Hollis v. Covenant Blg. & Loan Ass'n

Cobb J. 1. The first question to be determined in the present case is, whether or not the contract between the plaintiff and the defendant is to be governed by the laws of Tennessee or those of Georgia. All of the different transactions which make up the contract must be looked to in order to properly determine this question. The plaintiff resides in Tennessee, and the defendant resides in Georgia; so residence can have no material bearing on the question. There appears in the record a deed given to the plaintiff to secure the payment of the loan, a bond for the faithful performance of the contract, and a written transfer to the plaintiff of twenty-five shares of stock owned by the defendant in the plaintiff association. These instruments were all executed on the same day in Bibb county, in this State. The bond recites that the' plaintiff and his wife procured the loan on the day on which it and the other instruments were executed. There is nothing in the record to show where the loan was in fact made, or where the money was to be repaid, or what was the intention of the parties in this regard. The circumstances above recited would afford a strong presumption that the contract was in fact consummated in this State. The recital in the bond would seem to indicate that the money was paid here, and all the papers which appear in the record as constituting the contract between the parties appear on their face to have been executed here. So far as the record is concerned, it is as reasonable to assume that the loan was to be repaid in Georgia to an agent of the plaintiff, as that it was to be sent to the office of the plaintiff in Tennessee. Where a [322] person in one State borrows money from a person in another State, and the instrument given to secure the loan is executed in the borrower’s State, and the money is to be repaid there, the contract will be governed by the laws of that State, notwithstanding the money may have been actually advanced in the State where the person making the loan resided. Story on Con. Laws, 392, §287 (a); DeWolf v. Johnson, 10 Wheat. 367; Cope v. Allen, 53 Barb. 350; Hosford v. Nicholls, 1 Paige, 220; Klinck v. Price, 4 W. Va. 4; Cubbedge v. Napier, 62 Ala. 518. According to the authorities just above cited, the interest allowed by the laws of the place where the contract is made, in the absence of any special stipulation in the contract to the contrary, is presumed to be the interest agreed upon. See also Martin v. Johnson, 84 Ga. 481; Odom v. Mortgage Security Co., 91 Ga. 505. If it should appear at the trial of this case, therefore, that the loan was in fact made and was to be repaid in the State of Tennessee, then the legal rate of interest allowed by the laws of that State would be looked to to determine whether or not the contract is usurious. But it being presumed from the record that the contract was executed in Georgia, was to be performed here, and hence is governed by the laws of this State, it was unnecessary for the defendant to allege in his pleas what rate of interest was allowed by the laws of Tennessee. The chief reason why the lex loci contractus governs is that the parties are supposed to have in mind the law of the country where the contract is made. It should be determined, therefore, from the nature of the transaction and the situation and objects of the parties what law they had in contemplation when the contract was executed. Van Sliaick v. Edwards, 2 Johns. 335. 2. But it is contended that, even if the contract is to be governed by the laws of this State, the plea attempting to set up usury was properly stricken for the reason that usury was not pleaded with sufficient minuteness. In the case of Carswell v. Hartridge, 55 Ga. 412, it was held that “In pleading usury for the purpose of avoiding the deed, it is unnecessary to set it out with all the particularity required in pleas of usury to actions for money. In such actions amounts are material, but in at [323] tacking a deed the bare fact of usury is enough to' decide the issue of title.” The defendant’s plea, under the ruling made in the case above cited, alleged usury with sufficient particularity, and hence was improperly stricken. 3. The defendant alleges that the contract entered into between himself and the plaintiff was a scheme to evade the usury laws. Whether or not this would be true would depend upon whether the plaintiff association was formed for the purpose of lending money to its members; in other words, whether it was a building and loan association pure and simple, or whether it was a composite institution formed for various other purposes as well. If at the trial it should be made to appear to the jury that the contract was in fact made with a building and loan association pure and simple, and that the apparent usury was simply the result of the plan and scope of the association, then the plea of usury would not be available to the defendant. If, on the other hand, it should appear that it was a mere device to hide a real intent to exact usurj^, then the plea would be good, and the deed given to secure the payment of the loan would be void. Parker v. Fulton Loan & Building Association, 46 Ga. 166; Butler v. Mutual Aid Co., 94 Ga. 562. Judgment reversed. All the Justices concurring, except Simmons, C. J, disqualified.