Court Opinion

ID: 7991965
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:32:13.712073+00
Date Added: 2024-06-11T16:35:24.201856
License: Public Domain

Smith, C. J.,
delivered the opinion of the court.
Appellant filed its bill in the court below alleging that it was a building and loan association incorporated under the laws of the state of Georgia, and had been- admitted to do business in the state of Mississippi under the provisions of. chapter 167, Laws of 1912; that on the 15th day of September, 1913, it loaned to appellees the sum of five hundred dollars, payable, principal and interest, in sixty monthly installments, secured by a deed of trust upon certain land situated in the city of Jackson. This indebtedness due from appellees to appellant was evidenced by a bond in which it was—
“stipulated and agreed that the nonpayment of three installments of principal and interest after the same shall fall due, shall authorize the company to proceed to enforce the payment'of the loan, together with the interest due thereon, and amounts for taxes, insurance or other charges advanced by it for the benefit of the property conveyed to secure this obligation, the amount due to be *544ascertained as follows: The principal debt, with interest thereon at the rate of ten per cent, per annum, and allowing credit for all payments of installments of principal and interest upon the loan, with interest thereon at the rate of ten per cent, per annum from date of payment to said company, computed in accordance with the laws of the state of Mississippi.”
In the deed of trust it was provided that:
“In event of default of the payments of installments of principal or interest for the space of three months . . . the entire debt will become due and payable at the option of the company or its assigns.”
And the trustee, upon request, should proceed to sell the land,, and apply the proceeds thereof to the payment of the indebtedness thereby secured. The bill further alleged that this condition of the bond and of the deed of trust had been broken; and, after setting forth facts showing why it is necessary for appellant to resort to this proceeding in order to obtain a foreclosure of the deed of trust, prays that the land be sold and the proceeds thereof applied to the payment of the indebtedness thereby secured. The amount claimed to be due is the principal, together with interest computed according to the stipulation in the bond hereinbefore set out.
A demurrer to this bill was sustained and the bill dismissed. This demurrer contains numerous grounds, all of which have been here expressly abandoned by counsel for appellant, except the sixth and seventh, and these alone have been taken into consideration by us in reaching our conclusion in this matter. The sixth ground is as follows:
“Because complainant is only authorized by the law to sue for monthly installments past due, and the act of 1912, upon which the loan contract is based, does not provide that upon the nonpayment of any one or more installments the loan shall mature, and the enforcement of the payment of the loan at this time would nullify the two years’ period provided by the act.”
*545Sections 4 and 9 of chapter 167 of the Laws of 1912, ■under which it is claimed that this bill cannot be maintained, are as follows:
“Sec. 4. Foreign building and loan associations and savings associations whose business is to loan money on real estate for a period of not less than two years, to be repaid, principal and interest, in equal monthly installments, may be admitted to do business in this state upon •compliance with the conditions of this act. ’ ’
“Sec. 9. All associations, whether foreign or domestic, now organized, or that may hereafter be organized, •shall be permitted to contract for loans to its members, or to applicants or borrowers who are not members in this state at a rate of interest not to exceed ten per cent, per annum, payable in equal monthly installments for the average time or duration of such loans, but to not be of less duration than two years.”
It will be observed that section 9 expressly permits building and loan associations to require payment of money loaned by them in equal monthly installments. It therefore necessarily follows that the further provision of the section that such loans shall “not be of less duration than two years” cannot mean that the borrower must be permitted to retain the entire amount borrowed for two years. It simply means that the borrower must not be called upon to pay monthly installments in such .amounts as will liquidate the debt in less than two years; but it does not follow from this that, if the borrower declines to comply with his obligations to pay these monthly 'installments, the company is not thereby released from its obligation not to require him to repay all of the principal within two years from the mailing of the loan. If the legislature had so intended, nothing would have been ■easier than to have expressly so provided; and in the absence of such a provision the statute should not be construed so as to impose such a hardship upon the company.
*546Section 4 of the act presents no question of difficulty here for the reason that this loan was made for a period of more than two years, and neither the bonds by which it was evidenced, nor the deed of trust securing it, contain any provision under which the entire debt could be collected in a less period, provided the borrower also complies with his obligations arising therefrom.
The contention of counsel for appellees is that:
“No matter what the borrower does they (referring: to building and loan associations) must look to their’security to make them whole, and cannot undertake an enforcement before the expiration of the time which the law requires the contract to be made for. ’ ’
It is true that these associations are given no express. authority by the statute to, collect the entire amount loaned a borrower until the expiration of two years from the time the loan was made; but, on the other hand, it is-also true, that the statute does not expressly prohibit them from so doing when the borrower fails to comply with his obligation relative thereto and to so construe the statute would place these associations at the mercy of’ unscrupulous borrowers and probably render it impossible for them to carry out the purposes of their organization, which the legislature meant to aid and encourage-by enacting the statute.
The seventh ground of this demurrer is as follows :
“Complainant is not entitled to sue for the amount of interest and principal set forth in its complaint, as is provided under the stipulations and agreement set forth in the fifth paragraph in the answer (¶ bill) for the reason that such stipulation and agreement is not authorized by the building and loan association act, and the lender would be collecting straight interest at a rate greater than is authorized by the general law. ’ ’
Counsel, both for appellant and appellees in their briefs, say that under the allegations of the bill, other than those hereinbefore set out, there is no controversy *547between appellant and appellees in so far as tbe collection by appellant of the principal of the debt is concerned, and that the real controversy between them arises only ont of appellees’ refusal to pay any interest on this principal.
We will assume that this is true, and that therefore the question now under consideration can be presented by demurrer.- As hereinbefore pointed out, this loan was made in strict accordance with the provision of the statute by which building and loan association are expressly permitted to charge a rate of interest not to exceed ten per cent, per annum; the grant of this right being the concession made by the legislature to these companies in order to induce them to do business in this-state. The statute does not expressly provide that this-rate of interest shall not be collected unless the loan in fact continues for more than two years. All that it requires is that the borrower shall not be called upon to repay all of it within two years from the time it was made, provided, as hereinbefore pointed out, that he complies with his own obligations relative thereto. -
To permit appellees to obtain a reduction in the rate of interest merely by refusing to carry out their obligation to make these monthly payments, thereby making it necessary for appellant to proceed to collect the whole of its debt, would be to permit them to take advantage of their own wrong, and this the statute nowhere contemplates ; for by it, as hereinbefore pointed out, the legislature simply intended to secure to the borrower the right to repay the loan in equal monthly installments extending over a period of at least two years, provided he complies with his own obligations in the matter. The-■claim for the interest here propounded is not inconsistent with the statute, and therefore must be sustained.

Reversed and remanded..