Crofton v. New South Building & Loan Ass'n

Wiiitfiei/d, J., delivered the opinion of the court. Critical and repeated examination of the testimony makes it impossible for us to concur in the finding of the chancellor that the trust deed should be reformed. The testimony falls far short of the convincing character of proof required for that purpose under our decisions. It may be that the appellee’s agents thought the whole lot That the quitclaim deed of November 21, 1896, generally not so intend. As to the usury, we have held in Sokoloski v. New South Building & Loan Association, opinion this day delivered by Brother Terral, that a fixed premium of six per centum, together with a further charge of six per centum as interest, eo nomine, makes the building and loan contract usurious. See that opinion, ante, p. 155. The application in this case made part of the contract, recites: “That the loan hereby applied for sir all bear six per centum per annum interest, and to procure said loan I also bid, as a premium, six per centum per annum on the amount so loaned me.” It is true in the contract of subscription they agree to certain stipulations in consideration, as recited, of their “right to pay no premium^ on their loan whatever, unless they repay same voluntarily before 142 months from the date of their stock, and that in case of such voluntary repayment, then they were to pay premiums” at stipulated fixed rates. Taking these features of this contract together, with the facts of record, it is plain this was a fixed premium of six per centum per annum. That is the real transaction, however named. It is very questionable whether this series B stock, without any voting power, sharing not at all in the earnings or dividends proper, but only in such sums as have been paid in, or forfeited stock sold [179] and bought in by appellee, in certain cases, can be held to be real stock of the corporation in any just legal sense; and if not, whether it is not a mere disguise for a straight loan for the 142 months. One of the answers made by appellee is to the effect that as there is an indefinite and indeterminate fund of which stock B may partake, it cannot be known in advance that, on this line of reasoning, the rate will be usurious. The supreme court of Tennessee, in McCauly v. Workingman's B. & L. Association, 35 L. R. A., p. 248, responds to this suggestion as follows: “The contract upon its face being unauthorized, illegal, and not warranted by law, the court will not compel the borrower to continue it for years, meeting its exac-tions of fines and dues,' and interest, upon a possibility that, perchance, in the final wind up, the borrower may be shown to have paid no more than legal interest.” The suggestion that the option to declare the whole loan due, and that in that case the appellee wants nothing in this particular case but $5,000 and six per centum interest, cannot change the essential nature of the contract taken as a whole. Suppose the loan had run 140 months, would the appellee have wanted, only $5,000 and .six per centum interest? The accident of the situation in the particular case, that only one month’s interest, dues, etc., have been paid, and that hence, in this case the loan and. six per centum interest is all that the appellee can be regarded as asking for, is not determinative at all of the character of the contract as usurious or not. That is to be resolved by what the appellee would Have the right, under the terms of the contract, in any situation during the life of the contract to do, not by what it may ask as the result of any accidental situation. But without now deciding on these last features of this very unusual character of building and loan contract, we rest the usurious character of this contract on the feature of the fixed premium. As the appellee invokes the equity jurisdiction, and to enforce the usurious contract, it follows that the appellee is only entitled to the amount actually loaned without interest, [180] and tlie sums advanced for taxes and insurance with six per centum interest per annum. Dickerson v. Thomas, 67 Miss., 777, and authorities. The attorney’s fee feature of the contract falls Avith the contract, and cannot be enforced. Mortgage Co. v. Jefferson, 69 Miss., 770. We do not think it would be equitable to reinstate the trust sale and deed thereunder, and charge the appellee with the $9OS excess of the bid, since the appellee may have thought it was contracting for a trust deed on the whole lot. The decree is reversed, and cause remanded to be proceeded luith in accordance with this opinion, with instructions to have an account stated, and the legal amount due established, and a sale made to pay the same under the terms as to notice, etc., of the original trust deed.