Court Opinion

ID: 6543753
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:17:54.825378+00
Date Added: 2024-06-11T15:55:54.529140
License: Public Domain

Bourland, Special Judge, (dissenting). I have not been able to concur in the opinion of the majority of the court delivered in this case. The original complaint was filed by the executors of one C. C. Graham, deceased, for the purpose of avoiding certain trust deeds existing against the lands of Lanier, in order that the executors might realize, by legal process, the amount of a judgment held by them, it being alleged that the property of appellant was incumbered to its full value. But the Grahams have not appealed, and the cause proceeds here as if originally brought by appellant; he having filed a cross-complaint, to which Austin Corbin, the Corbin Banking Company, the Union Mortgage, Banking & Trust Company, as well as all the defendants to the Graham complaint, saving himself, were made parties defendant. In his cross-complaint, appellant attacked all save one of the incumbrances mentioned in the Graham complaint, on the .ground of original usury; charging also that the indebtedness therein named had been fraudulently, and by coercion, augmented against Mm, and that he had paid large sums thereon for -which he had not received credits. Appellant further charged that appellee Union Mortgage, Banking & Trust Company, which likewise filed a cross-complaint, was the holder of the last of the series of usurious incumbrances, which last was and is but a consolidation and'renewal of all the incumbrances on his property, including one not originally usurious. The allegations as to usury were all substantially denied by the Union Company; and on the hearing a decree was rendered, as prayed by the Union Company, for its debt, and for foreclosure of the said last incumbrance, and, as to the lien of the Graham judgment, the Union Company was subrogated to the rights of the antecedent mortgagees, and the antecedent mortgages were enforced for its benefit, it being alleged that they had been expressly kept alive, by agreement of the parties at the time of the execution of the last incumbrance, for the protection of' the holder thereof. The record in this case is exceptionally large, owing, as it seems proper to say in passing, to the needless length of the pleadings; one, of many but little shorter, occupying fifty pages of typewritten legal cap. To say that the pleadings abound in argumentative matter, trenchant rhetorical sentences, and other redundance, is not, perhaps, paying a clearly doubtful tribute to that zeal which, within proper limitations, should mark the conduct of every faithful solicitor. It must suffice, therefore, if I shall make a substantial statement of the facts upon which this opinion is founded. The incumbrances involved in this litigation are: (a) That of the American Freehold Land Mortgage Company of London, Limited, for $8,600. (&) A series of loans, known as the “Dun-ton transaction.-” (I) In 1885, for $1,500; (2) in 1886 for $7,200; (3) in 1887, for $2,500; (4) in 1888,for $3,000; (5) in 1889, for $6,000; and (6) in 1890, for $3,000. (c) The Sherman debt, made in 1882, for $5,000. (d) The Hirsch Bros, debt, dated in 1889, for about $10,000. (e) Three notes for $10,000 each, and one for $1,792.84, made March 26, 1891, to the Real Estate Mortgage Company, of Maine. Each of the debts named in the foregoing series was secured by a trust deed. (/) A loan of $1,500 dated May 26, 1891, made by the Corbin Banking Company, also secured by trust deed. Appellant’s contention as to usury is (1) that all these transactions, except the Sherman transaction, were originally tainted with usury; (2) that all the notes ' antedating the transaction with the Máine company of March 26, 1891, including the Sherman transaction, were owned or controlled by the Corbin Banking Company, and by th.e transaction of March 26, 1891, were consolidated and renewed, thus sterilizing that transaction with their usurious taint. There seems to be no disagreement between the parties as to the propositions that if any of the antecedent notes were usurious, and the transaction with the Maine company was a renewal of them, all would be vitiated, but that whether that transaction was or was not a renewal is immaterial unless some one or all of the antecedent debts be found to have been stricken with the fatal disorder. It is agreed also that if the transaction with the Maine company was in good faith an independent loan, as appellee maintains, by means of which the old indebtedness, though usurious, was liquidated, the new loan goes unaffected with any of the virus of the old. •However, appellant’s plea of usury has, it appears, a double aspect. He not only pleads usury under the laws of Arkansas, but he further sets it up under the laws of the State of New York, as follows: “Defendant, Lanier, here specifically states and charges that the notes of date March 26, 1891, and all prior notes merged into them, were and are payable at the office of the Corbin Banking Company, in the city and State of New York; that under the laws of the State of New York, as they then existed, and as they now exist, all contracts whereby a greater rate of interest is reserved or charged for forbearance in excess of seven per cent, per annum are declared illegal and void, and the penalty for an infraction of said laws is total forfeiture of both principal and interest; and defendant, Lanier, as well by answer as by cross-complaint, inasmuch as New York is designated as the place of performance, here specifically and specially pleads the laws of the State of New York in discharge of the usurious and void notes under said laws of the place of performance.” It is to be noted that no objection was taken below on account of repugnance, nor were these allegations in any wise answered; so the unvarying rule is that the record is to be taken here as we find it. American Freehold Land Mortgage Co. v. Sewell, 15 L. R. A. 229. Appellee insists here that no answer was required, (1) because the laws of New York are not set out in haec verba, and (2.) because it is not alleged that the notes were made in New York. In so far as the pleadings may be indefinite or uncertain, the objection should have been taken below by motion, for the allegations appear to be substantially sufficient. Under the code, which was designed to sweep away the vexatious niceties of the old system, it is only necessary to state the facts in ordinary and concise language, with such certainty as will fairly enable the court to know what is meant; and in that sense the foreign law in this case is but a fact. Sand. & H. Dig. §§ 5761, 5764; Green, PL & Pr. § 877; Bushey v. Reynolds, 31 Ark. 657. And the allegation that the notes were expressly payable in New York carried with it the legal presumption, in the absence of anything to the contrary, that the laws of that state furnished, by agreement of the parties,-the standard of obligation. It must then inevitably follow that, in legal effect, appellee, by failing to deny the allegations of appellant .setting up usury under the laws of New York, confessed that the notes wero void under the laws of 7 / that state. Still the anomaly remains that the positive testimony of appellant himself to establish his plea under the laws of Arkansas refutes the presumption mentioned, and establishes the fact that the parties elected the laws of this state as their standard of obligation. In all the trust deeds there is a provision that “the notes shall be construed by the laws of Arkansas where they are made.” The notes and mortgages were, however, while expressly payable in New York, formally delivered for convenience merely in Memphis, Tennessee. Appellant lived near that city, and did his business there. The parties with whom he negotiated these various loans had selected Memphis as their base of operations only because it is a commercial center convenient to those parts of Arkansas and Mississippi in which it was proposed to carry on the business of making farm loans. Part of -the notes were dated in Arkansas, and all the circumstances indicate that the parties intended this state as the locus contractus as well as locus solutioms. It seems to be the ease of citizens of different states, temporarily in a foreign state, contracting with reference to the laws of the domicile of one of them, but stipulating that the contract shall be performed for convenience in the state of the domicile of the other. In contracts, effect is to be given to the intentions of the parties, in so far as such intentions do not contravene the rights of others, or good policy, or the law itself; and the doctrine of election, as understood in private international law, is limited only by such contravention. The doctrine has, of course, no application in the case of a contract both made and to be performed in a particular state, between persons there domiciled, or between one domiciled and a foreigner; for, upon obvious principles growing out of the rights of independent sovereignties, such contracts are conclusively presumed to have been made with reference to the laws of such state. Bank of Harrison v. Gibson, 60 Ark. 269. Following the rule of intention, the law, in principle and upon the authorities, seems to be that where, between citizens of different states temporarily in a foreign state, or in the state of the domicile of one of them, a contract is made, they may elect as their standard of obligation the laws of the state of either of their domiciles; and, where such contract is expressly to be performed in the state of the domicile of either transient contractor, or, if made' in the state of one' of their domiciles to be performed in the state of the domicile of the other, the law will presume,—but only in the absence 'of other proof of intention,—that the contract was made with reference to the laws of the place of performance. Bishop, Cont. § 1388; Cockle v. Flack, 93 U. S. 344. As to the notes of March 26, 1891, for $41,972.84, made to the Real Estate Mortgage Company, appellant insists that under the evidence, even upon the part of appellee, they, at least, were both made and payable in New York, and are purely New York contracts, under the rule laid down in Bank of Harrison v. Gibson, supra. And if' such testimony is to be taken alone, and absolutely veritable, the result contended for would follow; for it seems the chief office of the Maine Company was in New York; and from the evidence upon the part of appellee it would appear that Austin Corbin there, acting for appellant, negotiated this loan; that Watson, the attorney for Cor-bin, and also acting for appellant, procured the execution of the papers at Memphis, and forwarded them on to New York for delivery, where, as seen, they were also payable. This, if true, as I have said, would fix the character of these particular notes as purely New York contracts. But, for reasons that will appear further along, I think Austin Corbin and Watson were acting in this matter, not as the agent of appellant, but for the Corbin Banking Company, the real beneficiaries of these notes. Under the laws of Arkansas, then, are these notes or any of them invalid for usury? After a most careful consideration, I have reached the opinion that they are all void, either for original usury, or for consolidation and renewal with debts primordially tainted. The $8,600 loan made by the Freehold Company is clearly ruled by the case of Banks v. Flint, 54 Ark. 40. In that case this court said: “To sustain the plea of usury it must appear that excessive interest was paid to the lender, or that a bonus or commission was paid to the agent of the lender, with his knowledge, or under, circumstances from which his knowledge will be presumed, which commission, when added to the interest paid or to be paid to the lender, would exceed the lawful rate.” The facts in this ease are much like the facts in that: Appellant, Lanier, owned, it seems, about 6,000 acres of land in Mississippi county. In February, 1883, he applied for . a loan of $8,600, at Memphis, Tennessee, to one F. W. Ocobock, the agent at that place of a New York firm known as the Cor-bin Banking Company. The terms upon which he was authorized to loan money was by Ocobock fully explained. Appellant was informed that, in addition to signing a blank form of application, he would be required to sign, and he did sign, a form of contract declaring Ocobock his agent in the negotiations for the loan, and agreeing to pay the agent a twenty per cent, cash commission. Thereupon appellant executed his notes, one for $8,600, payable in five years, and five interest coupon notes, one payable each year, calculated on a basis of eight per centum on the principal sum. At the instance of Ocobock, these notes were made payable, however, to the American Freehold Land Mortgage Company of London, Limited; and to secure the same a mortgage was executed to J. K. 0. Sherwood, of New York, Trustee. The evidence shows that, up to the time of the execution by Lanier of the notes and the mortgage, he had no knowledge of Sherwood or the Freehold Mortgage Company, nor had they of him. Immediately upon the execution of the securities, Ocobock drew a check on a Memphis bank in favor of Lanier for $6,780; the remainder of .the loan, .$1,820, going in satisfaction of the contract for commissions, and for some matters of expense connected with the loan. Ocobock was at the time receiving from the Corbin Banking Company a salary of $600 per month for negotiating loans, and the twenty per cent, commission exacted of Lanier by him was retained by this bank. At the date of the loan, Austin Corbin, an active member of the Corbin Banking Company, owned 1,502 shares of the stock of the Freehold Company, and the Corbin Banking Company was extensively connected with the negotiations of loans of money in the United States belonging to the Freehold Company, placed with the bank for that purpose. A representative of the Corbin Bank and the secretary of the Freehold Company testify, however, that neither the Corbin Banking Company, nor any person connected with it, represented the Freehold Company in the negotiations of such loans; and this brings me to an examination of the facts and circumstances in evidence tending to establish or disprove the truth of their statements. There is in evidence what purports to be a copy of the charter of the Freehold Company. Appellee objects, however, in this court, for the first time, to the .consideration of this copy as evidence, upon the grounds that (1) it is not properly authenticated, and, second, no part of the res gestae. Two persons signing as directors certify that the copy in evidence is a true copy of the charter, and acknowledge before the consul general of the United States of America, at London, that they have the right to certify. A properly proved copy of the charter of the Freehold Company, in so far as any of its provisions tend to establish usury, would be evidence against that company in a case of this character; and I can see no reason why such a copy is not to the same extent admissible against appellee. German Bank v. Deshon, 41 Ark. 331. And if the copy in evidence is not properly authenticated, that objection, to be considered here, must have been called to the attention of the lower court. Woodruff v. Core, 23 Ark. 341; George Campbell Co. v. Angus, 22 S. E. 167; Robinson v. Dewhurst, 28 Fed. Rep. 336. From the copy in evidence it appears that the Freehold Company was organized in England, under the companies act (24 & 26 Victoria), for the purpose of making loans throughout the United Kingdom and in the United States, with a principal office at London. Article 58 of the charter provides for the election or appointment of various officers, denominated ‘ ‘ dii*ectors, ” “ auditors,” “ managers ’ ’ and “bankers,” and that these officers may be elected or appointed either within or without the United Kingdom. The office of banker, by another provision, is made custodian of all moneys and other property from time to time entrusted to it. It is provided further that the person holding the office of banker may be removed at any time, or other bankers appointed to act with him. Article 117 empowers the directors to appoint local agents in the United States. Another provision is to the effect that the directors may from time to time delegate to local boards, local directors, manager, commissioners, and other officers, such of the powers conferred pn the directors as they may consider requisite, with power of revocation at will. From the nature of the business of extensively negotiating loans on land mortgage security, there are many most essential details which cannot, upon any correct business principle, be entrusted to the borrower; and the charter of the Freehold Company manifestly contemplates that these details are to be in charge of its own officers. ■ Nor is it unreasonable to assume, if there were no evidence on the subject, that the Freehold Company assigned to one of the principal fields of its proposed operations the agencies contemplated by the charter as essential to the success of the enterprise. There are inherent difficulties attending investigations of this nature which render it impracticable to say, with the highest moral certainty, that such agencies are established in a given manner; but that the Corbin Banking Company, and the individual members of that firm, performed the functions of banker, general manager and directors of the Freehold Company in the United States, finds ample warrant in the testimony. The Corbin Banking Company and its officers, through local agents to whom they paid high salaries, reached borrowers in all parts of the country for the Freehold Company. The bank superintended all the details, and furnished the requisite legal blanks, framed so as to protect every interest of the lender at the expense of the borrower. The bank approved the loan, paid out the money, and collected it as itfell due, sued borrowers who made default, and looked after the loans generally as a shrewd business man is expected to look after his own interests. Moreover, an allegation made by appellee in its cross-complaint, in view of the rule that in the construction of pleadings everything is to be taken most strongly against the pleader, is not without significance. Appellant having charged' that the Freehold Company had been doing business in Arkansas in violation of the law applicable to foreign corporations, appellee, after averring that the Freehold Company had not done business in this state, further averred that the loan made to appellant by such company was made, and all the negotiations therefor carried on, in the city of Memphis in the State of Tennessee. It is nowhere disputed that the loan was made through Ocobock in Tennessee, and that he, and not another, there conducted all the negotiations with Lanier. The notes and mortgage were delivered by Lanier to Ocobock in Memphis, and there Ocobock gave to Lanier the check on a Memphis bank. Confessedly, no one, unless Ocobock, represented the Freehold Company in that state. True, appellee denies, on information and belief, that Ocobock was the agent of the Freehold Company, and alleges that, under written contract between them, he was the agent of appellant; how then could the loan have been “made,” and all the negotiations therefor carried on, in the city of Memphis, in the State of Tennessee,” as appellee has alleged? To have been “made,” the negotiations must have been “ carried on” or consummated with some representative of the company. The tranaction was complete only when the papers were delivered and the money or its representative received thereon. It scarcely needs to be stated that nothing Ocobock or appellant could have done in Tennessee would have bound the company until the papers had been received and accepted by its home office, or by its New York agent, unless Ocobock really represented the company in Tennessee, and his claim to represent appellant was a mere pretext. It follows that to say that “the loan was closed up in Tennessee” is to admit that Ocobock was the agent of the company. Furthermore that the Freehold Company knew, or should be charged with knowledge, that the Corbin Bank, through Ocobock, was exacting of borrowers commissions which, added to the rate of interest reserved in the face of the loan, exceeded ten per cent, per annum does not admit of reasonable doubt. It is in evidence that neither the Corbin Bank nor its local agent, Ocobock, received any compensation from the Freehold Company for services of which it received the benefit. It is immaterial whether the Freehold Company received any part of the twenty per cent, commissions. Section 12, article 29, of its charter provides that the remuneration of the directors shall be AlOOO per annum, tobe increased to and remain at £1500 per annum when and so long as a dividend of ten per cent, per annum shall be paid; and to be further increased to and remain at A2000 per annum when, and so long as a dividend of fifteen per cent, per annum shall be paid. If these provisions do not manifest an intention or expectation that the profits of' its loaning business, conducted through its various agencies, would exceed ten per cent, per annum upon the money invested, over and above all expenses, then the language of the charter upon this subject is wholly without significance. And, without a full discussion of the voluminous evidence tending to establish knowledge, upon the part of the Freehold Company, that its agent, the Corbin Bank, exacted through Ocobock an excessive rate of interest, the drawing of the cheek by Ocobock for $6,820 in satisfaction of a loan for $8,600, which check appears to have been paid without question by the Freehold Company, is sufficient notice to the company, even if it had not previously authorized it, that its agents were exacting excessive bonuses on loans; and acquiescence under these circumstances, I am impelled to hold, has ratified the act. There are now to be considered a series of loans made in the name of one F. W. Dunton. It seems that in the year 1885 B. J. Martin had succeeded to the Memphis agency of the Corbin Banking Company, and in the early part of that year he, at the instance of the bank, called upon Lanier for the purpose of collecting the past-due interest on the Freehold debt. Lanier was then unable to meet these payments, and needed more money. Martin proposed to make him a new loan of $1,500, and accordingly Lanier executed his note for that sum, but, at the instance of Martin, to F. W. Dunton. And each year thereafter, up to and including 1890, Martin negotiated a similar loan, except as to the amounts. All the Dunton loans aggregated about $21,700. They were severally secured by-trust deeds upon the lands of Lanier, in which deeds W. G. Wheeler was named as trustee. The evidence discloses that in each case the Corbin Banking Company was the real lender, and that Dunton and Wheeler were members of that firm. Before Martin proposed the loan in 1885, he had exacted and obtained of Lanier a writing surrendering his plantation to Sherwood, trustee in the Freehold loan, with the understanding that Martin, as agent of Sherwood, would at once lease the plantation to Lanier, which was accordingly done under a stipulation that the rental should be paid upon the Freehold loan. To the note given.for $1,500 in 1885 was attached an interest coupon for $106.25, the principal note being payable January 1, 1886. Indeed, all the Dunton notes bore interest at the rate of ten per cent, per annnm from date till paid. The respective sums for which the notes severally called were not paid to Lanier, however, when the notes were delivered to the agent; the only consideration received by Lanier being paid in installments of money and supplies from time to time during the year. Occasionally Lanier purchased supplies himself, and made requisition on Martin for the money to pay for them, but generally Martin purchased them upon Lanier’s orders, and forwarded them to him. In any event, Martin invariably sent the original invoice to the Corbin Banking Company, where a profit was charged to Lanier upon the price of the supplies, notwithstanding the notes given for the loan drew ten per cent, interest per annum from date till paid. The first loan made by Martin (that of 1885) was evidently treated by the parties as exhausted when the installment received by Lanier reached $1,390; for at that time Lanier, through Martin, borrowed from the Corbin Banking Company a further sum of $500, needed to erect a gin, and Martin, after purchasing the gin at a cost of $270, upon which purchase he retained a commission of $15, delivered to Lanier only $215. The loan made in 1886 was for $7,200, divided into three notes for $2,400 each, payable in one, two and three years, at ten per. cent, interest per annum from date till paid. It seems that upon this loan appellant received in installments only $5,519.34. Part of the balance was’ retained by the Corbin Bank, without appellant’s consent, to satisfy a charge it had made against him in the sum of $1,371.44, which was on account of a payment made by the bank, against appellant’s consent, of a tax illegally assessed against his lands, and for which it had been illegally sold. The bank evidently thought the payment necessary to protect its own securities, but appellant was at the time resisting the payment of the tax, and seeking to avoid the illegal sale by legal proceedings, in which he finally prevailed. For the note and mortgage given in 1889 for $6,000, appellant received no consideration whatever from Dunton or the Corbin Bank. These papers were executed at the instance of Martin, and appellant continued to receive advancements of money and supplies as usual, as he thought, until September following, when, for some reason which the testimony does not make clear, Lanier learned for the first time that these installments were coming from Hirsch Bros., a Memphis firm of merchants, and not from Dunton, as Lanier supposed. As to this loan, appellee states in its brief that, “at Martin’s suggestion, Lanier, early in 1889, had executed a trust deed and notes for $6,000 in favor of F. W. Dunton, under the impression that the Corbin Banking Company would continue to furnish him money and supplies, as it had been doing, and that for several months he believed they had been doing through Hirsch Bros.; but in September, 1889, Hirsch Bros, informed him that they were making those advancements on their own account.” Not far from the time Lanier “received this information,” Dunton assigned the notes and mortgage for $6,000 to Hirsch Bros., and it seems that Lanier executed an additional note and mortgage “to secure $8,000 already advanced and $1,200 to be advanced.” In September, 1890, Hirsch Bros, claimed that Lanier’s indebtedness to them amounted to about $10,892.52,upon which they sued at law, and also sought in equity a foreclosure of their mortgages. With Lanier, they made Dunton a party to the suit in equity, charging that they were acting for the latter in making the advances to Lanier. In this connection it is proper to state that, whilst that suit was pending, several thousand acres of Lanier’s lands were advertised to be sold under the power in a trust deed which he had executed in 1882 to Alma C. Sherman for note and interest amounting to $5,000. Meanwhile Martin, acting for the bank, claimed to Lanier that his indebtedness was greater than he had supposed. Circumstances had arisen from which the bank seem to deem it necessary to take precautionary steps in view of a possible plea of usury on the part of Lanier. To that end correspondence passed between Martin and the bank; and one W. J. Kelley, a New York attorney of the bank, came on to Mississippi county to effect such an adjustment of Lanier’s indebtedness as would result in the least loss to the bank. Kelly bought the Sherman debt at a discount of $1,000, and a little later lie bought the Hirsch Bros, debt at a discount of $2,500, and the notes and mortgages were assigned to him in trust for the bank. Whilst these, matters were transpiring, Martin, under the advice from the bank, was impressing Lanier with the idea of negotiating “a. new loan on long time for a sufficient sum to pay off all the-antecedent incumbrances on his property.” The purchase of the Hirsch debt, which was on the 19th of March, 1891, gave the Corbin Bank control, as owner or otherwise, of all of Lanier’s mortgage indebtedness, which the bank claimed aggregated $41,792.84. At this juncture, Watson, another attorney for the bank, to use his own language, “informed Lanier that, to enable him to pay his indebtedness, the Real Estate Mortgage Company agi-eed to lend him that amount of money for five years at eight per cent., payable annually, secured by trust deed on his entire lands.” Lanier did not know the Real Estate Mortgage Company; and it is plain from the evidence that it had never seen or heard of him. The Corbin Bank had previously sent to Watson for adjustment all the indebtedness held by it against Lanier, including the Freehold debt; and on March 26, 1891, Lanier executed to “the Real Estate Mortgage Company,” through Watson, his note for $41,792.84, with trust deed upon all his lands, to one Hinsdale, of New York, trustee. And at the time the papers were delivered to Watson, it was expressly understood between him and Lanier, at the suggestion of Watson, that all the antecedent incumbrances, except the Freehold incumbrance, which was to be paid off and cancelled, were to be kept alive and assigned to the Real Estate Mortgage Company for its protection and better security. Whereupon Watson drew his check in favor of Lanier upon the Real Estate Mortgage Company for $41,972.84, which Lanier indorsed, and Watson inclosed to the Corbin Banking Company, with Lanier’s instructions to “collect and apply the proceeds to the payment of the said debt.” The evidence discloses that the Real Estate Mortgage Company is a Maine corporation. It was organized in February, 1891, but its certificate of incorporation was not filed in the proper office in that state until the 7th day of April, 1891, eleven days subsequent to the date of Lanier’s note for $41,972.84. This company appears to have been organized entirely by residents of New York; indeed, mainly by members of the Corbin Banking Company. Manifestly, the purpose of its organization was, as it was expressed by Martin in his evidence, “ a desire bn the part of the Corbin Banking Company to take up old Arkansas loans and make new ones, apparently through some entirely disinterested party, upon a ten per cent, basis, and thus take them out of the danger of a suit for usury.” It is to be observed that the capital stock of the Real Estate Mortgage Company was divided into 1,000 shares of the par value of $100 each. Of this stock, Austin Corbin subscribed for 430 shares; Hanna M., his wife, for 90 shares; Anna W. and Austin, jr., his children, for 40 shares each; Austin Corbin, trustee, for 105 shares; Isabella C. Eggell, a daughter of Austin Corbin and wife of a member of the Corbin Bank, for 40 shares; W. J. Kelly (attorney for the bank), Frank M. Kelly, and E. R. Reynolds, for one share each; Charles Pratt & Co. for 250 shares; Benjamin Nor-con and Charles M. Pratt, for one share each. Frank M. Kelly, with one share, was made president. The office of this company was in New York City, and, as seems certain, in the office of the Corbin Bank. The certificate of incorporation, which, as shown, was filed eleven days after the date of the Lanier notes and mortgage, made, as has been seen, to “The Real Estate Mortgage Company,” discloses that only $300 of the capital stock had been paid in. And if this mortgage company ever transacted any other business besides making this loan to Lanier (if it may be so termed] for a sum nearly equal to half of its capital stock, the fact is not satisfactorily shown by the record. And while F. M. Kelly, W. J. Kelly and E. R. Reynolds nominally constitute the board of directors, the circumstances show to my mind most convincingly that the affairs of the company were wholly under the control of the Corbin .Banking Company. The officers of the Real Estate Mortgage Company knew nothing whatever of Lanier, nor of his securities or their value. Indeed, as to these matters, this company, according to its secretary’s statement, relied wholly upon the representations of Austin Corbin; and, as illustrative of the nature of the transaction, the evidence of Kelly, President, is not without bearing. According to Kelly, who contradicts Watson, this company would not invest in these securities until Austin Corbin had assured its officers that he would “find a-buyer in a short while” to take the paper off their hands. Thus the Maine company, as he says, was induced to make the loan “temporarily.” President Kelly explains that the loan at that particular time was, on account of its size, not desired by his company, as a permanent investment, although Watson had ‘ ‘ informed Lanier that the company had agreed to make the loan for five years at eight per cent.,” and although President Kelly seems to stress the statement that his company made even the temporary investment solely for the interest that would accrue thereon. In view of the professed mission of the Maine company to negotiate and handle this class of securities, President Kelly might well have particularized wherein so large a-loan was less desirable than a number of small ones whose aggregate, saying nothing of the expense of numerous negotiations, required an equal expenditure. In what way Austin Corbin kept faith with the Maine company, and “found a buyer,” is now to be seen. On the 25th day of June, 1891, about three months from their date, these securities were transferred to appellee. The negotiations were conducted entirely by Austin Corbin, who assumed throughout to be the sole owner of the paper. At some time prior to the transfer to appellee,—and at what time no one seems to know or is willing to tell,—the Maine company indorsed the paper, but without date and without recourse. At the time of the transfer from the Maine company to appellee, some $800 of interest had accrued; and yet, according to the secretary of appellee, his company paid the face of the notes-only, leaving the accrued interest, as it is said, “for subsequent adjustment.” Moreover, as a condition of its acceptance of the paper, appellee required and was given the written guaranty of the Corbin Banking Company, covering the principal and seven per cent, interest from the date of the notes. Thereupon the transaction was closed by debiting the account of appellee on the books of the Corbin Bank with the face of the note. Still a further, and the last, transaction between appellant and the Corbin Bank, and in which appellee has no interest, is to be noticed. It is a note and mortgage executed May 26, 1891, for $1,500 to the bank, likewise attacked for usury. The note was made to draw ten per cent, interest per annum from date till paid, but the money was to be paid, as in the Dunton transaction, in installments from time to time during the year. To the allegations of the cross-complaint upon this note, neither the Corbin Banking Company, Austin Corbin, nor any one for them, or any of them, answered or in anywise pleaded. It is developed in evidence, however, that there was an understanding at the time the loan was made that the money was to be retained by the bank, and paid to appellant from time to time, but only upon the approval of Watson, the bank’s agent. It is clear that the money was never at the free disposal of appellant. It is the contention of appellee that the notes and mortgages in the Dunton series do not reflect the real contracts between the parties, that they are only forms of security for advancements of money and supplies agreed to be made from time to time as appellant should call for them, and that interest was charged only upon the amount of each advancement from its date. But in my opinion the evidence is far from consonant with that contention. In the case of the $1,500 loan made in 1885, appellant received, as stated, only $1,390 in installments, while he was charged on the books of the bank with the full face of the note. The' loan of 1886 for $7,200, consisting of three notes for $2,400 each, was made in renewal of the loan of 1885, and to pay off the interest coupons then due on the Freehold loan, and for some additional money. There is no evidence that the parties hadan understanding that interest would be charged only upon the sum of each advancement from its date; but appellant and Martin, the bank’s agent, both testify substantially that the notes and mortgages express the only direct understanding as to interest between the parties. Moreover, there is an unqualified concession that the Corbin Bank secretly charged a profit on the advancements of supplies. But appellee stresses the evidence of witness Watson that, as soon as appellant learned of these secret exactions, they were eliminated from the final aggregate claimed by the bank. Furthermore, the argument is advanced that the manner of these exactions, the element of secrecy, saves them from the taint of usury; that usury can only be predicated upon a corrupt agreement between the parties. “You can not,” it is declared illustratively, “charge a man with one crime and convict him of another.” But the true proposition seems to be whether one charged with usury may escape the consequences of his illegal and unconscionable exactions by showing that the manner of them was so stealthful as to constitute an essential element in one of the indictable felonies. Usury laws are punitive. They are leveled at the lender. No shift, or device will be allowed to evade them, but the courts should disregard mere forms, and examine into the real nature of the transaction. Knowledge or assent upon the part of the borrower is wholly immaterial. It has been recently and very clearly so decided by this court in an able opinion delivered by Battle, J. Garvin v. Linton, 62 Ark. 370. Under our statute the usury maybe taken “upon the contract,” which of course implies the assent of both parties; but by the same statute the illegal exactions may be usurious if made by the aid of the contract, as in the case at bar, when the knowledge or assent of the borrower is immaterial. It does not, however, become necessary in this case to pass upon the question whether the simple charging of profits secretly in excess of the maximum legal rate of interest would constitute usury. Such acts nevertheless manifest the usurious disposition; and this, taken with all the facts and circumstances, convinces me that this entire system was but a plan devised by the Corbin Banking Company, and understood, in most of its features, by Lanier, whereby the lender was to be remunerated in excess of the legal rate of interest for the use of his means. Appellant doubtless did not know that he was being charged these profits, and, if not, of course he did not directly agree to such charges; but he did know, during a series of years, that he was giving his notes at ten per cent, for sums that were to be paid in installments; that by the plan adopted the lender would get interest in excess of the legal rate, and the manner and amount of it were left largely to the latter. A banking institution may, in emergencies, doubtless depart from the usual custom of banking, and take upon themselves the task of furnishing to a planter his annual supplies, not only of money in varying amounts, but farm necessities, provisions, stock, seed and the endless number of miscellaneous articles constantly demanded by the business of planting; but such departures are doubtless rare, nor is it to be supposed that they will be persisted in for a period of five years unless there is an incentive looking to interest beyond what might be lawfully realized by the more ordinary and direct methods for investing bank capital. A single transaction of the character in question might be susceptible of explanation consistent with legitimate purpose; but here are a number of transactions all interlocked,'and attended with clear marks of unity of design to evade the law. The law looks to the substance, not to its ingenious covering; and where there is, in substance, a loan of money for a pecuniary benefit, in any form, in excess of the legal rate of interest, by no scheme or plan can the transaction escape the blight of usury; but it settles over all, upon leaf and branch, filtering into the sap, carrying death to every part. Nor has the transaction of March 26, 1891, escaped the common taint. It is, I hold, clearly shown to be but a consolidation and renewal of all antecedent ones. It matters not, I think, under the facts of this case, that the Real Estate Mortgage Company, to which these notes were nominally made, is a corporation. It is shown to be one in name only, for, beyond reasonable question, it is and was tbe mere creature of tbe Corbin, Banking Company, organized by that concern for tbe manifest purpose of taking up old usurious loans, and renewing them in its name, so as to make it appear that there was a new lender to the old borrowers of the bank, and that fresh funds had liquidated the usurious indebtedness; whereas the whole is seen to be, if not the clever juggle of an expert, nevertheless a wileful device of those who well understood the countless methods of the usurer. Davis Improved Wrought Iron Wagon Wheel Co. v. Davis Wrought Iron Wagon Co., 20 Fed. Rep. 700 ; Cook on Stockholders, § 663a; First National Bank v. Plankinton, 27 Wis. 177; Lukens v. Hazlett (Minn.), 35 N. W. Rep. 265. Corporations are often organized to act, as I think this one was, as a cloak for fraud; and certainly it is the very highest province of the courts in all such ' cases to disregard the corporate existence, in so far as the ends of justice may demand, to circumvent the fraud. Finally, that the notes under consideration are void in the hands of appellee, even if an innocent holder (and it is not), is ruled by the case of German Bank v. De Shon, 41 Ark. 331. I have now reached the last question presented by this voluminous record. In his cross-complaint appellent charged against the Corbin Banking Company, and the individual members of that firm, that the transaction of March 26, 1891, was fraudulent, and superinduced by compulsion and coercion on the part of the bank. It was further specifically charged that he had paid large sums on the antecedent indebtedness, for which he had received no credits. The payments thus made are particularly pointed out. It is also alleged, by appellant that he relied upon the bank to keep a correct account of his various payments, and that, at the time of the execution of the notes of the last named date, he was misled, as to the true state of his affairs, by the concealments and frauds of the bank. The payments which appellant alleges that he paid the bank aggregate $27,729.14. From the record there is no question that, in the settlement of March 26, 1891, he was credited with payments only to the amount of $10,007.68, leaving a difference of $17,722.46, which does not include the $1,371.44, tax money wrongfully withheld as shown. Now, as I understand the opinion of the majority in this case, appellants claim for these credits comes too late. Too late for what? Too late, as I understand the opinion, as any kind of defense or set-off against the notes in the hands of appellee, held to be, by the court, an innocent holder. But the allegations of appellant are not made for the purpose of defense against the notes. They are not made against appellee. They are specifically charged against the Corbin Banking Company, and the individual members of that firm. Nor were these allegations, thus specifically made, answered or pleaded to ■in any manner. If it is replied that the bank and its members were non-residents served by publication, against whom, therefore, a personal judgment could not be taken, I reply that they filed a demurrer at an early stage of the proceeding. Besides, the decree of the lower court recites the presence of all parties. But the demurrer did not relate to the sufficiency of the allegations under consideration, and I hold 'that they are sufficient to entitle appellant to a decree by default against the Corbin Banking Company. The decree of the lower court ought to be reversed, the securities held void for usury, and appellant ought to have a decree for the sum of $17,722.46 by default against the Corbin Banking Company, and the' individual members of that firm. Wood, J., concurs in the dissenting opinion.