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The appellees, Lehman, Durr & Co., were entitled to charge lawful interest for their money loaned. They could stipulate for the bona fide consignment of cotton by the borrower, and he could lawfully agree to pay reasonable storage on such cotton, in view of the fact that the consignees were warehousemen engaged in the cotton business. They could also charge the usual and reasonable price for selling cotton, such as was customary among commission merchants in Montgomery. But they could not charge one price for this service where no money was loaned, and a larger price for the same service where money was loaned. The necessary inference is that the excess of charge was not for the service, but as a bonus for the use of the money additional to lawful interest.
From the principles declared above it necessarily follows that the Ilarmons, or J. F. Harmon, can take nothing by their assignments of error, and the same are disallowed. In the case of Lehman, Durr & Co. v. Harmon, the chancellor erred in disallowing storage and customary commissions of 50 cents per bale for the cotton promised to be delivered under the contract. To this extent the decree of reference is altered and amended, and the register will take and state an account between the parties, and report the same to the chancellor with all convenient speed. All other questions are reserved for de cision by the chancellor.
SMITH v. LEUMAN et al.
(Supreme Court of Alabama. December 19, 1888.) USURY-AS A DEFENSE-BURDEN OF PROOF.
Where one enters into a contract, in consideration of a loan, to deliver certain cotton, to be sold on commission, which contract is usurious if the borrower has no reasonable expectation that he can comply with its terms, the burden is on him to show that in making the contract he had no such expectation.
Appeal from chancery court, Montgomery county; JOHN A. FOSTER, Chancellor.
A bill by Mrs. Cordelia C. Smith, the wife of Stephen L. Smith, against her said husband and the firm of Lehman, Durr & Co., doing business in the city of Montgomery, as warehousemen and commission merchants. The bill sought to establish a resulting trust in favor of the said Mrs. Cordelia C. Smith to the extent of a one-half interest in a tract of land which Lehman, Durr & Co. had sold under a mortgage executed to them by said Stephen L. Smith, in which the complainant joined as his wife, two of the partners becoming the purchasers. The mortgage was dated January 23, 1884, and was given to secure the payment of $1,500, money loaned or advanced by the mortgagees, for which said Stephen L. Smith gave a crop lien note in the usual form, due October 1, 1884; and it also bound the mortgagor to deliver to them, by that day, 150 bales of cotton, for storage and sale on commission, or, in default thereof, to pay, as liquidated damages, 50 cents per bale for one month's storage, and 23 per cent. commissions on the value of the number of bales not delivered. The complainant claimed and alleged that the purchase money for the lands was paid with funds belonging to her statutory estate; that the mortgage was usurious; and that the mortgagees were charged with notice of her equity. The defendants answered, denying the charge of usury, and denying the use of complainant's funds in paying for her husband's half interest in the land; and they claimed that the complainant was estopped from asserting her alleged equity against them, and that they were entitled to protection as bona fide purchasers without notice. On final hearing, on pleadings and proof, the chancellor held (1) that the complainant was entitled to a resulting trust in her husband's one-half interest in the land, "to the extent that her money paid for it;" (2) that the equity could not be asserted against Lehman, Durr & Co., because their mortgage was not usurious, and they were entitled to protection as bona fide purchasers without notice. The complainant appeals from this decree, and here assigns as error that part of the decree which declared her equity subordinate to the claim of Lehman, Durr & Co. as mortgagees.
Arrington & Graham, for appellant. Tompkins, London & Troy, for respondents.
STONE, C. J. Stephen L. Smith, husband of appellant, executed a mortgage to Lehman, Durr & Co., to secure the payment of money advanced to him, and also to deliver certain bales of cotton for storage and sale as warehousemen and commission merchants. The mortgage conveyed, among other things, certain lands, to secure the payınent of the money and the delivery of the cotton. Mrs. Smith, the wife, united in the mortgage, by proper words, and certificate to bar her dower, and to legalize the conveyance of the homestead. The mortgage contained a power of sale on default, and under it the lands were advertised for sale. Before the sale was made, Lehman, Durr & Co. learned that the title to the lands mortgaged was jointly and equally in the said Stephen L. Smith and his wife, Cordelia C. Smith. They thereupon sold the undivided half interest, and Lehman brothers, two of the members of the firm of Lehman, Durr & Co., purchased the said half interest, and received a con veyance.
The present bill was filed by the wife, Mrs. Cordelia C. Smith, and alleges that the lands, though conveyed to her husband and herself jointly, were purchased and paid for with her money,—her statutory separate estate. She seeks to have a trust declared in her favor for the entire half interest so conveyed to her husband, or for such part as was purchased and paid for with her money. She also sets up usúry in the mortgage made by herself and husband to Lehman, Durr & Co., and on that account charges that they are not bona fide purchasers, so as to cut off her equity, even though it was latent, and they had no notice of it. Under our rulings, if there be usury in the debt secured, that vitiates the defense of bona fide purchase, and permits an equity, even though latent, to prevail over a title thus tainted. Insurance Co. v. Quinn, 73 Ala. 558; Wailes v. Couch, 75 Ala. 134; McCall v. Rogers, 77 Ala. 349.
In Harmon v. Lehman, ante, 197, (at the present term,) we decided that when a warehouseman or commission merchant, in advancing money to a customer, takes a note for the repayment of the money with interest, and an obligation to deliver for storage and sale certain bales of cotton, if there be a reasonable expectation, or just ground for belief, that such obligation to deliver cotton can be complied with, then it is a legitimate transaction, and is not usurious. On the other hand, if there be no reasonable expectation, or just ground for believing, that the stipulated quantity of cotton can be delivered, an agreement to pay as liquidated damages a sum equal to the charges for storing and selling cotton of like quantity to that stipulated to be delivered, but not delivered, is usurious.
In the present case, if the testimony of Smith and Beard be true, Beard, of Beard, Wright & Hamil, merchants, conducted the entire negotiation with Lehman, Durr & Co, which led them to make the advance to Smith. The latter was never brought into communication with Lehman, Durr & Co., and hence made no representations as to his ability to deliver the cotton. If representations were or were not made by Beard, Smith, according to their testimony, did not and could not have personal knowledge of it. Three witnesses were examined who had the means of knowing what representations were made.-Beard on the part of Smith, and one member of the firm of Lehman, Durr & Co., together with their managing agent or clerk, in their be
half. It is not controverted, but is conceded, that Smith's plantation and farming appliances were not sufficiently extensive to justify a reasonable expectation, or even a belief, that he could produce and deliver therefrom as much as 150 bales of cotton, the quantity he bound himself to deliver. Beard was not examined as to what representations he made, or did not make, in reference to the delivery of the 150 bales of cotton. The witnesses for appellees give testimony tending to show that Beard, Wright & Hamil were able to deliver, and agreed to deliver, for storage and sale, cotton enough to make up the deficiency in Smith's delivery, and that this representation was made before Lehman, Durr & Co. agreed to advance the money; in fact, that it was one of the conditions on which they agreed to advance, and did advance, the money. True, this testimony is not as direct and emphatic as it might be, and some portion of it was illegal in form, if it had been objected to. No objections or exceptions are found in the record. The following question to Smith, and answer by him, tend to show there must have been some agreement or representation in regard to delivery of cotton by Beard, Wright & Hamil, under Smith's contract: “Question. Did they [Beard, Wright & Hamil] not agree to aid and assist you in delivering the cotton stipulated in the mortgage to be delivered ?
Did not said Beard, Wright & llamil again agree to assist you in delivering the number of bales of cotton required to be delivered by the mortgage? Answer. I do not think they did agree distinctly. They said that, if they had more than was necessary for their own use, they would let me have the advantage of the shipment of it.
Beard, Wright & Hamil did not make such agreement, only as above stated.”
As we have said above, the testimony of the witnesses for appellees tends to show that Beard, Wright & Hamil, as a condition on which the money was obtained, agreed to deliver for Smith whatever number of bales of cotton that might be necessary to comply fully with his contract, and their testimony stands practically uncontroverted. Smith's contract, the execution of wbich is not denied, bound him to deliver the agreed number of bales of cotton. We have shown that a warehouseman or commission merchant, in making advances to a customer, way, in addition to the payment of lawful interest, exact from him an obligation to deliver cotton for storage and sale and, in certain conditions, such obligation to deliver is neither usurious, nor otherwise illegal. From these premises the legal conclusion is irresistible that the burden was and is on Mrs. Smith to show that, in making this contract, there was no reasonable expectation or just ground for belief that Smith could comply with this term of his contract. In other words, when parties enter into a contract which, on its face, contains no stipulation which is per se or prima facie illegal, and only becomes so by the existence of certain extrinsic facts, the court must, in the absence of extrinsic proof, pronounce the contract legal, ut res majis valeat, quam pereat. The burden of inaking the extrinsic proof must rest on him who assails the validity of such contract. Usury is a defense, and must be satisfactorily proved, when set up. 2 Brick. Dig. 128, § 122; Munter v. Linn, 61 Ala. 492; T'homas v. Murray, 32 N. Y 605; Bank v. Boynton, 105 N Y 656, 11 N. E. Rep. 837; Poppleton v. Nelson, 12 Or. 349, 7 Pac. Rep. 492; Rowland v. Rowland, 40 N. J. Eq. 281. The question of reasonable ground for believing whether the cotton could be delivered was and is important in this case only as it sheds light on the inquiry, of usury in the transaction. The proof in support of this feature of the case is insufficient. By the terms of the contract which Stephen L. Smith made with Lehman, Durr & Co., he was to pay them interest on the money received, was also to deliver them for storage and saie 150 bales of cotton, and was to pay customary charges of 50 cents per bale for storage for one month, whether the cotton was delivered or not. This, as was shown in Harmon v. Lehman, was permissible, when there was a reasonable expectation that the cotton could be delivered. But the contract contained a further stipulation that upon all the 150 bales of cotton, whether delivered or not, Lehman, Durr & Co. were to be paid commissions of 27 per cent. At the average price at which cotton was then selling, this would amount to $1.12 to $1.25 per bale, while the price for selling, when no money had been advanced, was universally 50 cents per bale. This was shown by all the testimony without conflict. To the extent the commissions for selling were increased in consequence of the money advanced, the contract was usurious, under the decision in Harmon v. Lehman. This, under the authorities cited above, takes away from Lehman, Durr & Co. the vantage ground or defense of bona fide purchase, and opens the transaction to the assertion of Mrs. Smith's equity, if sufficiently proved.
The question then arises, has Mrs. Smith shown an equity as against her husband's half of the land? We feel bound to answer that she has, but not to the full extent of the purchase price. Six hundred and fifty dollars of the deferred installment of the purchase money was paid from the proceeds of crops, and she can assert no lien on this account. The remaining $350 was obtained from a sale of a part of the land in which he had title and claim to one-half. He is indebted to her, on account of the land purchase, $713.57, for which sum, without interest, she is entitled to a paramount lien on her busband's half of the land.
The decree of the chancellor is reversed, and it is ordered that the husband's half of the land be resold, and out of the proceeds the complainant be paid, first, $713.57, and the balance will be paid to Lehman, Durr & Co., until they are paid any balance due from Stephen L. Smith to them under the mortgage. The sale to Lehman brothers is set aside and vacated. All other necessary orders will be made by the chancellor.
BEARD 0. HORTON.
(Supreme Court of Alabama. January 7, 1889.) 1. ASSUMPSIT-MONEY PAID TO DEFENDANT'S USE.
Where a draft is sent to a bank for collection, and the agent of the bank, through a mistake known to the drawee, only collects a portion of the draft, marking it “Paid, ” and the bank pays the entire amount of the draft to the holder, taking the notes of the agent for the amount, which he failed to collect, an action by
the agent for money paid will lie against the drawee. 2. TRIAL-CONFLICT OF EVIDENCE-INSTRUCTIONS.
Where parol evidence is conflicting, an affirmative charge should not be given in favor of either party. Appeal from circuit court, Jefferson county; LEROY F. Box, Judge.
This action was commenced by the appellant, J. W. Beard, suing by his next friend, against the appellee, H. M. Horton, by attachment sued out and levied on the goods alleged to be owned by the defendant, on the 8th day of October, 1887. It was brought for the recovery of money alleged to have been paid by the plaintiff for the defendant. The defendant pleaded the general issue, and issue was joined on this plea. The facts, which are undisputed by the evidence, as produced on the trial of the case, and about which there is no controversy in the contestation of the case, are sufficiently set out in the opinion. The main ground of dispute in the evidence is as to the payment of the draft, which was drawn on the defendant by a commercial firm in the city of Memphis. The plaintiff introduced evidence tending to show that the said defendant, instead of paying him the sum of $370.86, the amount which the draft called for, only paid the plaintiff $52.90. There was evi. dence on the part of the defendant tending to show that the draft had been paid in full. The court charged that, “if the jury believe all the evidence in this cause, they should find a verdict for the defendant." The plaintiff appeals.
Weatherly & Putnam, for appellant. Martin & McEachin, for appellee.
CLOPTON, J. The account, which was transferred by Farabee Hunter & Co. to plaintiff, having been paid, either by defendant or the Birmingham National Bank, before its transfer, does not constitute a sufficient cause of action. As the case is presented by the record, the gravamen of the action is money paid by appellant for the benefit of the appellee. The principles which underlie such actions are well settled. In order to enable one who paid money to the use of another to maintain an action for money paid, two Things are essential,-a legal liability on the part of the defendant to pay the original demand, and his antecedent request or subsequent promise to pay. No person can make another a debtor against his will, and a voluntary payment of the debt of another, without his knowledge or consent, the party paying being under no legal obligation to pay, will ordinarily be regarded a gratuity, and the money paid cannot be recovered back. An express request or promise is not essential. If the party paying is under a legal obligation to pay, and a primary obligation rests on the person for whose benefit the money is paid, a request or promise, sufficient to uphold the action, will generally be implied. As illustrative, the following instances may be noticed: Money paid in ignorance or under mistake of facts may be recovered. Young v. Lehman, 63 Ala. 519. A party compelled, in order to preserve his rights, to pay the debt of another, may recover the amount so paid from the person whose duty it was to have paid the debt. Walker v. Smith, 28 Ala. 569. Also, where a person is compelled, by operation of law, to pay a debt, which another in equity and good conscience ought to pay, he may recover the amount of such person. Bank v. Smiley, 27 Me. 225. It bas been held that a surety on the official bond of a sheriff, who has paid a judgment recovered against him for his principal's default in failing to return or make the money on an execution, may recover the amount paid from the defendant in execution on proof of an agreement between him and the plaintiff therein that suit should be instituted against the sheriff and his surety, and, if the money could be made out of the latter, the defendant in execution should no longer be pursued. Evans v. Billingsley, 32 Ala. 395. The principle on which the case last cited rests is that where a person owes a debt, and by any trick, deceit, or contrivance causes another to pay it, the party paying it may maintain an action against such person for money paid, and the means used to bring about such payment is immaterial. Cross v Cheshire, 7 Exch. 43.
The following facts are undisputed: On June 7, 1887, Farabee Hunter & Co. drew a sight draft on defendant for $370.86, being the price of a car-ioad of corn sold by them to defendant. The draft was forwarded for collection to the Birmingham National Bank. The plaintiff was in the employ of the bank, and had charge of its collections. The bank paid the entire amount of the draft to the holders, and took plaintiff's notes for the amount, which, it is alleged, he failed to collect. The material fact controverted is whether defendant paid the plaintiff the full amount of the draft, or whether plaintiff, by mistake, collected only $52.90 as being its full amount, and thereupon stamped it “Paid,” and delivered it to defendant. An action for money paid cannot be maintained unless there has been a payment of money or its equivalent. If the notes of plaintiff, however, were accepted and taken by the bank as payment, and defendant's liability, except as to plaintiff, was discharged, this is equivalent to a payment in money, and is such payment as will uphold an action for money paid. The institution of legal proceedings is not requisite to constitute a compulsory payment. If the plaintiff made the payment to the bank because of a legal liability, the payment is not voluntary. The bank, having received the draft, and having undertaken its collection, was liable to the holders for any loss occasioned by the negligence of its employe; and the plaintiff, being an employe of the bank, is responsible