Opinion
No. 31138.
March 26, 1934.
1. EVIDENCE.
In action upon ninety-day notes, parol agreement as to when notes were due and payable held properly excluded.
2. USURY.
Accrued interest upon ninety-day notes which had been renewed held properly calculated on basis of three hundred sixty-day year (Code 1930, section 1946).
3. EQUITY.
Where bill prayed that notes be purged of alleged usury and foreclosure of deed of trust be enjoined until notes were so purged, court, after declining to award relief prayed for, should have dismissed bill and discharged defendant, where neither bill nor answer requested foreclosure of deed of trust under superintendence of court.
APPEAL from Chancery Court of Alcorn County.
B.F. Worsham, of Corinth, for appellants.
The court below erred in sustaining the objections to the testimony of Mr. Cox to the effect that he had an agreement with the bank for a loan to be paid back as and when he could, but that the notes were made due in ninety days instead of in line with such agreement. We do not think the testimony was in any way an effort to change the terms of a written instrument by oral testimony.
The court erred in holding that usurious interest had not been charged Mr. Cox by the bank.
In this case a greater rate of interest than eight per cent was charged, as is practically admitted by the defendant in the court below, and was recognized as a fact by the chancellor, as shown by his opinion in the record in deciding the case.
Hebron Bank v. Gambrell, 116 Miss. 343, 348; James et al. v. Brewer et al., 146 Miss. 142, 151; Rev. Stat., secs. 5197 and 5198, National Banks; sec. 1946, Code of 1930.
The highest rate of interest cannot be reserved in advance and to do so renders contract usurious.
Rogers v. Rivers, 135 Miss. 760.
The junior mortgagee, under the circumstances and facts, as presented by the record, had the absolute right as a matter of law and as a matter of equity to have the sale of the property under the senior mortgage stayed until the correct balance due on the notes ahead of her indebtedness was ascertained and adjudicated. Our court has repeatedly held that a junior mortgagee is entitled to have payments made of usurious interest applied to principal of the debt.
Wilczinsky v. Smith, 110 Miss. 215; Sprinks v. Jordan, 108 Miss. 133; Aust v. Rosenblaum, 74 Miss. 893; Peeples v. Yates, 88 Miss. 289.
W.C. Sweat, of Corinth, for appellee.
The court properly sustained the objection to the testimony of George Cox on the ground that it was an attempt to vary the terms of a written instrument by parol testimony.
It will be noted from this testimony that the parol agreement was made at the time of the execution of the notes. The notes are complete in themselves; and, since there is no ambiguity in them, the testimony to vary their terms, or to show that there was an additional agreement at the time, is clearly inadmissible.
Shrapley Hardware Co. v. Spiro, 141 Miss. 38, 106 So. 209, 44 A.L.R. 393; Slush v. Foxworth, 146 Miss. 360, 111 So. 840; McInnis v. Manning, 131 Miss. 119, 95 So. 250; H. Western Lbr. Co. v. Lacy Lbr. Co., 123 Miss. 208, 85 So. 193, 10 A.L.R. 436; O'Keefe et al. v. McLemore, 125 Miss. 394, 87 So. 655; Davis v. Butler, 128 Miss. 847, 91 So. 279; Edrington v. Stephens, 148 Miss. 583, 114 So. 387; Porter Hardware Co. v. Peacock, 129 Miss. 693, 92 So. 823; Bettman-Dunlap Co. v. Gertz Bros., 136 Miss. 160, 99 So. 384; J.B. Colt Co. v. McCollough, 141 Miss. 328, 105 So. 744; Junius Hart Piano Co. v. Stewart, 145 Miss. 488, 111 So. 106; Traders Security Co. v. Sullivan, 147 Miss. 72, 112 So. 869.
Mr. Cox's testimony is incompetent for another reason. As above stated, the bill was filed on the theory that the taking of these notes for ninety days, or four months, and collecting interest thereon for that period of time, when the agreement was that it should not be collected until the end of the year, constituted usury. But, when the bill was filed appellants must have overlooked section 1951, Code of 1930, chapter 179, Acts of 1926.
When any particular rate of interest per annum is specified in any contract or evidence of indebtedness, it shall not be construed as any increase of said rate merely that the interest at the specified rate per annum is stipulated to be paid quarterly, or semi-annually, or at any other period less than a year, nor shall the fact that the principal and interest is paid at a date earlier than that stipulated in the contract or evidence of indebtedness be taken as any increase of the rate per centum although paid for the whole period stipulated.
Section 1951, Code of 1930; Rogers v. Rivers et al., 135 Miss. 756, 100 So. 385.
The court below correctly held that it was proper to charge interest for ninety days at one-fourth of eight per centum, for thirty days at one-twelfth of eight per centum, for sixty days at one-sixth of eight per centum, etc.
Planters Bank v. Snodgrass, 4 How. 572; Patton v. Lafayette Bank, 124 Ga. 965, 53 S.E. 664, 5 L.R.A. (N.S.) 592; Neal v. Brackam, 87 Ga. 130, 13 S.E. 283: Planters Bank v. Bass, 2 La. 430; Agr. Bank v. Bissel, 12 Pick. 386; Lafayette Bank v. Findlay, 1 Ohio Dec. (Reprint) 49; Merchants, etc., Bank v. Sarratt, 77 S.C. 141, 57 S.E. 621, 122 Am. St. Rep. 562; Parker v. Consius, 2 Fratt. 372, 44 Am. Dec. 388; N.C. State Bank v. Cowan, 8 Leigh, 238; Bradley v. McKee, 3 Fed. Cas. No. 1784, 5 Branch CC 298; Camp v. Bates, 11 Conn. 487.
The contract in this case is not usurious according to the National Banking Act, as construed by the Supreme Court of the United States.
Section 5197, Revised Statutes, sec. 85, Title 12, U.S.C.A.; Sec. 5198, Revised Statutes, sec. 86, Title 12, U.S.C.A.; Evans v. National Bank of Savannah, 64 L.Ed. 171, 251 U.S. 108; Fleckner v. Bank of U.S., 8 Wheat. 338, 58 L.Ed. 631.
Under the National Banking Act, in order for the taking of interest by a national bank to be usurious, it must have been knowingly done.
Section 85, Title 12, U.S.C.A.; Section 5239, Revised Statutes, sec. 93, Title 12, U.S.C.A.; Yates v. Jones National Bank, 206 U.S. 158, 51 L.Ed. 1002; Corsicana Bank v. Johnson, 251 U.S. 68, 64 L.Ed. 141.
The appellant should have tendered with his bill the amount admitted to be due. Not having done so, the injunction was properly dissolved and the bill properly dismissed.
Rush v. Pearson, 92 Miss. 153, 45 So. 723; Crittenden v. Ragan, 89 Miss. 185, 42 So. 282; Purvis v. Woodward, 78 Miss. 929, 29 So. 917; Lewis v. Boguechitto, 76 Miss. 356; M. O.R.R. Co. v. Moseley, 52 Miss. 137; Musser v. First National Bank of Corinth, 165 Miss. 873, 147 So. 783; Proctor v. Hart, 72 Miss. 288, 16 So. 595.
Argued orally by W.C. Sweat, for appellee.
This is an appeal from a decree dissolving a preliminary injunction and declining to award the complainants the relief prayed for. The appellants are the complainants, and the appellee is the defendant in the court below, and they will be hereinafter so styled.
The bill alleges, in substance, that one of the complainants executed a deed of trust on property owned by him to the First National Bank of Corinth, Mississippi, to secure certain promissory notes thereunder given by him to the bank, which notes were renewed at maturity over a period of several years; that the last renewals thereof came into the possession and ownership of the defendant, and the trustee in the deed of trust, at the request of the defendant, was proceeding to foreclose it for nonpayment of the notes secured by it; and that the notes are tainted with usury. The prayer of the bill is that the notes be purged of the alleged usury and that the foreclosure of the deed of trust be enjoined until this has been done.
The usury is alleged to have arisen under the following state of facts: The notes on their face were due ninety days after date; but the complainants say that they were in fact not so due and payable, for the reason that, when the first notes were executed, the bank agreed, but not in writing, that they would become due and payable as and when the complainants desired. The notes bore interest at the rate of eight per cent. per annum from date, the highest rate allowed by section 1946, Code 1930. When they were renewed, the accrued interest thereon was paid, and, in calculating this interest, a year was treated as if composed of three hundred sixty days.
The parol agreement as to when the notes were due and payable was excluded by the court; and no error was committed in so doing under the rule which prohibits the adding to or varying a written agreement by prior or contemporaneous oral agreements relating thereto.
Computing interest on the theory that a year consists of three hundred sixty days would present a more serious question were it not for the case of Planters' Bank v. Snodgrass, 4 How. 573, wherein it was expressly held that the proper way to compute interest for fractional parts of a year under the then statute which now appears as section 1946, Code 1930, is to treat the year as being composed of three hundred sixty days. That decision is in accordance with the great weight of authority; and, as the statute has been several times re-enacted since that decision was rendered, it is controlling here.
The bill of complaint did not pray for the sale of the property mortgaged, but only for the purging of the notes of usury. No cross-bill was filed by the defendant. In its decree the court below, after dissolving the injunction and awarding damages therefor, retained jurisdiction of the case "for the purpose of passing on and approving or disapproving, as the court may find proper, the sale of the said property, if and when made by the trustee in the trust deed, and the said C.D. Meeks, trustee, one of the defendants, is hereby ordered and directed to report said sale, if and when made, to this court for confirmation, in vacation, on five days' notice to complainants, or their attorney of record, of the time and place of hearing said motion for confirmation."
The defendant has filed a cross assignment of error to this provision of the decree. The court, after declining to award the complainants the relief prayed for, should have dismissed the bill and discharged the defendant, as neither the bill nor the answer thereto requested a foreclosure of the deed of trust under the superintendence of the court. This erroneous provision of the decree will be eliminated therefrom, and a decree will be rendered here accordingly.
Reversed, and decree for appellee.