Farmers' & Mechanics' Sayings Co. v. Bazore

Hughes, J., (after stating the facts.) The contention here seems to be mainly upon the question whether the contract was a Missouri or an Arkansas contract. The appellee does not contend that the contract was usurious under the laws of both Missouri and Arkansas. The pleadings and evidence show that itwas a building and loan contract, and that the appellees, aftei taking and agreeing to mature $2,500 stock, or, rather, 50 shares of stock, borrowed of the company, upon their written application therefor, $2,500, to be re-paid in 60 months, with interest payable monthly at the rate of 6 per cent, per annum, and agreeing to pay the company 60 months’ dues, of $50 each month, and a premium of $25 every month for 60 months, when the stock was to mature. It appears that the company was organized under the statutes of Missouri, authorizing the organization of such building and loan associations, and by and under which statutes and the bylaws of said association, in evidence, such building and loan associations, by their board of directors, were authorized to hold “stated meetings, at which such sums of money as they may determine shall be offered for loan to all the members in open meeting. The shareholders who shall bid the highest for the preference or priority of law shall be entitled to receive a loan whose amount shall not exceed the number of shares of stock held by such shareholder multiplied by the par value thereof.” Section 2812. Rev. Stat. Mo., 1889. The loan in this case seems to have been in accordance with this section and said by-laws. Section 2814. id., provides that “no premiums, fines, or interest on such premiums that may accrue to the said corporation according to the provisions of this article shall be deemed as usurious. And the same may be collected as debts of like amount are now by law collected.” So it seems that, under these statutes and by-laws, this company was empowered and authorized to make its organization and become incorporated; to loan money and purchase real estate; to do a building and loan business; to charge interest on money loaned at a rate not higher than ten per cent.; to take mortgages; and to provide for premiums to be paid for loans, and for monthly dues to be paid the company, all upon the money loaned,—and that such should not be usurious, and might be collected as other debts. See above article, and chapter 90, Revised Statutes of Mo. tit. “Interest.” So, if this was a Missouri contract, it appears that it was not usurious under the Missouri law, but was valid there; and if valid there, it is valid here, as a contract valid where made is valid everywhere. The lex loci contractus governs the validity and construction of a contract. Was this a Missouri or an Arkansas contract? The note is dated at Springfield, Mo.; and while the place of its date does not afford an absolute presumption that the contract was made and to be performed there, it is, according to some authorities, prima facie evidence of these facts, and, without proof to the contrary, the prima facie showing prevails in such cases, as in all cases. The proof shows that there was some conversations had with Newman, the agent of the company to sell stock of the company, in Boone county, Arkansas, by the appellee Wilson, and some negotiations with him preliminary to making application for the loan; that the application was made to the board of directors of the company in Springfield, Mo., and was there passed upon and accepted, subject to approval of the general attorney of the board at Springfield, Mo., who there approved it, before the loan was or could have been consummated; that Newman had no authority to contract for loans. The contention that, because Ellis, the manager for the county, wrote to Wilson in Boone .county, Arkansas, the terms on which the company would make the loan, and Wilson wrote him from Boone county, Arkansas, that he accepted his proposition, the contract was therefore made in Arkansas, and was an Arkansas contract, we think is not tenable,.considering the evidence that the contract was not binding on the parties until submitted tc and approved by the board of directors, and then approved by the general attorney for the company, all which was done in Springfield, Mo. In a quitclaim deed for his interest in the property in controversy made by Bazore to Wilson, there was a provision that Wilson should pay all accounts of the firm in which they were partners; and, if this includes the note to the Farmers & Mechanics’ Company, Wilson could not be heard to plead usury as to Bazore’s half interest. Pickett v. Merchants’ National Bank, 32 Ark. 346. He paid only a nominal sum for Bazore's interest, and the property was quite valuable, worth several thousand dollars. It is unnecessary to determine whether this contract was usurious under the laws of Arkansas, if it had been an Arkansas contract. The land upon which the deed of trust was given cuts no figure in the ease, as the security was only an incident to the debt. We think the contract was a Missouri contract, valid under the laws of Missouri, and valid here, and that the learned chancellor below erred in holding it to be usurious and void. The decree is reversed and remanded, with directions to enter a decree for amount due, and foreclosing the appellant’s mortgage. Rector v. Southern Building & Loan Association, 98 Fed. 1007.