Court Opinion

ID: 6544687
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:18:37.176597+00
Date Added: 2024-06-11T15:55:52.957803
License: Public Domain

Hughes, J., (after stating 'the facts.) The appellant contends that this is a Missouri contract, and the appellee that it is an Arkansas contract. The court is of the opinion that it is a Missouri contract, because it is dated and payable at Kansas Cit)r, Missouri, and must be governed by the laws of Missouri. The court is of the opinion also that the evidence is sufficient to sustain the decree that the contract is usurious under the laws of Missouri upon the subject of usury, and the decree to that extent is affirmed. But the decree as to the penalty, — that is, the forfeiture of the interest to the school fund of Howard county, — is reversed and set aside. We have no law authorizing such a decree, and, while that might be a proper decree, under the Missouri law, in the state of Missouri, yet the law of Missouri imposing such penalty has no extraterritorial force, and will not be enforced here upon the principle of comity. In Western Transportation & Coal Company v. Hilderhouse, 87 N. Y. 436, 438, the court of appeals of New York held: “It is very well settled that penal laws have no extraterritorial force, and the statute of New York regulating the rate of interest is merely a penal law.” See, also, Lebanon National Bank v. Karmany, 98 Pa. St. 65, 76; Barnet v. National Bank, 98 U. S. 555. “Nor will the courts of one state enforce the statutory penalty of another state. Such penalties can only be enforced in the courts of the states by the laws of which they are imposed; and they cannot be enforced elsewhere, either by the force of the statute creating them, or upon the principles of comity.” Stevens v. Brown, 20 W. Va. 450, 461. Rorer, Interstate Law, p. 206. The courts of no country will enforce the penal laws of another country. State v. Kirkpatrick, 32 Ark. 117, 120. This seems to be a universal rule. The following sections from the Revised Statutes of Missouri were introduced in evidence: “Section 5972. When no rate of interest is ■ agreed upon, 6 per cent, allowed as legal interest. “Section 5973. Parties may agree in writing for interest not ■exceeding 10 per centum per annum on money due or to become due upon any contract. "’Section 5974. Interest shall be allowed on all money due upon any judgment or order of any court from the day of rendering same until satisfaction be made by payment, accord or sale of property; all such judgments and orders for money upon contracts bearing more than 6 per cent, shall bear the same interest borne by such contracts, and all other judgments and orders for money shall bear 6 per centum per annum until satisfaction made, as aforesaid. "’Section 5975. No person shall directly or indirectly take, for the use or loan of money or other commodity, above the rate of interest specified in the three preceding sections for the forbearance or use of $100, or the value thereof, for one year, and so after these rates for a greater or less sum, or for a longer or shorter time, or according to those rates or proportions, for the loan of money or other commodity. "Section 5976. If any action or suit shall hereafter be commenced upon any bond, note, mortgage, specialty, agreement, contract, promise or assurance whatever, which shall be made within this state, and the defendant may, in his answer, show that a greater or higher rate of interest than 10 per cent, per annum was therein or thereby agreed for, or received or taken, and if the answer of the defendant to any suit shall be sustained by the verdict of a jury or the finding of the court, the court shall render judgment on such verdict- or finding for the real sum of money or the price of the commodity actually lent, advanced or sold, and interest on the same at the rate of 10 por cent, per annum; upon which judgment the court shall cause an order to be made setting apart the whole interest for the use of the county in which suit may be brought, for the use of common schools, and the same, when collected, shall be paid over accordingly, and go to and form a part of the common school fund of said comity; and the defendant may recover his costs.” But can the judgment for the principal be enforced in the courts of this state? It will be observed that, unlike our usury laws, the Missouri statute imposes a penalty in case of usury to the extent only of a forfeiture of the interest, while in our state the law forfeits both principal and interest in case of a usurious contract. In Missouri the contract is not void, but only the interest is forfeited in case of usury. It is contended that our courts will not -enforce a iisurious contract, wherever it may be made; that it is contrary to tlie policy of our laws. If the contract was an Arkansas contract, it would be void, if usurious, and could not be enforced. But a contract, valid under the laws of the state where made, is valid in this state, and may be enforced in the courts of this state. “As a general rule, the validity of a contract is to be determined by the law of the place where -it is made. * * * The nature, validity and interpretation of contracts are to be governed by the lex loci contractus; but remedies, by the lex fori.” The rights of the parties are governed by the lex loci. 3 Am & Eng. Enc. Law (1st Ed.), 542. As the contract as to the principal was valid in Missouri, and so held by the court, that part of the decree is affirmed, and the cause is remanded to the court with directions to enter a decree in accordance herewith, and to proceed to foreclose the mortgage accordingly.