National Mutual Building & Loan Ass'n of New York v. Pinkston

Whitfield, O. J., delivered the opinion of the court. This case is controlled by the case of Shannon v. Association, 78 Miss., 955 (30 So. Rep., 51). The contention that the act — 478 — of 1886 (Laws, p. 35) applies to foreign building and loan associations is not maintainable. That act is as follows: “An act to regulate the rate of interest in this State. “SectioN 1. Be it enacted by the legislature of the state of Mississippi, that hereafter no person, bank, corporation or association of persons, except building and loan associations, shall demand or stipulate for a greater rate of interest than 10 per centum, per annum, for any money advanced or loaned, on any note, account, or other evidence of debt. “Sec. 2. Be it further enacted, that every provision of any act heretofore passed, creating any corporation or amending any act creating any corporation, which authorizes any such corporation to take or receive more than 10 per centum, per annum, or which is in conflict with § 1141 of the code of 1880, is hereby repealed. “Sec. 3. Be it further enacted, that this act take effect and be in force from and after its passage.” .We think it clearly appears from the history of the act— which can be gathered from the brief of counsel for appellee, which we direct to be published in full on this point — that said act is not an act merely amending § 1141 of the code of 1880, hut is a repealing act. The history of the act shows that the legislature had, by special grants and charters to corporations— especially banking corporations- — authorized such corporations to charge more than 10 per centum per annum interest, and it was the clear purpose of this act of March 13, 1886, as shown by sec. 2 of said act, to repeal all of these special grants in acts “heretofore passed,” so as to abolish all special privileges by such previous acts granted in the matter of charging interest, and to put all persons and all corporations in this state on the same footing, applying the provisions of § 1141 of the code of 1880 to all alike. At the time of the passage of this act § 1141 of the code of 1880 provided the general law regulating the rate of interest in this state, and fixed the legal rate at 6 per centum, and authorized not more than 10 per centum to be charged by — 479 — contracts in writing. At this same time, however, various special acts authorized banks and other corporations, including building and loan associations, to charge more than 10 per centum — to charge varying rates; in some instances to charge any rate the corporation saw proper. Here was a manifest in-harmony between the general law and the special statutes conferring these invidious special privileges, and the object of this act was to leave § 1141 in full force and effect by abrogating ail these special acts in conflict therewith. Section 2 of the act plainly shows this to have been its clear purpose. That section repeals all these conflicting statutes, and thereby establishes uniformity as to rate as to all persons and all corporations within this state. There are many other considerations to which we will briefly advert, showing this to be the true construction. 1. The phraseology of every statute from Hutchinson’s code to the code of 1892 shows — the object of such statutes being to provide a general rate of interest — that their phraseology is wholly unlike the phraseology of this act. The code of 1880, for instance, provides (§ 1141) : “The legal rate of interest on all notes, accounts, judgments and contracts, shall be six per centum per annum; but contracts may be made, in'writing, for the payment of a rate of interest as great as 10 per centum per annum. And if a greater rate of interest than 10 per centum shall be stipulated for, in any case, all interest shall be forfeited, and judgments and decrees, founded on any contract, shall bear interest after the rate of the debt on which such judgment or decree was rendered.” This is a typical statute, as to this language, on this subject. It will be observed that sec. 1 of the act of 1886 provides what the legal rate of interest shall be, and that “hereafter no person, bank, corporation or association of persons shall demand or stipulate,” etc. No reference is had in any previous general statute regulating the rate of interest to “banks, corporations, or associations of persons”; but at the time of the passage-of this act certain “banks, corporations, and associa — 480 — tions of persons” under the aforesaid special acts were charging more than 10 per centum interest, and sec. 1 was leveled directly at these, and provided that “hereafter” they could not charge more than 10 per centum. And sec. 2 expressly repeals the provisions in the said special acts authorizing them to charge more than 10 per centum. It would be quite an odd and unusual thing to find a special reference to “banks, corporations, and associations of persons” in a statute which is merely a general statute regulating the rate of interest; and the presence of this unusual phraseology is due to the fact that the “corporations, associations, and banks” named were then in existence, and then charging a rate which it intended to repeal, and thus put them on the same footing with the rest of the citizens of the state'. The statute did not look towards foreign corporations. It looked within, to the persons and corporations domiciled within the state, with the view of abolishing invidious distinctions between such citizens of the state, natural or artificial, as to the right to charge interest. It was a domestic statute, intended to secure equality and uniformity in the matter of the rate of interest to be charged by citizens of this state. 2. The first section of the act provides no penalty for usury; and, if the view that it is a mere amendment to § 1141 of the code of 1880 be correct, then it follows that for a period of six years (from 1886 to 1892) there was no statute inflicting any penalty for usury in this State — a conclusion not to be supported ; or that we would have to attribute to the legislature the folly, in dealing with so simple a subject-matter as the rate of interest, of prescribing that rate in the act of 1886, and yet fixing the penalty in § 1141 of the code of 1880. Surely, the legislature, if it had been dealing simply with the matter of regulating the rate of interest, would not have failed to do what had been done in every code from Hutchinson’s down — ■ provide a penalty for usury. 3. The first and second sections of the act of 1886 must be construed together, and the language of the second section — 481 — shows beyond controversy that it is dealing with corporations, “created” by acts of our legislature, which acts “authorize” such corporations to receive more than 10 per centum interest per an-num. Of course, the acts referred to were acts “creating” corporations, etc., and “authorizing” corporations, etc. The Mississippi legislature could only “create” corporations domiciled within this state. .Domestic corporations manifestly are the only ones to which this section refers. And it is a just inference that the first section is referring to those “persons, banks and corporations” domiciled within this state, and that the legislature was dealing with such persons and corporations only in the matter of interest; the object being to provide that “hereafter” —that is, after the passage of the act — persons and corporations domiciled within this state should not charge, etc. We think 'that the use of the word “hereafter” clearly implied that some “banks, corporations,” etc., had theretofore been charging more than 10 per centum. And the use of the words “heretofore passed,” in sec. 2, indicate likewise the purpose of the statute to be that by repealing all such acts “heretofore passed” there would “thereafter” be uniformity among all citizens as to the rate of interest to be charged. It was argued that this statute contains a grant to the building and loan associations to charge more than 10 per centum. It is obvious that this would involve us in holding that the substantive benefits of a grant passed by a mere exception in the statute, which is altogether unusual in legislation;-besides, the contention is overthrown by the fact that building and loan associations in the state were authorized, prior to this act, to charge more than 10 per centum, to wit, the Vicksburg Building Association (Laws 1877, p. 223, sec. 4) ; the Greenville Building & Saving Association (Laws 1877, p. 224, see. 4). And the history of this sec. 4, set forth in brief of counsel for appellees, shows that it had been brought forward from various special charters granting banks this special privilege, and applied, in 1877, to building and loan associations. It is therefore perfectly obvious that the words “except building and — 482 — loan associations,” in sec. 1 of tbe act, were not intended to contain any new substantive grant to building and loan associations of a privilege they did not already have, but were rather intended — as the words indicate — to “except” building and loan associations from the repealing effect of sec. 2 of said act. It is shown by reference to the original copy of the act and the journals of the house and senate that these words “except building and loan associations” were not in the act as first framed, and that the sole purpose of their insertion was to “except” them from the sweeping repeal applied by sec. 2 of said act. As strengthening this view of the legislative purpose, the code of 1892, § 2348, expressly provides: “But this section shall not apply to a building and loan association domiciled in this state, dealing only with its members.” It is necessary that the building and loan associations, to avail of this special privilege, must not only be domiciled within this state, but must deal alone with their members. These are conditions upon which the privilege to charge more than 10 per centum interest is granted. It might very well be that associations of the highly beneficial character possessed by true building and loan associations should be encouraged by the laws of this state, and that special privileges should be granted only to such building and loan associations as were chartered by our laws, subject to legislative control, domiciled within this state. There can be no reason, squaring with a wise public policy, in conferring any such privileges upon foreign building and loan associations, chartered by other states, deriving all their powers and privileges from the laws of other states, as interpreted by the courts of such states. The legislature, in the act of 1811, manifestly was dealing alone with the two domestic corporations named; and in 1886 it had in mind these two domestic corporations in writing this exception into sec. 1 of the act of 1886. They put the exception there with special reference to these then existing domestic building and loan associations. It was that class of building and loan associations which they could charter, over which they had power, and with — 483 — respect to which, therefore, they must surely have been legislating. In Falls v. Building Co., 97 Ala., 423 (13 So. Rep., 25) ; 24 L. R. A., 174; 38 Am. St. Rep., 194, the supreme court of Alabama interpreted a similar statute precisely as we do — as referring alone to domestic building and loan associations — and the same doctrine is announced in the following authorities: In re Prime, 136 N. Y., 347; 32 N. E., 1091; 18 L. R. A., 713, where the court said: “A state statute granting powers and privileges to corporations, in the absence of plain indications to the contrary appearing on the face of the act, applies only to corporations created by the state;” and Vanderpoel v. Gorman, 140 N. Y., 563; 35 N. E., 932; 24 L. R. A., 548; 37 Am. St. Rep., 601, which was a case “in which a corporation created under the laws of New Jersey, doing business in the state of New York, made a general assignment for the benefit of all its creditors without preferences. An attachment was levied in the state of New York upon the property assigned, and the assignee brought suit to recover damages for the levy upon and sale of the property. The defendant in that suit claimed that the assignment was void on account of the provisions of a statute of the state, which, among other things, provided “that no corporation shall make any transfer or assignment to any person whatever in contemplation of its insolvency, and every such assignment is declared to be void.” It was claimed that the foreign corporation was embraced in the general language of this statute. The court held that the law above quoted did not apply to foreign corporations. See 44 Cent. Law J., 118. We are therefore of opinion that the act of 1886 does not embrace foreign building and loan associations.