Court Opinion

ID: 6902956
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:56:51.305549+00
Date Added: 2024-06-11T16:06:14.187490
License: Public Domain

On Petition for Rehearing.
Mr. Justice Moore
delivered the opinion of the court.
In a petition for a rehearing it is maintained that the judgment in the case at bar was affirmed on the ground that the plaintiff had charged usurious interest on the promissory notes sued on, and that in reaching such conclusion this court overlooked the averments of the answer and the defendant’s testimony respecting the alleged unlawful rate of interest. This action is based on three promissory notes for $10,000 each and one note for $1,750, executed April 29, 1905, the smaller note payable in 90 days and the larger notes August 1st of that year, with interest on each from maturity until liquidated at the rate of eight per cent per annum. The answer, in stating the items forming the consideration of these notes, alleged in substance that prior-to April 29, 1905, the plaintiff had loaned the defendant money, evidenced by promissory notes that had been frequently renewed and on that day amounted to $19,000; that other sums of money had also been so loaned prior to April 29, 1905, for which no notes were given and on that day equaled $2,049.43; that the defendant had given the plaintiff, for capital stock in a corporation, a promissory note for $9,000, aggregating $30,049.43; that the interest in advance was computed on the latter sum from April 29, 1905, when the notes were executed, to August 1st of that year, when they matured, at the rate of one per cent a month, to wit, $985.87, and added to the principal.
18. The reply denied these averments and alleged that, instead of loaning $19,000 to the defendant, the plaintiff had advanced to him $19,714.70. At the trial defendant’s counsel admitted that such sum should have been $19,714.70 as. set forth in the reply, and thereupon *283obtained leave to amend the answer so as to correct the mistake in this respect; but no alteration in that pleading was made. The cause was tried, however, as though the amendment was actually made, and, such being the case, the order permitting the alteration will be treated as an amendment. 1 Enc. PI. & Pr. 641, note 1. Correcting the answer filed by adding $714.70 to $19,000, and including the items loaned and the interest stated, it will be seen that the result exactly coincides with the sum of the several promissory notes sued on, thus evidently disclosing an inadvertent mistake in the defendant’s pleading. By computing the interest in advance on $30,764.13, the corrected sum, at one per cent per month for 94 days, the actual time from April 29th to August 1st, it will be found to be $963.88, instead of $985.85, as alleged in the answer, a difference of $21.97.
19. The defendant, referring to the material part of his answer, as hereinbefore set forth, testified as follows :
“I paid interest at the rate of one per cent per month; the computed interest amounting to $2,224.12. None of this interest has ever been repaid to me or credited upon the notes.”
H. H. Hopkins, who during the years 1904 and 1905 was the defendant’s bookkeeper, corroborated Hoskins’ testimony as last hereinbefore quoted and made the following statement upon oath:
“That the interest upon the notes sued on in this action was added to the principal up to the time of the maturity thereof and figured at the rate of one per cent per month.”
In the deposition of E. G. Wilson, who in the years 1904 and 1905 was the president of the United States Oil & Mining Company, and also secretary of the Denver, Wichita & Memphis Railway, corporations engaged in *284business at Catoosa, Indian Territory, the following interrogatory appears:
“State, if you know, whether plaintiff ever charged the defendant interest at the rate of one per cent per month on moneys owing from defendant to plaintiff on or before the 29th day of April, 1905, or at any other time.”
The response was:
“To this inquiry I answer, ‘No,’ for the reason that I had these notes in my hands for collection and talked with Mr. Hoskins frequently about them, and he made no mention of any excess charge, or any charge with which he was dissatisfied, or any charge other than shown by the notes and mortgages.”
The foregoing comprises the substance of the allegations of the answer, respecting the consideration for the promissory notes in question, and the entire testimony found in the bill of exceptions as to the rate of interest which the plaintiff charged the defendant on account of money loaned or for sales of property or choses in action.
A substantial issue was made with regard to the alleged usurious rate of interest, and if it be assumed that Wilson’s answer as quoted was the statement of a probative fact and not an inference based upon other facts, so that a conflict in the evidence was thus created, there was sufficient testimony received from which the jury could undoubtedly have reached the conclusion that usurious interest was charged by the plaintiff as they were instructed. Any statement to that effect that may be found in the former opinion in this cause was made after considering the pleadings and the testimony now set forth, and the conclusion there reached has not been changed by a careful re-examination of the question.
It is contended that in determining, in the absence of any testimony on the subject, that the chattel mortgage in question was governed by the law of Arkansas as applied to Indian Territory, while the notes sued on *285were subject to the laws of Missouri, an error was committed. The defendant, referring to such matters, testified as follows: .
“All the transactions set forth as counterclaims in defendant’s answer and the business connected therewith in reference to the Denver, Wichita & Memphis Railroad took place in the Indian Territory and were Indian Territory transactions.”
20. Each of the promissory notes described in the complaint purported to be dated at Kansas City, Missouri, and is expressly made payable at that place. In the absence of any evidence to the contrary, it will be presumed that a promissory note was executed where it pretends to be dated; but this deduction is overcome by evidence showing that the instrument was given at a different place. 4 Am. & Eng. Enc. Law (2 ed.), 129; Parks v. Evans, 5 Houst. (Del.), 576; Plahto’s Adm’r v. Patchin, 26 Mo. 389; Hopkins v. Miller, 17 N. J. Law, 185. In each of the four causes of action set forth in the complaint it was alleged that the promissory note there referred to was executed in Missouri. In the third instruction the jury were informed that it was admitted that the notes sued on were made and delivered in Missouri. This declaration by the court must be accepted as a true statement of the evidence received at the trial, .though such fact is not disclosed by the meager bill of exceptions herein.
21. In its general charge the court referred to the chattel mortgage given by the defendant to the plaintiff, but did not state to the jury when or where it was made, and, the bill of exceptions containing no evidence on that subject, it will be presumed that the mortgage was given in Indian Territory, where it was undertaken to be enforced and where the property was when it was hypothecated, as intimated in the former opinion. Jones, Chat. Mort. (5 ed.), § 305. The presumption is strength*286ened by the defendant’s testimony, hereinbefore quoted, to the effect that all his counterclaims and the business connected therewith arose and occurred in Indian Territory. The defendant, referring to his dealings with the plaintiff, testified as follows:
“I commenced borrowing money and borrowed in various amounts at various times from Mr. Casner between November, 1904, and April 29, 1905, amounting to a total of $19,714.70.”
As the defendant during the time thus stated was engaged in business in Indian Territory, it is fairly infer-able that the money so obtained was furnished by the plaintiff at that place, and, though the notes may have been executed in Missouri, the contract for the loans was evidently made in Indian Territory.
The evidence referred to presents for consideration the question whether promissory notes given in Indian Territory on property then therein render such hypothecation void under the law applicable to that territory, on account of the usurious interest. If the bill of exceptions had disclosed an application by the defendant for a loan to be made in Missouri accompanied by a stipulation that the promissory notes evidencing the debt should be secured by a chattel mortgage of property then in Indian Territory, the agreement might possibly be construed as a Missouri contract, which, so far as it related • to the notes, was not void in that State by reason of the usury, and, these negotiable instruments being valid there, they would be efficacious elsewhere. Hosford v. Nichols, 1 Paige (N. Y.) 220.
22. The rule is quite general that, a mortgage being only an incident of a debt, the validity of the security, so far as it may be affected by usury, is, in the absence of any enactment to the contrary, governed by the principles of law applicable to personal contracts. McIlwaine v. Ellington, 111 Fed. 578 (49 C. C. A. 446: 55 *287L. R. A. 933); Bank v. Doherty, 42 Wash. 317 (84 Pac. 872: 4 L. R. A. [N. S.] 1191: 114 Am. St. Rep. 123); Manhattan Life Ins. Co. v. Johnson, 188 N. Y. 108 (80 N. E. 658: 9 L. R. A. [N. S.] 1142: 11 Ann. Cas. 223); Tenny v. Porter, 61 Ark. 329 (33 S. W. 211). No distinction in this respect exists between real estate and chattel mortgages. Trower Bros. Co. v. Hamilton, 179 Mo. 205 (77 S. W. 1081); Central National Bank v. Cooper, 85 Mo. App. 383.
The notes sued on having been made payable at Kansas City, Missouri, the place there expressly designated became important only for the purpose of making presentment of the negotiable instruments for payment. An action could have been maintained on the notes in any court of competent jurisdiction in the United States where personal service of process could have been had on the defendant. In the absence of the service indicated, an action could also have been supported in any such court to the extent of the defendant’s property if necessary, by the seizure thereof within the territorial jurisdiction and the giving of such notification as the statute demanded, whereupon a judgment of condemnation, in the nature of a proceeding in rem, could have been given pursuant to which the property so taken into possession could have been sold and the proceeds arising therefrom applied on the notes. Any proceeding, however, undertaken to foreclose the chattel mortgage, was not transitory, but was required to be had in Indian Territory where the property was being used.
23. At the trial the plaintiff’s counsel observed:
“We think the defendant should be required to elect under what law they desire to stand on; whether the laws of Arkansas or the laws of the State of Missouri.”
The defendant’s counsel replied:
“We stand on the mortgage in the place where the mortgage was given, and we stand on the notes on the place where the notes were given.”
*288The weight of authority supports the rule that, in the absence of any attempt to evade the usury limitations, the law of a State where a contract was consummated governs the enforcement of its terms. Where, however, a contract is expressly or impliedly to be complied with in a place other than that where it was made, the presumed intention of the parties controls the interpretation of their agreement subjecting it to the law of the place of performance. Storey, Conflict Laws (7 ed.), § 280. It is generally conceded that the situs of a debt is not governed by the situs of the security, and that the debt is usually subject to the law of the domicile of the party to whom it is due. 1 Wharton, Conflict Laws (3 ed.), § 368. This legal principle would seem to make the laws of Missouri relating to usury applicable to the chattel mortgage of property in Indian Territory, particularly so when the notes for which the security was intended to be given were expressly made payable at Kansas City, Missouri, the place of the plaintiff’s domicile. Whatever the rule may be in this respect, it was attempted in the former opinion to adopt the theory evidently advanced by the parties at the trial with respect to the law of usury as applied to the chattel mortgage. The answer on this branch of the case sets forth the substance of the laws of Missouri on the question of usury. At the trial the plaintiff was permitted to amend his reply so as to aver that possession of the property was taken under the chattel mortgage upon default therein. No alteration, however, was made in that pleading, but the cause appears to have been tried as though the amendment had in fact been made.
24. The defendant never having had an opportunity to plead either the statute of Missouri with respect to a chattel mortgage affected by usury, or to set forth the enactments of Arkansas applicable to Indian Territory in relation to usury or to the effect thereof upon a chattel *289mortgage, was entitled to offer in evidence the statutes of these States upon those subjects. The Missouri statute as to the rate of interest provides generally that the parties may agree in writing for the payment of 8 per cent per annum, and that usury may be pleaded as a defense in a civil action in any court in that State, and upon proof that more than the prescribed rate had been exacted the excess shall be credited upon the principal debt. Rev. Stat. Missouri 1909, Sections 7180, 7183. This evidence was admissible under the original averments of the answer. Pursuant to the permission to amend the reply, the defendant’s counsel offered in evidence another section (Section 7184) of the Missouri statute, as follows:
“In actions for the enforcements of liens upon personal property pledged or mortgaged to secure indebtedness, or to maintain or to secure possession of property so pledged or mortgaged, or in any other case where the validity of such lien is drawn in question, proof upon the trial that the party holding or claiming to hold any such lien has received or exacted usurious interest for such indebtedness shall render any mortgage or pledge of personal property or any lien whatsoever thereon given to secure such indebtedness, invalid and illegal.”
Upon the receipt of this evidence it would seem that the situs of the property was thereupon assumed and treated by court and counsel to govern the place of the enforcement of the contract, thereby making the statute of Arkansas applicable to Indian Territory relating to usury and the effect thereof upon contracts also admissible in evidence.
25. It was not considered in the former opinion, nor is it now believed to be important, under which statute the contract should be interpreted, for by either it was invalid if the jury found that the interest exacted equaled the sum testified to by the defendant and his witnesses. It will be kept in mind that in Missouri, *290where the rate of interest is in excess of that prescribed, and the right to retain the sum exacted is controverted, and that issue is established at the trial, the undue amount is to be credited on the principal debt. This application of the surplus exacted, however, does not validate a mortgage tainted with usury. Wintergirst v. Loan Co., 60 Mo. App. 166; Western Storage & Warehouse Co. v. Glasner, 169 Mo. 38 (68 S. W. 917).
26. In any event, therefore, the chattel mortgage was void, and a seizure of the property under a pretended foreclosure was a wrongful act that rendered the plaintiff liable for the value of the property converted, and because from a sale of the goods and chattels he paid off prior liens on the property is of no consequence, for, being a volunteer, he must suffer the consequences of his intermeddling.
We adhere to the former opinion, and the petition for a rehearing is denied.
Affirmed : Rehearing Denied.