Opinion
No. 32094.
April 20, 1936.
1. USURY.
Charging of interest in excess of twenty per cent. per annum on loan secured by note and trust deed held to invalidate entire transaction and to authorize forfeiture of both principal and interest (Code 1930, section 1946).
2. MORTGAGES.
Grantee of trust deed, providing that it was to secure advances subsequently made, only had right to personal judgments against grantors for such advances, since trust deed was invalid for purpose of securing such advances.
3. HOMESTEAD.
Tenant in common occupying land as homestead with consent of his cotenant is entitled to homestead exemption (Code 1930, section 1765).
4. HOMESTEAD.
Homestead right is founded upon ownership of some assignable interest in land (Code 1930, section 1765).
5. HOMESTEAD.
Tenant at will of land containing dwelling is entitled to homestead exemption (Code 1930, section 1765).
6. HOMESTEAD.
Signers of trust deed who were married and living upon land conveyed by such deed as a homestead held entitled to homestead exemption where their spouses did not sign deed (Code 1930, section 1765).
7. HOMESTEAD.
In suit to invalidate trust deed on ground that some of signers of deed were married and occupying land conveyed as a homestead and that their spouses did not sign deed, exclusion of evidence of common-law marriage held error (Code 1930, section 1765).
8. MARRIAGE.
Common-law marriage is valid and may be established by showing agreement between parties that they are husband and wife, followed by cohabitation.
9. HOMESTEAD.
Homestead exemption would prevent declaration of lien on homestead land for debts which occupants themselves owed as well as debts of others (Code 1930, section 1765).
10. USURY.
Grantee, under trust deed invalid because part of usurious transaction, held entitled to reimbursement from grantors for payments made by him on prior incumbrance to preserve property.
11. USURY.
Amount of taxes paid by grantee under trust deed, which was invalid because part of usurious transaction, and improvements made upon property during period land was occupied by such grantee after foreclosure of trust deed should be considered in connection with rental due grantors for occupation of land during such period.
12. USURY.
Measure of value of rent due grantors from grantee under trust deed, invalid because part of usurious transaction, for period grantee was in possession of land after foreclosure of trust deed held to be what premises were reasonably worth when skillfully managed and not what he actually made.
APPEAL from the chancery court of Bolivar county. HON. R.E. JACKSON, Chancellor.
Shands, Elmore, Hallam Causey, of Cleveland, for appellants.
The decree ordering land to be sold and appointing commissioner to make the sale was beyond the scope of the pleadings.
Rosenbaum v. Hammack, 96 Miss. 462, 51 So. 213; Griffith's Chancery Practice, sec. 612; Hibernia Savings Loan Society v. Thornton, 55 P. 702; First Baptist Church v. Fort, 54 S.W. 892.
Five days in which to perform decree by payment is totally inadequate and unreasonable.
Griffith's Chancery Practice, sec. 626, page 716; Hebron v. Kelly, 77 Miss. 54, 23 So. 641, 25 So. 877; Gray v. Bryson, 87 Miss. 309, 39 So. 694; McIntyre v. Whitfield, 21 Miss. 88 (13 S. M.); Hoops v. Burnett, 26 Miss. 428.
Neither Mattie Phillips, nor her husband, Manuel Phillips, having signed Lamensdorf notes and deed of trust, it was error to charge either of them or Mattie's interest in the land with the Lamensdorf debt.
The land being the homestead of Clayton Thornton, Robert Thornton and Susie Bass, the Lamensdorf deed of trust was void as to their interest for failure of the wives of the first two and the husband of the latter to join in its execution.
Lewis v. White, 69 Miss. 352, 13 So. 349; Livasy v. State Bank, etc., 170 N.W. 756.
If Virginia Thornton was Clayton Thornton's wife at the time the Lamensdorf deed of trust was executed, her failure to join in the deed of trust, rendered it void as to Clayton's one-seventh undivided interest in this land. At the time the deed of trust was executed, Virginia was temporarily away from the place on account of her physical condition. But there is no evidence, or claim, that she had abandoned the property. The home of the husband is that of the wife. Virginia and Clayton were married prior to January 28, 1930, which is the date the deed of trust was executed, and at that time she and Clayton were expecting a child to be born, the fruit of the marriage.
Ladner v. Pigford, 138 Miss. 461, 103 So. 218.
It is immaterial whether the last marriage be a ceremonial marriage or a common law marriage.
Howard v. Kelly, 111 Miss. 285, 71 So. 391, Ann. Cas. 1918E 1230; 38 C.J. 1318; Cartwright v. McGowan, 12 N.E. 737.
The exclusion of evidence of a common law marriage between Robert and Clara Thornton was error.
Sims v. Sims, 122 Miss. 745, 85 So. 73; Sykes v. Sykes, 162 Miss. 487, 139 So. 853; Section 2363, Code of 1930; Hunt v. Hunt, 172 Miss. 732, 161 So. 119.
Marriage may be proved by parole.
38 C.J., page 130, sec. 105, and page 335, sec. 108.
If Robert and Clara entered into a contract of marriage which was followed by cohabitation, the marriage was good not only as between themselves, but as to the whole world.
18 R.C.L. 392, sec. 13; Barton v. State, 143 So. 861.
Under Mississippi law the only requirement to fix the status of a homestead is that the land and building be owned and occupied by a householder having a family.
Sections 1821 and 1822, Hem. Code 1917 (Code 1930, sections 1765 and 1766).
The same rule applies where the wife owns the homestead.
Sec. 1779, Code of 1930.
It is the policy of the courts to liberally construe the facts in each case, as well as the statutes, in favor of homesteads.
Pocoke v. Peterson, 165 S.W. 1017.
M. Lamensdorf was a volunteer in discharging prior liens and in making improvements.
Slaton v. Alcorn, 51 Miss. 72; Foote v. Cotting, 80 N.E. 600; Preston v. Banks, 71 Miss. 601, 14 So. 258; Edwards v. Hillier, 70 Miss. 807, 13 So. 692; Brown v. Nevitt, 27 Miss. 801, 823; 60 C.J. 707, par. 19.
Allowance for improvements was error.
Wilies v. Brooks, 45 Miss. 542; Storey's Eq. Jur.; Bright v. Boyd, 1 Story; Hicks v. Blakeman, 74 Miss. 459, 481.
The account was improperly stated by the court, and the rule as to application of payments ignored.
Kimbrough v. Carter, 129 Miss. 337, 92 So. 229; Fletcher v. Gilliam, 62 Miss. 8; Poindexter v. LaRoche, 7 S. M. 699, 713; McLaughlin v. Green, 48 Miss. 175; Neal v. Allison, 50 Miss. 175; Windsor v. Kennedy, 52 Miss. 164; Duffy v. Kilroe, 116 Miss. 7, 76 So. 681; Sunflower County v. Bank of Drew, 136 Miss. 191, 101 So. 192.
The notes and deed of trust in question had been materially altered after their delivery. The alteration was made so as to make it appear that the interest was to run from maturity instead of from date.
It is of course plain that the purpose of the alteration was to try to cover up the usurious interest charges in the transaction.
Section 2781, Code of 1930.
It is a well established rule that any alteration, in an instrument for the payment of money, of a clause relating to interest is a material change discharging from liability on the instrument any parties thereto who did not consent to the alteration.
Brannon's Negotiable Instruments Law, sec. 125; 1 R.C.L., page 997, sec. 10, and page 968, sec. 4; Upton v. Bush, 141 Miss. 660, 107 So. 284; 3 R.C.L. 1112, sec. 328; Peeples v. Clark, 139 Miss. 47, 103 So. 500; 2 C.J. 1189, sec. 31. Roberts Smith, of Cleveland, for appellees.
The contention of the appellees is that the deed of trust was executed, a contract was made between the parties which covered two different items, namely: the three notes described therein as specific items of "any amount, or amounts, in addition to the above described promissory notes." The contract was effective to secure the promissory notes; it was also effective to secure any additional amounts furnished prior to the cancellation of the deed of trust. The record is clear that additional amounts were furnished and our contention is that such amount were secure by the deed of trust, even though the promissory notes should be held usurious and therefore not enforceable. In other words, the obligation secured by the additional amount clause is severable and is secured by the deed of trust.
Wilizenski v. Everman, 51 Miss. 841.
When the obligation is severable, and a part thereof can be assigned to the usurious consideration, and a part to a consideration that is legal, the courts will enforce such part of the obligation as rests on the valid consideration, visiting the penalties of usury only on that part which is supported by the illegal consideration.
Davis v. Elba Bank Trust Co., 114 So. 211, 216 Ala. 632; Compton v. Collins, 67 So. 395, 190 Ala. 499; 66 C.J. 241, par. 185 (b) and 248, par. 200; Weaver Hardware Co. v. Solomovitz, 139 N.E. 353, 235 N.Y. 321.
On the assignment of errors by appellants in the direct appeal, we submit that the position of appellants in the first assignment of errors is correct and that the court below went beyond the scope of the pleadings in the case, and the assignment is well taken to this extent.
The evidence is that the contract was that the appellants were to pay eight per cent on the indebtedness and the appellee, M. Lamensdorf, directed the attorney to prepare the papers in accordance with the agreement. The intent of the parties was that the interest rate should be eight per cent and there was a mistake on the part of the attorney in preparing the papers. From the testimony it is clear that the parties did not knowingly and intentionally disregard the law of usury.
Smythe v. Allen, 67 Miss. 150.
It appears that the parties were not trying to hide anything and all was in good faith when the appellee, M. Lamensdorf was paying his money out. The change comes when the time to repay arrives. No part of the money advanced was repaid. A court of chancery will place such construction as would free the contract from the effects of usury, if it can possibly be done.
If an agreement can reasonably be construed as nonusurious, it should be so construed.
66 C.J. 172, par. 61; Jones v. Brewer, 115 So. 116.
Admitting the presumption of divorce, yet Clayton did not marry until much later than the date of the execution of the trust deed, the evidence is clear that he was not married to Virginia on January 28, 1930.
If the alteration (though material) be made by a stranger, without knowledge, privity or consent of the holder, it does not change or affect its legal operation. That is mere spoliation.
Craft v. White, 36 Miss. 455; Bridges v. Winters, 42 Miss. 135; Ferguson v. White, 18 So. 124; Caulson v. Stevens, 122 Miss. 797, 85 So. 83.
The trend of the testimony is to the effect that the spoliation of the notes was effected by J.C. Walker, the trustee. His acts, if the change was his, cannot affect the legal status of the notes and deed of trust, unless with the consent of the payee.
The trustee is only representative. He has no authority to consent to a modification of the deed of trust.
19 R.C.L. 272.
The duties and powers of the trustee are fixed by the terms of the deed.
Nelson v. Hubbard, 11 So. 434.
The alteration of these notes, in order to be availed of by the appellees, must have been made with a fraudulent intent.
Bank of Lauderdale v. Code, 111 Miss. 39, 71 So. 260.
The appellant, Hattie Thornton Jones, was formerly Hattie Thornton, the wife of Sam Thornton, and the other appellants, Susis Bass, Velma Johnson, Abbie Sanders, Mattie Phillips, Clayton Thornton, and Robert Thornton, are the children of Hattie and Sam Thornton. Sam Thornton died leaving certain personal property, and a tract of land consisting of eighty acres which had been occupied by Thornton and his family as a homestead and which was incumbered by a deed of trust in favor of the Federal Land Bank.
In 1930 the appellants applied to the appellee, M. Lamensdorf, for a loan giving the land as security therefor. Appellee agreed to lend the money provided the appellants would include in the loan an open account of three hundred eighty-six dollars owing by the deceased, Sam Thornton. At the time this arrangement was made Hattie Thornton had married Hardy Jones. The notes provided for interest from date until paid, a full year, when only nine months were involved on the first note, and the deed of trust provided for any other advances or supplies furnished to the borrowers.
In the early part of 1932, the deed of trust was foreclosed in pais; the land was purchased by R.G. Lamensdorf, the son of M. Lamensdorf, for eight hundred dollars; possession was immediately taken thereof, and the appellants became tenants or share croppers for that year. At the expiration of the year 1932, Lamensdorf required the appellants to move off and give him possession, and he thereafter rented said land to another.
The bill of complaint was filed on November 26, 1934, and alleged that the deed of trust was void for the reason that the interest charged exceeded twenty per cent, and that Hardy Jones had been forced to sign the deed of trust under threats of violence made by J.C. Walker, attorney for Lamensdorf, and who, at Lamensdorf's request, prepared the papers, but who has since died. It was also alleged that the deed of trust was void because the husbands and wives of some of the appellants were living on the land occupying it as a homestead, and they did not sign the papers.
In attempting to prove one of these marriages, the appellants offered to show that a common-law marriage had been entered into and the parties were living together as husband and wife prior to the execution of the deed of trust, and that they had been married ceremonially, by a license, two days after the deed of trust was executed. The court below refused to permit proof of the common-law marriage to be given, holding that as between the parties the proof might be competent, but not as to third persons.
Lamensdorf furnished different amounts to different persons for the years 1930 and 1931, and claimed that there was a balance due him, after deducting payments made by the appellants, which balance he claimed was secured by the appellants. Subsequent to the foreclosure of the deed of trust, certain payments were made to the Federal Land Bank, for installments due them, by Lamensdorf, and he also paid the taxes for certain years.
The interest stipulation on the notes was changed, after their execution, by J.C. Walker, who had them in possession for Lamensdorf, so as to show eight per cent from maturity rather than from date.
The court below appointed the court reporter as a special master to state accounts, and directed him to treat the three hundred eighty-six dollars which Lamensdorf required the appellants to assume as a condition of his loan to them, as usurious interest, and to state how much interest was charged, and to state a separate account from 1930 to the foreclosure of the deed of trust, and another for the year between the foreclosure and the filing of the suit. The master found that the amount of interest charged on the loan was twenty-nine per cent, and stated an amount, as between the execution of the deed of trust and its foreclosure, for each of the parties that Lamensdorf had furnished, and also stated an account for the subsequent period showing payment of taxes and installments due the Federal Land Bank by Lamensdorf, and declared a lien upon the land as to the appellants and their interests, for the amount so found to be due, and undertook to re-establish the deed of trust, and the court decreed in accordance with the master's finding, and held that the notes given were void under section 1946, Code of 1930, but also held that the appellee was entitled to a lien for the supplies furnished under the deed of trust, and for the amount of the Federal Land Bank payments and taxes paid, and ordered the land to be sold if payment was not made within five days from that date. The amount found to be due Lamensdorf under the deed of trust was nine hundred ninety-two dollars and eighty-seven cents principal, with six per cent interest from March 5, 1932, constituting a total of one thousand one hundred eighty-nine dollars and eighty-four cents, and that of said amount, seven hundred sixty-one dollars and five cents with interest at six per cent from March 5, 1932, represented the amount paid for taxes, insurance, and Federal Land Bank payments. The court also held that the status existing at the date of its decree, June 28, 1935, would remain for that year, and fixed the value of rental for the year 1935 at four hundred twenty dollars, and from that decree this appeal is prosecuted.
Section 1946, Code of 1930, reads as follows: "The legal rate of interest on all notes, accounts and contracts shall be six per cent per annum; but contracts may be made, in writing, for a payment of a rate of interest as great as eight per centum per annum. And if a greater rate of interest than eight per centum shall be stipulated for or received in any case, all interest shall be forfeited, and may be recovered back, whether the contract be executed or executory. If a rate of interest is contracted for or received, directly or indirectly, greater than twenty per centum, the principal and all interest shall be forfeited, and any amount paid on such contract may be recovered by suit."
Under this section, we think the entire contract was void as being in violation of the latter part of this section. The charging of interest at a rate above twenty per cent per annum is wholly contrary to public policy, and is so usurious that the courts should apply the statute in such manner as to discourage the practice. It follows therefore that the entire transaction, the note and deed of trust given at the time constituting one contract, is void, and both principal and interest were forfeited, and the court was correct in so holding.
We think the deed of trust was invalid for the purpose of securing advances thereafter made, and that Lamensdorf only has a right to personal judgments against each of the appellants for their accounts, and that the deed of trust did not constitute a lien upon the land to secure these open accounts. It appears, without dispute, that some of the signers of the deed of trust were married and living upon the land as a homestead, and that the husbands or wives did not sign, and in such cases the interest of the signer would not pass because of section 1765, Code of 1930, which secures to any family, or head of a family, an exemption of one hundred sixty acres of land to the value of three thousand dollars.
A tenant in common occupying with the consent of his cotenant is entitled to this exemption. McGrath v. Sinclair, 55 Miss. 89.
A homestead right is founded upon ownership of some assignable interest in the land. Berry v. Dobson, 68 Miss. 483, 10 So. 45.
A tenant at will of land containing a dwelling is entitled to the exemption. King v. Sturges, 56 Miss. 606, and Parisot v. Tucker, 65 Miss. 439, 4 So. 113.
The court below should have held, under the undisputed proof in the case, that the appellants were entitled to this exemption because they were married and living upon the land. We think the court also erred in excluding the evidence of the common-law marriage. A marriage good at common law is valid in this state. Sims v. Sims, 122 Miss. 745, 85 So. 73; Sykes v. Sykes, 162 Miss. 487, 139 So. 853. To establish the existence of a common-law marriage it is only necessary to show an agreement between the parties that they are husband and wife, followed by cohabitation. Sims v. Sims, supra; Hunt v. Hunt, 172 Miss. 732, 161 So. 119, 8 R.C.L. 392, sec. 13; Barton v. State, 165 Miss. 355, 143 So. 861.
This exemption, of course, if it existed, would prevent the declaring of a lien on the land for the interest of these parties, as against the debts which they, themselves, might owe, as well as the debts of others.
We think Lamensdorf is entitled to reimbursement for payments made to the Federal Land Bank to preserve the property. As to the payment of taxes by Lamensdorf, and the improvements he made upon the property during the period between the foreclosure and the decree, they should be considered in connection with the rental due for occupation of the lands for the years 1932, 1933, and 1934. It appears that the rental for 1933 and 1934 would exceed the amount paid for improvements and taxes, and we think Lamensdorf should be charged with a reasonable value of rent for the year 1932, and his accounts for improvements considered in connection therewith. It is not what he actually made upon the place, or the net profits involved in its operation, that is the measure of value of the rent due, it is what the premises were reasonably worth when managed with skill and care.
The decree of the court below is affirmed in so far as it holds that the notes were void; but as to the accounts of the several appellants during the year 1930-1931, and for the failure of the court to adjudge that the alteration of the notes was material, and to award a partition charging the several interests with liens for the amounts due Lamensdorf for payments he made to the Federal Land Bank, and for taxes he may have paid during the years of the rental of the property involved, if they exceeded the rents, balancing the rent due with improvements, taxes, etc., and for the error of the court below in refusing to receive evidence of the common-law marriage, and for the court's failure to grant a partition, and in case the land is not capable of partition in kind, to direct that it be sold, with directions to pay any amount due Lamensdorf, the decree will be reversed.
Affirmed in part, reversed in part, and remanded.