Equitable B. & L. Ass'n v. Corley

The opinion of the Court was delivered by Mr. Justice Woods. The Equitable Building and Loan Association, a corporation having its principal place of business in Augusta, Ga., brings this action to foreclose a mortgage on land in Lexington County, S. C., executed by the defendant Corley, a resident of South Carolina. The land was afterwards conveyed by Corley to' Roof and Barre, and by them to the defendant Roof & Barre Lumber Company. The answer sets up the plea of payment. The first question arising under this plea is, whether all sums paid to the Equitable Building and Loan Association by Corley and his grantees, after Corley made the mortgage and borrowed the money, should be credited on the sum borrowed and interest, *406 or should be applied not only to that, but also- to- the expenses o-f the association and premiums, as provided by the bond. We first consider this question as it effects the rights of Corley, the original mortgagee. If the contract is governed by the law o-f this- State, as defendants contend, the former method of computation would be correct, and the bond and mortgage would be overpaid. Association v. Holland, 65 S. C., 448; 43 S. E., 978. The Circuit Judge, however, held the contract fell under the law of Georgia, and that by that law1 the bond was to- be computed according to- its terms, which included no-t only the sum actually borrowed, with interest, but the expenses and premiums for which Corley was liable as a borrowing- member of the association. The following is the statute of Georgia under which the computation in the Circuit decree was- made: “Be it further enacted, That no- fines, interest or premiums- p-aid on loans in any building and lo-an association shall be deemed usurious, and the same may be collected as deb-ts of like amount are now collected by law in this S-tate, and according to- the terms and stipulations of the agreement between the association and the borrower” (Laws of Georgia, 1890-91, vol. 1, pages 176-181, sec. VIII.) This statute was construed by the Supreme Court of Georgia, in Cook v. Equitable Building and Loan Association, 3 0 S. E., 911; and Burns v. Equitable Building and Loan Association, 33 S. E., 856. If the Georgia statute governs the contract, it is obvious from its terms, as construed by the Supreme Court of Georgia, that there was no error in the decree of the Circuit Court. The complaint alleges “that at Augusta, in Georgia, on August 3, 1895, the p-laintiff advanced to- the defendant, Patrick H. Corley, on four shares- of the stock of this plaintiff, held by him, the sum of four hundred dollars, and in consideration thereof the said Patrick H. Corley made, executed and delivered to- plaintiff his bond, dated August 3, 1895, in the penal sum- o-f eight hundred dollars.” The pleadings and the bond and mortgage are silent as to the place of payment. The law of the p-lace where the contract *407 is made governs as to its construction and the obligations which arise from1 it where it does not provide for the application of the law of a different place, and makes no mention of the place of payment. 9 Cyc., 668; Touro v. Cassin, 1 N. & McC., 173; Pegram v. Williams, 4 Rich., 219. Here it is not only admitted the contract was made in Georgia, but also that by the bond the parties expressly contracted, “that this obligation is a Georgia contract, and in all respects subject to and governed by the laws of Georgia.” The law applicable to such an agreement is so well and accurately stated by Scates, C. J., in McAllister v. Smith, 17 Ill., 328, 65 Am. Dec., 651, 654, that we quote at some length from his opinion, though it would be sufficient to refer to our own cases of Thornton v. Dean, 19 S. C., 583; Association v. Hoffman, 50 S. C., 303, 27 S. E., 692; and Association v. Rice, 68 S. C., 236 : “The contracts were made in this State, and the laws of this State would, had the parties been silent, have become part of the contracts for the construction and meaning of the parties, in ascertaining and fixing their mutual rights and obligations. But parties may substitute the laws of another place and country than that where the contract is entered into, both in relation to the legality and extent of the original obligation and in relation to the respective rights of the parties for a breach or violation of its terms. This I call a substitution of the laws of another place or government for those of the place of entering into the contract, and which is noted by the authorities as an exception to the general rule. This is allowed in all civilized countries, and recognized as part of the jus gentium, or law of nations, respecting private and personal rights, and in all cases where the subject-matter of the contract is not malum in se, immoral, or contrary to the local policy, or dangerous to the peace and good order of the particular community in which it is sought to be enforced. When parties seek to enforce such obligations in the courts of the country whose laws have been adopted as those of the contract, it presents only an ordinary case of jurisdiction to the court over a con *408 tract made under the same laws of the forum', and by parties within its jurisdiction. But when the enforcement of the contract is sought in the courts of a country governed by a different rule than the local or adopted law of that contract, the law governing it has no force or obligation ex propria vigore in that forum, but ex comitate, under the general public law, the court will enforce it, giving extraterritorial effect to' the laws of another government where it is not dangerous, inconvenient, immoral, nor contrary to the public policy of the local government. Where the legislature does not define and prescribe the extent of this comity, it must be declared by the courts in each case, governed by precedents, under the general public law.” 9 Cyc., 665-666. We conclude the contract was governed by the law of Georgia, and as to- Corley the computation was correctly made. The serious question remains whether the plaintiff can foreclose the mortgage on the land in the hands of the Roof & Barre Lumber' Company, a subsequent purchaser, for more than a debt of $400 and interest, less, the payments made. The bond contemplates that Corley should remain a.member of the association after he became a borrower-, with the obligation of a member to pay $1.20 per month on each share of his stock until the series to- which his certificate belonged should mature — maturity being the date when these payments would aggregate enoug'h, after taking out expenses and premiums, to liquidate the principal of the debt of $400'. It contemplates further that he should pay in addition each-month interest on the $400 at the rate of six per cent, per annum until the stcfck should mature, and that his four shares of stock should be assigned to the association as collateral for the obligations, of the bond. Upon these payments being kept up until the maturity of the series, the bond stipulated that the obligation would be at an end. The mortgage contains none of these provisions as to the payment of stock, but merely recites that it is given to secure the payment of a bond in the penal sum of $800 conditioned for the payment of $400, “as in and by the said bond and conditions thereof, *409 reference being thereunto had, will more fully appear.” There is nothing whatever in the record of the mortgage to indicate or to put a purchaser of the land on notice that Corley was a member of the association or anything more than an ordinary debtor; for we do not think the fact that it was given to a building and loan association and no date of maturity specified, could be regarded sufficient for that purpose. If, therefore, there were nothing beyond the record of the mortgage to show notice of the terms of the bond, the principles of Association v. McCartha, 43 S. C., 72, 20 S. E., 807, would be applicable, and the defendant, Roof & Barre Lumber Company, would not be chargeable with notice of anything beyond an ordinary debt of $400' secured by the mortgage. We find, however, that Roof & Barre Lumber Company answered the complaint not separately but jointly with Corley, and the answer, while admitting the execution of the bond and mortgage by Corley, says nothing of a want of notice of the terms of the bond set out fully in the complaint. But what is still more significant, Roof & Barre and Roof & Barre Lumber Company continued to pay each month after the purchase, for sixty-four months, the sum of $6.80, which was. precisely the amount called for each month by the bond, and which, before the sale of the land, had been paid by Corley. There is no' evidence that there was any demand made by the mortgagee for these payments, and it is a fair inference that these parties bought the land with knowledge of the character of the debt represented by the bond which the mortgage secured, and undertook to pay it. They never have indicated, however, in any way that they knew of the provision for the collection of attorneys’ fees, and the Circuit Judge correctly held these fees could not be collected from the land. The judgment of this Court is, that the judgment of the Circuit Court be affirmed. • The Chiee Justice did no<t participate m this opinion becmise of illness.