The Union Central Life Ins. Co. v. Champlin ( 1901 )

Opinion of the court by

Hainer, J.:

The only question involved in this case is the validity of that provision of the note which provides that the right to make payment of said note at any time is waived if tbe money tendered is borrowed, in whole or in part, elsewhere. It is contended by. the appellant that this provision in the note is a valid and binding agreement in the mortgage, and thát the conrt erred in holding said agreement to be void for being contrary to public policy.

The record in this' case shows that the debtor tendered to the creditor the full amount of the principal and interest that was due upon his obligation, and the sole objection made by the creditor for not receiving the amount tendered, was because the debtor had refused to make an affidavit that he did not borrow the money, in whole or in part, elsewhere. We think it is clear that the creditor has no right to impose such a condition upon the debtor. It is sufficient if the debtor tendered the amount of money that was due. It is true that a creditor has a right to stipulate in a contract any particular kind of money to discharge an indebtedness, for instance as gold coin of a certain weight and fineness; but he has no power to stipulate the source from whence the money is obtained to discharge the debt. It could not affect the rights of the creditor if the debtor borrowed the money elsewhere, unless it was intended by the creditor to compel the debtor to borrow from the creditor in the event he desired to discharge the debt. To uphold such an agreement would be equivalent to holding that the debtor must borrow from the creditor and not elsewhere, if he desires to discharge the indebtedness before the loan matures.

Mr. Story in his work on Conflict of Laws, section 546, after reviewing the authorities, deduces the following rule:

“Public policy is in its nature- so uncertain and fluctuating, varying with the habits and fashions of the day, with the growth of commerce and the usages of trade, that it is difficult to determine its limits with any degree of exactness. It has never been defined by the courts, but has been left loose and free from definition in the same manner as fraud. This rule may, however, be safely laid down, that whenever any contract conflicts with the morals of the time, and controvenes any established interest of society, it is void, as being against public policy.”

Mr. Greenhood in his work on Public Policy, says:

“By public policy is intended that principle of the law which holds that no subject can lawfully do that which has a tendency to be injurious to the public, or against the public good, which may be termed the policy of the law, or public policy in relation to the administration of the law. The strength of every contract lies in the power of the promisee to appeal to the courts of public justice for redress for its violation. The administration of justice is maintained at public expense; the courts will never, therefore, recognize any transaction which, in its object, operation or tendency, is calculated to be prejudicial to the public welfare.”

In volume 15, page 934, American and English Encyclo-paedia of Law, (second edition), the rule is thus stated:

“Where a contract belongs to a class which is reprobated by public policy, it will be declared illegal, though in that .particular instance no actual injury may have resulted to the public, as the test is the evil tendency of the contract and, not its actual -result.”

The principle deducible from the authorities is that any stipulation, agreement or contract which forbids the debtor from discharging his obligation by borrowing money, in whole or in part, except from the creditor, is subversive of the rights of the individual, injurious to the public at large, and is therefore void on the high ground of public policy. ' We therefore hold that the stipulation in the note sued on in this action which forbids the maker from discharging his obligation by tendering to the payee money which was borrowed, in whole or in part, elsewhere, is in clear contravention of public policy and is therefore null and void.

For the reason herein stated the judgment of the district court is affirmed, at the cost of the plaintiff in error.

Burford, C. J., who presided in the court below, not sitting; all the other Justices concurring.