Court Opinion

ID: 6679614
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:19:33.228951+00
Date Added: 2024-06-11T16:00:48.347803
License: Public Domain

Mr. Chief Justice McIver
*1172 dissenting. Being unable to concur in all the conclusions reached by Mr. Justice Pope, I propose to state the points upon which I differ from him, and indicate some of the reasons why I cannot agree with him. The action in this case was brought to enforce the performance of a contract, evidenced by the defendant’s bond and mortgage, to the Carolina Interstate Building and Loan Association; and the only question, as I understand it, is whether there is anything, and if so how much, still due the association by the defendant upon such contract. It is not an action brought by the receivers of an insolvent corporation to require from a shareholder of such corporation tocontribute his rateable proportion to the fund necessary to pay the debts of such insolvent corporation, for the necessary parties h> such an action are not before the Court, and there is no allegation in the complaint that the corporation owes a single debt to any third person. On the contrary, it is simply an action to recover from the defendant a sum of money loaned to him by the association; and the fact that the defendant was a shareholder of the association at the time this loan was made, cannot affect the question; for ever since the case of the Columbia Building and Loan Association v. Bollinger, 12 Rich. Eq., 124, followed in several other cases, notably Buist v. Bryan, 44 S. C., 121, it must be regarded as the settled law of this State, that in such a case the relation between the parties is simply that of borrower and lender; and hence the only question is whether there is anything remaining due on the sum of money loaned, after applying all the payments which have been made thereon.
3 I am, therefore, at a loss to- perceive what the action of the Court in North Carolina in the case'of Strauss v. The Carolina Interstate Building and Loan Association, as reported in 23 S. E. Rep., 450, and again in 24 S. E. Rep., 116, has to do with the present controversy, as it is now presented. But even if I am in error in this, I do not think that the defendant herein was in any way bound by those decisions, at least so far as they authorized the receivers to assess all stockholders thirty per cent, of the amount paid in on their stock, in order to cover the loss and expenses as reported by the receivers, for three reasons : 1st. Because the defendant herein was not a party to that case. 2d. Because the order of the Circuit Judge, from which there was no appeal, contained this express provision: “This order shall not be binding upon any one concerned therein without his consent to the same.” 3d. Because the defendant herein had assigned his stock to the corporation1 long before the insolvency of the corporation occurred. In support of the third reason, it will be sufficient to* cite Pullman *118v. Upton, 96 U. S., 328, and National Bank v. Case, 99 U. S., 628, where it is held that the assignee of stock, even as collateral security for the payment of a debt due by the assignor to the assignee, is liable as a stockholder to the claims of creditors, and that the original holder is no longer liable to such claims. See, also, Efird v. Piedmont &c. Co., ante. But in any point of view, it seems to me that the defendant could not, in this case, be liable for the thirty per cent, assessment upon the amount paid on his stock, because there was no competent evidence adduced in this case to show what were the losses and expenses, and what assessment was necessary to- meet losses and expenses; for, as I understand, it is conceded that the proceeding in the North Carolina Court, based upon the estimate made by the receivers, was not competent evidence to show the amount of such losses and expenses. If so, I do. not see the propriety of referring this matter back to the special master, as that would, practically, be allowing the apellants another opportunity of offering evidence which they have already had an opportunity to offeiq of which they did not see fit to' avail themselves.
6 If, then, the contract which the appellants are seeking to enforce is to be regarded as usurious either under the laws of North Carolina or South Carolina, the next inquiry is, whether the plaintiffs, when they invoke the aid of the Courts of this State to enforce the contract, are not bound to the remedy afforded by the laws of this State. It seems that by the law of North Carolina the penalty for charging usury is simply the forfeiture of so much of the interest as is in excess of the rate allowed by the law of that State, while here the penalty is a forfeiture of all interest as well as costs; and our statute not only provides that the lender of money shall not be allowed to recover, in any Court of this State, any portion of the interest unlawfully charged, but expressly declares that: “The principal sum, amount or value so lent or advanced, without any interest, shall be deemed and taken by the Courts of this *119State to be the true legal debt or measure of damages, to all intents and purposes whatsoever, to be recovered without costs.” Rev. Stat., 1390. In the face of these explicit provisions, I do not see by what authority the Courts of this State, when called upon to enforce a usurious contract for the loan of money, can render any other judgment except for the principal sum loaned, after deducting all payments made thereon, without any interest or costs. Otherwise, our Courts would be undertaking to do that which they are expressly forbidden, by statute, to do. It is contended, however, that this is a North Carolina contract, and must, upon the principle of comity, be governed by the laws of North Carolina, by which the lender of money upon a usurious contract is entitled to recover the amount loaned with lawful interest. Assuming, for the present, that this is a North Carolina contract, there is no doubt that the rule of comity is well settled, that when a contract is made in one State, or is to be performed in such State, its validity and construction is to be determined by the laws of that State. But to this rule there is an exception, as well settled as the rule itself, which is thus stated by that learned jurist, Chancellor Kent, in his Commentaries: “That no people are bound, or ought to enforce or hold valid in their Courts of justice, any contract which is injurious to their public rights, or offends their morals, or contravenes their policy, or violates a public law” (italics mine). See 2 Kent. Com., 458, recognized and followed in Thornton v. Dean, 19 S. C., at page 587; Gist v. Telegraph Co., 45 S. C., at page 369. But as is said by Mr. Justice McGowan, in delivering the opinion of the Court in Thornton v. Dean, supra: “As to all matters relating to the remedy, each State insists upon enforcing its own laws;” and as is said in 3 Am. & Eng. Ency. of Law, 1st edition, at page 561: “The law to be applied to the remedy is the lex fori, at the time such remedy is sought.” And again on the same page: “Where contracts are made in one place, and to be performed in another, they are to be governed by the law of the place of performance as to validity, *120nature, obligation and interpretation. But the remedy upon it will be governed by the law of the State in which a remedy is sought.” And again at page 578 of the same volume, it is said: “Where the laws of two States are brought into conflict, the rule is, that the laws prevailing where the relief is sought must have the preference. The rule that the laws relative to the binding force of a contract form a part of the contract to secure the remedy to the creditor, does not extend so far as to carry the remedy into another jurisdiction, and regulate the mode of enforcement of a contract in an action in the Courts of another State.” The following extract from the opinion of Evans, J., acting as the organ of the Court, in Pegram v. Williams, 4 Rich., at page 224-5, will be found instructive: “The nature, obligation and construction of contracts are to be governed by the lex loci contractus, but the remedies by which contracts are enforced, are to be according to the lex fori, which is strictly territorial in its operation (citing several sections from Story in Conflict of Laws). We all agree, says Mr. Justice Heath (1 Bos. & Pul., 142), that in construing' contracts, we must be governed by the laws of the country in which they are made; for all contracts have relation to such laws. But when we come to remedies it is another thing; they must be pursued by the means which the law points out where the parties reside. The laws of the country where the contract was made can only have reference to the nature of the contract, not to the mode of enforcing it. In De LaVega v. Vianna (1 B. & Ad., 284), Lord Tenterden said: ‘A person suing in this country, must take the law as he finds it. Pie cannot, by any regulation of his own country, enjoy greater advantages than other suitors 'here. He is to have the same rights which all .the subjects of this kingdom are entitled to.’ Judge Story, in his treatise on the Conflict of Laws, sec. 556, saji-s: Tt is universally admitted and established that the forms of remedies, and the modes of proceeding, and the execution of judgments, are to be regulated solely and exclusively by the laws of the place where the action is insti*121tutee!, or, as the civilians express it, according to the lex fori.’ And in sec. 557, he says: ‘All that a nation can, therefore, be justly required to do, is to open its own tribunals to foreigners in the same manner and to the. same extent as they are open to its own subjects, and to- give them the redress, as to rights and wrongs, which it deems fit to acknowledge in its own municipal code, for natives and residents.’ This is what is meant by the comity oí nations, and I do not find it has ever been extended beyond what is here said.” So, also, it was said by Johnston, Ch., in delivering the opinion of the Court of Errors, in LePrince v. Guillemot, 1 Rich. Eq., at pp. 211-2: “The-general doctrine is reasonably settled, that the validity and construction of a contract are, throughout the world, to. be determined by the laws of the country where it was entered into (especially if, as in this instance, it was intended to be executed there), though its lien and operation, and all priorities of rights under it, are generally limited to that country; and in enforcing or executing it, the tribunals of other countries are not bound to give it any effect, so- far as it may contravene the policy of their own States.” Accordingly, it is well settled that questions arising under the statute of limitations are to be determined by the lex fori, and not by the lex loci contractus. See McElmoyle v. Cohen, 13 Peters, 324; Levy v. Boas, 2 Bail., 217, cited with approval in Pegram v. Williams, supra; Ruggles v. Keeler, 3 Johns., 261. The reason is obvious: The Courts of this State cannot render judgment upon contracts, when the right of action is barred by our statute of limitations, even though it may not be barred by the laws of the State where the contract was entered into or where it was to be performed, because the laws of this State forbid it. For the same reason, where an action is brought in the Courts of this State upon a usurious contract, no judgment can be rendered for any interest or costs, because the laws of this State expressly forbid it. Again, in 27 Am. & Eng. Ency. of Law, 1st edition, at page 936, it is said: “The general rale that the penal provisions of a statute *122have no extra-territorial operation, and will not be enforced outside of the State where enacted, applies to penalties imposed by usury laws.” If, therefore, it be true, as it is said, that by the laws of North Carolina the penalty for charging usury is the forfeiture of all interest in excess of the legal rate, while here the penalty is the forfeiture of all interest, under the rule above stated, the latter penalty must be enforced in an action brought in the Courts of this State upon a usurious contract, notwithstanding the fact that such contract may be a North Carolina contract. I think, therefore, that his Honor, Judge Ernest Gary, was clearly right, after sustaining the plea of usury, in directing the special master, “to compute the amount due on the bond and mortgage set forth in the complaint, under the statute law of this State, Revised Statutes, sec. 1390.” ,
For these reasons 1 am unable to concur with Mr. Justice Pope in the views which he has taken of the several points hereinabove considered, and, on the contrary, I think the judgment of the Circuit Court should be affirmed.
1 If there was any error on the part of the Circuit Judge, it was in not holding that the contracts sued upon were North Carolina contracts. But as it is conceded that the plea of usury must be sustained, whether the contracts were North or South Carolina contracts, such error (if it be an error) is clearly harmless, and would not justify a reversal or even a modification of the judgment below. It may be as well to say that here lies the marked difference between the case now under consideration and the cases of the Equitable B. & L. Association v. Vance, 49 S. C., 402, and the same plaintiff v. Hoffman, 50 S. C., 303; for in those cases, after it was determined that the contracts sued upon were Georgia contracts, it followed necessarily that they were to be construed under the Georgia law, by which there was no usury in those contracts; while here it is conceded that the contract under consideration was usurious, whether construed under the laws of North or South Carolina. But I am not prepared to admit that even this was *123error. The only authority cited to sustain the plaintiffs’ 'first exception, raising this question, is Pollock v. Association, 51 S. C., 420. As I did not sit in that case, being disqualified, I know nothing of that case except what appears in the official report. There I see that the majority of this Court concurred only in the result; and, as it appears to- me, that there were other grounds upon which such a concurrence might have rested, than the conclusion of the writer of the opinion that the contract there in question, similar to this, was a North Carolina contract, I do not know that it has been authoritatively decided that the -contract here in question is a North Carolina contract. If it still be an open question, it seems to me that there is great force in what was said by the North Carolina Court in Rowland v. Old Dominion Building & Loan Association, 18 S. E. R., 965. The defendant, it seems, was a Virginia corporation, and one of the questions was whether the case was to be governed by the laws of Virginia or by the laws of North Carolina. In considering that question, the Court used the following language: “It is in no true sense a Virginia contract. The labored efforts of the association to make it so appear, but add to the conviction that it is not so in fact." Where a party litigant in the Courts of this State asserts that his rights are to be adjudicated, not by the laws of this State, but by those of another; that a contract illegal here shall be enforced because it is legal under the laws of another forum, he must be able to- show clearly and conclusively that his case is one that entitles him to malee such a demand. In this ease, the borrower was in this State; he applied for the loan here; there was a local board of managers here; it had a treasurer; the money was paid to the borrower here; he secured its repayment by a mortgage on land situated here; and the mortgage was executed here. Calling it a Virginia contract does not make it one. Sending the application to the ‘home office,’ as it is called; remitting the money from Richmond; calling the local board and its treasurer the agents, not of the corporation, but of the members who live in *124that locality; providing in the bond that it shall be paid in Virginia — all these things cannot enable the foreign corpol ration to evade the usury laws of this State.” This language is directly applicable to- the facts of this cáse. Of course, I do not cite this case as authority, for, according to nay view, it is not authority here. It is only cited for the force of the views there expressed, not only as to this immediate question, but also, in another part of the opinion which I 'have not quoted, for the clearness with which it is shown that such a contract as that here in question is usurious. But as I do not consider that the question whether this is a North or South Carolina contract is of any practical consequence in this case, T need not say more.