Snyder v. Fidelity Savings Ass'n

A statement of the case as above having been made, Babtch, J., delivered the opinion of the court: The principal question to be ‘ determined in this case is, whether the contract, over which this controversy arose, must be construed in accordance with the laws of Colorado, where the note and trust deed by their terms were made payable, or of this State, where the instruments were executed and delivered, and where the real estate given as security is situate. The appellant insists that, inasmuch as the contract was executed and delivered here, and the trust deed recorded here, and inasmuch as the corporation must seek its remedy in the courts of this State to foreclose the trust deed, the contract should be construed according to the laws of Utah, regardless of the provision contained therein that it was made “with special refer — 298 — ence to the laws of tbe State of Colorado,” while the respondents maintain that, because of such provision and the fact that the note and trust deed were made payable in the State of Colorado, the laws of that State should govern. We are of the opinion that the position of the appellant is substantially correct and must prevail. It will be observed, from the agreed statement of facts, that the makers of the note and trust deed, during the time of the transactions, which have resulted in this controversy were residents of Utah, and that the money was received and used heré. It appears they applied to the defendant corporation for the loan, through an agent who was also a resident of this State. All the acts which gave the contract force and effect were performed here. All the necessary papers were executed here, the trust deed was recorded here,-and it was clearly the intention of the parties that, if the promisees failed to repay the amount of the loan, the trust deed should be foreclosed in the courts of this State. It could be foreclosed nowhere else, the mortgaged realty being situate within this State. So all the payments of dues, premium and interest were made in Utah to an agent of the Colorado corporation residing here. Under these facts and circumstances, the contract must be regarded as a Utah contract, and must be construed in accordance with the laws of this State, and, as to interest, dues and premium, enforced with reference to our laws as interpreted by our courts. This conclusion is not at variance with the acts of the parties to the transaction, for, as all installments under the contract were made and accepted in Utah, the parties themselves treated it as a Utah contract to be performed in Utah, and the courts are, therefore, justified in adopting the interpretation which the parties, by their acts, have placed upon the contract, and this especially since the real estate, mortgaged and given as security, is situate in this State. — 299 — The contention of the respondents, in substance, it would seem, amounts to this: That the Colorado corporation shall be permitted to transact the business of loaning money in this State in total disregard of our statutes and the decisions of our courts; that, although a foreign institution, it must be permitted to exact and accept trust deeds, on land situate in Utah, from resident owners for money loaned to such owners, and, upon failure to repay the same according to the terms of such instruments, to enforce the contract, wind up the transaction, and sell the land by foreclosure in our courts, where alone jurisdiction to foreclose rests, not in conformity with Utah statutes and Utah decisions but according to Colorado statutes and Colorado decisions; that this foreign corporation, as to lending of money on real estate security, be permitted to ignore the well-settled policy and laws of this State. Comity of States does not extend to a violation of the laws of the forum, and we are not disposed to accede to the respondents’ proposition, but prefer to adhere to the doctrine that a contract, for the loaning of money, made and entered into under such circumstances as are disclosed herein, must be construed according to the laws of the State where the land is situate, and this we believe to be in harmony with the weight of authority. Rorer on Interstate Law (2 Ed.), p. 65, states the law to be as follows: “A note made in one State, at a rate of interest lawful in that State, and secured by a mortgage lien on lapds situated in such State, and which instruments were for money loaned by a citizen of a different State, and were delivered to him in such other State, where the contract of loan was agreed to, was held to be legal and enforcible in the courts of the State where the land was situate, and where the debtor resided at the time of making the contract, as also of enforcing the same, although such instruments called for a greater interest than allowed by law in the State where the — 300 — contract was agreed on and tbe instruments were delivered, and although in such latter State a forfeiture of the debt is incurred for usury. The ruling was that the whole transaction had reference to the laws of the Staife where the land was situate, the debtor resided and the instruments were made, although the latter were delivered elsewhere, as above stated, and notwithstanding, also, that the notes were made payable in a still different State than that wherein they were made or delivered, or wherein either party resided. Thus a note and mortgage made in Michigan to secure the same, on real property therein situated, calling for interest at ten per centum, per annum, a rate of interest legal in Michigan, is binding and valid, although the note be payable in New York, where such interest is usurious. Such a contract is a Michigan and not a New York contract, and is, therefore, governed by the laws of Michigan as to its validity.” _ In Pancoast v. Ins. Co., 79 Ind. 172, where the notes and mortgages were payable in the State of Connecticut, the court said: “It is true that the notes and mortgages are made payable at Hartford, in the State of Connecticut. But it is true that they were executed in this State, the mortgagor lived in this State, the lands lie in this State. And from the terms of the mortgage it is clear that the intention of the parties was that the contract was to be enforced in this State. The mortgage could be enforced nowhere else. In such a case, the law of this State governs, the rate of interest being fixed in accordance with the laws of this State.” So, in Building and Loan Association v. Griffin, 90 Tex. 480, it was said: “The fact that the contract expresses that the money borrowed is to be paid in the Territory of Dakota is met by the real substantial provisions for its enforcement and the circumstances under which the business was transacted, with such overwhelming force that we are brought to the — 301 — conclusion that- tbe contract, in so far as it was provided by its terms for tbe payment of tbe money in tbe Territory of Dakota, was simply a device to evade tbe laws of this State, and that these facts are so manifest from tbe face of tbe papers themselves that it ceases to be a question of fact, but becomes a matter of law to be determined from tbe undisputed evidence that is thus furnished. Tbe contract having been made with a view to its enforcement in tbe State of Texas and not in tbe Territory of Dakota, tbe agreement expressed in it that it should be paid in the Territory of Dakota was intended to enable tbe loan company by authority of tbe laws of this State to do business in Texas and set our laws at defiance with impunity, and it can not be enforced by tbe courts of this State.” Whart. Confl. Laws, sec. 508; Meroney v. Loan Association, 116 N. C. 882; Thompson, Adm. v. Edwards, 85 Ind. 414; People’s Building Assn. v. Fowble, 17 Utah 122; Locknane v. United States Sav. & Loan Co., 44 S. W. R. 977; McIlvaine v. Iseley, 96 Fed. Rep. 62; Fowler v. Equitable Trust Co., 141 U. S. 384; Fidelity Sav. Ass’n v. Shea, 55 Pac. Rep. 1022; Falls v. U. S. Savings, Loan & B. Co., 97 Ala. 417; Building & Loan Ass’n v. Atkinson, 20 Tex. Civ. 516; Pine v. Smith, 11 Gray 38; Jackson v. American Mort. Co., 88 Ga. 756; Chapman v. Robertson, 6 Paige 627; National Loan & Investment Co. v. Stone, 46 S. W. R. 67. Having determined that tbe contract in,this case is a TJtab contract, and must be construed according to tbe laws of TJtab and tbe decisions of this court, tbe appellant is entitled to have tbe stock payments, whether paid as dues or premiums, credited on tbe loan as well as other payments made in extinguishment of the debt. Such is tbe well-settled rule in this State. Sawtelle v. North Amer. Savings Co., 14 Utah 443; People’s Building Ass’n v. Fowble, 17 Utah 122; How — 302 — ells v. Pacific States, S. L. & B. Co., 60 P. R. 1025; People’s B., L. & S. Assn. v. Kroeger, 61 Pac. Rep. 559. The case must be reversed, with costs, and the cause remanded, with directions to the court below to set aside its judgment and proceed in accordance herewith. It is so ordered. Baskin, J., and Bolapp, D. J., concur.