bouton, ante p. 372, 131 Pac. 1153, the above rule from 39 Cyc. 952, is quoted with authority, as is also the case of White Water Valley Canal Co. v. Vallette, 62 U. S. 414, where it is said:
“Where there is a loan, although the profit derived to the lender exceeds the legal rate, yet if that profit is contingent or uncertain, the contract, if bona fide and without any design to evade the statute, is not usurious.”
Missouri, K. & T. Trust Co. v. McLachlan, 59 Minn. 468, 61 N. W. 560, is also quoted to the effect that, where the contract has the form of a contingency, the court will scrutinize it for the purpose of ascertaining whether that contingency is a real one or a mere shift or device to cover usury. Applying these rules of law to the facts in this case, it does not seem to me there can be any question but that this contract was entered into in good faith, and that the parties at the time had no thought of the usury statute or any intent or purpose to avoid it. The appellants wanted to save their *389property. They could do it in no other way. If the respondents desired to push the appellants to the wall, all that was necessary to do was to proceed with the foreclosure suit. It was not necessary, in order to derive any additional profit, that they should enter into this contract, because forcing the foreclosure suit to a final determination and repossessing themselves of the lands, which had become very valuable, would have been much more profitable to them than the $5,-000, which was the greatest sum that they could secure under this contract. It therefore seems to me that the contract bears upon its face, when read in connection with the facts surrounding it, evidence that it was entered into in good faith, at appellants’ request and need, and for the purpose of extricating them from their financial straits, without any thought of avoiding any usury statute. Now that it has served its purpose, they wish to avoid it. The court ought not to assist them in doing so, and thus put a premium on dishonesty.
For these reasons I dissent.
Crow, C. J., and Mount, J., concur with Morris, J.