United States Savings & Loan Co. v. Scott

JUDGE HAZELRIGG delivered the opinion oe the court. A foreign building and loan association engaged in doing business in Kentucky will be permitted to charge no higher rate of interest than is chargeable under the laws of this State; and, while by the law of comity the charter-of such a corporation will be recognized here as the law of its existence, it is the charter alone which is recognized, and not the general legislation of the country of its domicile with reference thereto, or the construction of its charter provisions by the foreign courts. Moreover, where such a corporation employs the usual agencies to solicit and transact business in this State, and contracts for the payment of premiums and interest in excess of the rate authorized here, the transaction will be denounced as an attempted evasion of our laws, whatever may be the nominal rate specified or artifice adopted; and this, though it be specifically provided that the contract is made with reference to the laws of the foreign State. Such a provision only makes the intent to evade the more manifest. The principles underlying these conclusions are fundamental and require no citation of authority. In the case at hand, appellee, a resident of Boyd county, Ky., in November, 1890, applied for-admission and was accepted as a member of the appellant, a building and loan association having its situs in Minnesota, and also applied for a loan of $800. The loan was made in December of the year named and secured by a mortgage on redi estate in Boyd county. The note therefor was dated at St. Paul, was payable at the office of the company’s treasurer at Minneapolis, and contained the express provision: “This note is under [699] stood to be made with reference to and under the laws of the State of Minnesota.” To discharge this debt the appellee paid to the appellant in premiums, fines and interest, from the date of the loan to August 25,1892, the sum of $260, and upon that date the further sum of $806.38. or $186.38 more than the principal sum and six per centum interest per annum thereon. To appellee’s suit to recover back this sum the appellant answered, first, that the contract was made with reference to the laws of Minnesota, where the collections of the premiums, interest, etc., exacted of the appellee were authorized by express statutory provision; and second, if it was not a Minnesota contract, but a Kentucky one, it was yet not usurious. It is manifest that the first contention falls within the principles already announced, and the loan must be treated as a domestic one. (Morawetz Private Corp., second edition, sections 964 and 967; Hitchcock v. United States Bank, 7 Ala., 435; 8 Am. & Eng. Ency. Law, page 334, and cases there cited.) And when so regarded it must be held usurious under the decisions of the court construing such contracts prior to the statute now in force in the cases of Henderson B. & L. Ass’n v. Johnson, &c., 88 Ky., 191, and cases there cited. The demurrer to the answer was properly sustained and the judgment is affirmed.