"(6) Among the by-laws enacted by the general board of directors of the defendant were the following: 'At any time after one year, and before two years, the certificate (or stock) may be returned, and members will be entitled to receive for each share the money paid into the capital fund of such shares, with six per cent. interest. At any time after two years, and before three years, the certificate may be returned, and the member will be entitled to receive for each share the money paid into the capital fund on such share and seven per cent. interest, and after three years eight per cent. interest. A withdrawal fee of fifty cents per share will be charged. A member desiring to withdraw his shares shall be required to give the association sixty days' notice of such intended withdrawal. The association shall not be required, without the consent of the directors, to use more than one-half the money received from monthly payments in any one month for the payment of withdrawing stock. Members who have obtained loans cannot withdraw their shares unless the loan is paid. Payments of each share shall be 70 cents per month, and shall commence one month from date of certificate, and shall be due each subsequent month, on the day of the month on which certificate is dated: provided, however, that the board of directors may require monthly payments on all or a portion of the stock outstanding, to be paid on the same day of the month. One dollar per annum on each share shall be passed to the expense fund, as provided in the charter.' All money due from members of the association, or from it to the members, shall be payable at the home office in New Orleans, La.' 'If the loan is granted, interest for the first six months may be deducted from the amount of the loan.' 'Loan on real estate may be repaid at any time after one year, on thirty days' notice.' If a borrower thereon neglects to pay interest due on monthly payments for a period of six months from the time the same shall be due, then the whole principal mentioned in the mortgage and note or bonds shall at once become due and payable without notice, and proceedings may be commenced forthwith to foreclose such mortgage, or to collect said bond or note, in such manner as the board of directors may deem best. All contracts made by or with the association shall be deemed to have been made at the home office in New Orleans, La.

"(7) On the 12th day of May, 1891, the defendant corporation loaned to the plaintiff the sum of $2,500, deducting therefrom the sum of $75, which the defendant retained as interest on said sum for the first six months. The plaintiff executed and delivered to the defendant corporation his promissory note for the sum of $5,000, which note was in all respects as set forth in his original petition. At the same time plaintiff executed and delivered to the defendant a mortgage or deed of trust, in substance as follows: On May

12, 1891, plaintiff executed and delivered his deed of trust to said corporation on certain lots described in his petition to secure the payment of a note for the sum of $5,000, bearing the same date, due six months after date, payable to the order of said corporation at its office in New Orleans, La., together with interest thereon at the rate of $12.50 per month from date, payable monthly, and, in case of legal proceedings, 10% attorney's fees, insurance, costs, and expenses, secured by pledge of the installments already paid in, and those to be paid in, on fifty shares of stock of said association, in the name of the plaintiff, and also secured by the aforesaid deed of trust. It is provided in said note that, so long as the interest and installments on said stock are punctually paid, the payment of the obligation shall not be demanded, but extended until, exclusive of interest dividend, the amount of said installment and dividend credit thereon shall be equal, exclusive of interest, to the amount of this obligation, at which time the certificate representing such stock shall be canceled, and the association released from all liabilities thereon, and the note canceled and returned to the plaintiff, each offsetting the other. It is further provided in said note the failure to pay the interest and installments on said shares for six months renders it due, and authorizes the association to sell said stock as provided in its charter; and it is further provided in the deed of trust that, on a failure to pay the interest and said installments for a period of six months, that the trustee or substitute shall sell the property at the request of the Southwestern Building & Loan Association, or to the holder or holders of said note.

"(8) At the time the plaintiff subscribed for the first ten shares of stock of the defendant corporation a certificate for said shares was issued to him, which was, in substance, as follows: No. 1,857. Series No. 4. Ten shares, for $1,000. It shows on its face that the plaintiff has subscribed for and owns ten shares of stock, and holds the same under the following conditions: He was to pay 70 cents monthly for each share, payable on the day of the month on which this certificate is dated, until such shares mature or are withdrawn, payment due and payable at the home office at New Orleans, La., provided that any branch may elect a local treasurer, and payments made to him at the home office for transmission, he being deemed the agent of members, and not of the association. It is further provided that the monthly installments, together with fines and interest, shall go to the capital fund, and authorizes the association to deduct $1 per share per annum for the expense fund. In default of the monthly payment, a fine of 10 cents is assessed. Stock is nonforfeitable, but, in case of default in monthly payments, the shares of stock may be sold, and proceeds applied--First, to the payment and expenses of

the sale; second, to the payment of monthly dues, arrears, and fines, and balance to the owner of stock. The association has the right to bid therefor an amount equal to that which is due for its monthly dues unpaid and fines, and, if it becomes a purchaser of the shares, stock shall be canceled, and all funds tanding to the credit of such stock forfeited o the other shareholders. It is further provided that stock on which no loans are made may be transferred on the books of the association, when not in arrears for dues or fines, and shares on which loans have been made inay be transferred to the purchaser of the property on which the association has its lien by the consent of the board of directors. lt is further provided in the certificate at the end of each fiscal year the profit arising from interest, premiums, fines, and other sources shall be apportioned among the shares in good standing; that, whenever monthly payments on the shares and the profits apportioned to such shares amount to the sum of $100, it matures the said shares, and monthly payments shall cease. There are other provisions in this certificate which do not affect this case.

"(9) The certificate for the Luckett shares is in all respects the same as the certificate for the ten shares, except the number, the name of the shareholder, and the amount.

"(10) Plaintiff paid to the defendant corporation all his monthly stock dues on said fifty shares of stock, amounting to the sum of $35 per month, and the monthly interest, amounting to the sum of $12.50 per month, up to and including January 19, 1895, beginning with June 10, 1890. After January 19, 1895, plaintiff failed and refused to make any further payments to the defendant corporation whatever.

"(11) A short time prior to July 10, 1896, the defendant corporation, through its board of directors, exercised its option, and declared the entire principal and interest on said loan to be due, and directed the trustee, Julian G. Hedrick, named in said deed of trust, to advertise the land described in said deed of trust for sale at public outcry, in accordance with the laws of Texas, which the said Hedrick was proceeding to do when he was restrained by writ of injunction issued from this court July 10, 1896.

"(12) Plaintiff in open court waives the issue of business homestead set forth in his pleading, and agrees, so far as this suit is concerned, the property described in said deed of trust shall not be considered as his homestead.

"(13) At the time plaintiff and his wife executed and delivered said deed of trust to the defendant corporation, plaintiff hypothecated and transferred to the defendant corporation all of said shares of stock for the purpose of securing the said loan, installments, and dues thereon.

"(14) At the time plaintiff subscribed for said ten shares of stock, and purchased said

forty shares of stock from said Luckett, the laws of the state of Louisiana, as set forth in Exhibit C of the defendants' first amended original answer, were in force, have continued in force, and are still in force.

"(15) The laws of the state of Louisiana, as the same have been finally and authoritatively construed by the court of last resort in that state, to wit, the supreme court of said state, provide that the said contract between the plaintiff and the defendant corporation is not such a contract as can involve or permit the defense of usury as between a stockholder and the association.

"(16) The provisions of the charter of the defendant corporation and the by-laws herein before set forth were not devised by the defendant corporation for the purpose of evading usury laws of the state of Texas.

"(17) The first payment of interest on said loan made by plaintiff to the defendant corporation was on January 9, 1892, and was for the sum of $12.50. Since that date the plaintiff paid to the defendant corporation, as interest on said loan, the sum of $12.50 each month, up to and including January 19, 1895.

"(18) Prior to the time of the issuance of said stock by the defendant corporation to plaintiff said corporation had duly complied with the laws of Texas relative to foreign corporations doing business in this state, and had obtained a permit to do business in the state.

"(19) In October, 1895, the plaintiff gave the defendant corporation the notice in writing required by the by-laws of the defendant corporation for the withdrawal of his stock, but did not pay to said corporation the bal ance on said loan still due, nor offer to pay the same, claiming that he had paid said loan in full and wanting settlement."

Conclusions of Law.

"(1) Under the decision of the supreme court of this state, the loan contract between plaintiff and defendant corporation, as embodied in the note and deed of trust mentioned in the conclusions of fact, was and is usurious, and therefore all the payments made by the plaintiff to the defendant corporation as interest, including the sum of $75 retained by the defendant corporation at the time it made the loan, should be applied to the satisfaction and payment of the original amount of the loan, to wit, $2,500. The plaintiff having made forty-five payments of interest, of $12.50 each payment, and having also paid the sum of $75 as interest in advance, he is entitled to have the sum of $637.50 deducted from the $2,500 originally loaned him by the defendant corporation, which leaves a balance due from the plaintiff to the defendant corporation of $1,862.50 on said loan.

"(2) The plaintiff, never having complied with the provisions of the by-laws with reference to the withdrawal of stock where a loan is made thereon, is not entitled to have the withdrawal value of said stock credited on said loan.

"(3) The defendant association is entitled to recover all monthly stock dues held by him that have accrued since January 19, 1895, being $35 per month, amounting to $1,490.

"(4) The defendant corporation is also entitled to recover of the plaintiff fines on the unpaid monthly stock dues at the rate of 10% per share for each installment of stock dues that is in arrears, amounting to the sum of $200.

"(5) The defendant corporation is entitled to recover of plaintiff the sum of $186.25, being 10% of the balance of said loan, as aitorney's fees.

"(6) The defendant corporation is entitled to recover judgment against the plaintiff for the aggregate of said amounts, to wit, the sum of $3,648.75, with interest from this date at the rate of 6% per annum; and is entitled to have its said mortgage on the property described therein, and its said lien on said stock, foreclosed.

"(7) The decisions of the supreme court of this state holding contracts like the one in this case usurious do not impair the obligation and validity of contracts, within the meaning of the constitution of the United States."

Opinion.

1. The first assignment of error complains that the court erred in not holding the contract of loan usurious, and in not rendering judgment for the plaintiff canceling the note and mortgage. The court did hold the contract to be usurious, and applied the interest payments to the satisfaction of the principal of the debt. It found, as a matter of fact, that the charter and by-laws of the defendant corporation were not devised for the purpose of evading the usury laws of the state of Texas, but it did not find that this particular character of contract was required by the charter and by-laws of the corporation, nor that the form of the contract used was not adopted for the purpose of covering up usury, nor that the contract was in good faith intended to be performed in Louisiana. The corporation was doing business in this state under a permit from the state, and the contract, by its terms, manifests that it was the intention of the parties that it should be performed in this state. The contract is of the same character as that held usurious in Association v. Griffin, 90 Tex. 480, 39 S. W. 656. And in that case it was held that the fact that the corporation was chartered under the laws of Dakota, and the note made payable in that state, where the contract, under its laws, was not usurious, would not prevent the application of our usury laws. As to the other proposition raised by the assignment, that the note and mortgage should have been canceled by the judgment,-we will dispose of that question hereafter.

2. The second assignment urges that the court erred in not allowing appellant credit upon the loan debt of $2,500 of his stock pay

ments of $35 per month, in addition to the

$637.50 paid as interest. The amount paid and denominated "interest" was $637.50; the amount of monthly stock payments made prior to the loan was $350; the amount of such stock payments made after the loan was $1,500,-the whole aggregating $2,487.50. This amount, it will be seen, only lacked $12.50 of being the amount of the original loan, $2,500. The appellant paid regularly the interest and stock payments up to and including January 19, 1895, at which time he had paid, as before stated, $2,487.50 in all, not including membership fees and dues. In October, 1895, appellant gave notice to the company in writing, as required by the bylaws, for the withdrawal of his stock, claiming that the full amount of the loan had been paid by him. In July, 1896, the company treated him as in default, and declared the debt, principal and interest, to be due, and directed the trustee to sell under the deed of trust. The trustee was proceeding to execute this order when the injunction in this case was issued, and he was thereby restrained from doing so. The by-laws expressly permit the withdrawal of stock, and provide that the monthly stock payments previously made shall be returned to the stockholder, with certain specified rates of interest thereon. It is required, however, in cases where members have obtained loans, that they cannot withdraw their stock and receive back the installments paid, unless the loan is paid. It is further provided that the stock is nonforfeitable, but, in case of a default, a sale of the stock is provided for. Had appellant's loan of $2,500 been fully paid up at the time he made the demand for withdrawal and settlement, he would have been entitled, under the plain express terms of the contract, to the withdrawal privileges. The law will make the application of the usury paid by him as payment upon the principal debt. This sum, and the stock payments which he had made, lacked only $12.50 of meeting the entire loan. The loan company was demanding a continuation of the regular installments, including the usurious interest, while appellant was contending that the debt was paid. The sale attempted under the deed of trust being restrained, the rights of the parties are to be judicially determined, as invoked by the pleadings of the parties.

There is nothing in the contract of the parties which has worked a forfeiture of appellant's right to have his stock payments applied in liquidation of the loan debt. There was no sale of the stock and purchase by the company, as provided for in the by-laws. The matter stands just as if the company were called upon to make an adjustment of the whole matter. Appellant in his pleadings tenders payment of the amount which it may be determined he is justly due and owing, and asks a cancellation of his note and deed of trust. We are of opinion that

he is not entitled to have the membership fees of $50 applied upon the debt, as is contended for by him. Association v. Grittin, 90 Tex. 480, 39 S. W. 656. But we think it quite clear that he is entitled to have that disposition made of his stock payments. The company could not require that he should pay more usury before availing himself of the withdrawal privilege provided for in the by-laws of the company. As to the $200 fines allowed by the court below, there was no such default as justified such fines, and they should not be recovered by the company. As to the attorney's fee of 10 per cent. provided for in the contract, the appellant, having brought the company into court, and 'contested all indebtedness, made himself liable for 10 per cent. attorney's fees upon the amount finally recovered by the company. Judgment will here be rendered, in accordance with the views expressed, reversing the judgment of the court below, and decreeing in favor of appellant the cancellation of the note, mortgage, and shares of stock, upon appellant's paying to the clerk of this court, for the use and benefit of said company, within 20 days, such sum as will cover $12.50, with 6 per cent. interest from January 19, 1895, 10 per cent. attorney's fees thereon, and all costs of the court below; and, in case he shall fail to comply with this requirement, said loan company shall have judgment for such sum and a foreclosure of the deed of trust. Reversed and rendered.

GARRETT v. GARRETT.

(Court of Civil Appeals of Texas. June 25, 1898.)

CLAIM

EVIDENCE-TRANSACTIONS WITH DECEDENT-SECONDARY EVIDENCE ADMISSIBILITY AGAINST TESTATOR RIGHT TO SUE EXECUTOR. 1. By Rev. St. 1895, art. 2302, in actions by or against executors in which judgment may be rendered against them as such, neither party shall testify against the other as to any transaction with the testator unless called by the opposite party. Held, that a plaintiff suing an executor on an account against the testator cannot testify in his own behalf that decedent had an understanding with the witness that the balance due was to become due at a certain date, and that he told witness that he owed him.

2. Where one sued an executor on an account against his testator, the statement of a witness that testator's account books showed that he was indebted to plaintiff is not admissible where it is not shown that the books were lost, or any excuse given for failure to produce them.

3. Where a judgment admitting a will to probate, and appointing an executor, was appealed from, as under Rev. St. 1895, art. 2262, the matter was triable de novo, the judgment below was annulled by the appeal, and the executor could not act nor be sued pending such appeal.

Appeal from Rains county court; James A. Boyd, Judge.

Action by W. H. Garrett against D. L. Garrett, administrator of James Garrett, de

ceased. Judgment for plaintiff, and defendant appeals. Reversed.

Perkins, Gilbert & Perkins and B. M. McMahon, for appellant. Alex. Mason, for appellee.

BOOKHOUT, J. This suit was instituted September 18, 1897, in the county court of Rains county, Tex., upon an account dated September, 1894, for the purchase from appellee by appellant's testator of certain promissory notes, and to establish said account as a claim against the estate of the testator, James Garrett, deceased. It was alleged that the notes were sold by appellee to James Garrett, now deceased, in September, 1894, at a price then agreed upon, being the face of the notes, with a discount of 15 per cent. thereon. It was alleged that the account had been presented to the executor, and that he had declined to either allow or reject it. There was a prayer for the account to be established as a claim against the estate of James Garrett, deceased, and that the same be paid according to law. The executor pleaded general denial, statute of limitations of two years, and that after being appointed executor of the estate of James Garrett, deceased, by the county court, an appeal was taken from said order, and the judgment appointing him superseded, and that said appeal was still pending in the district court of Rains county undetermined. The case was submitted to the court without the intervention of a jury, and resulted in a judgment for plaintiff in the sum of $208 against the estate of James Garrett, deceased, to be paid according to law. From this judgment, the executor has prosecuted his appeal in due form to this court.

Appellant's first assignment of error reads as follows: "The court erred in permitting the plaintiff, W. H. Garrett, to testify that the deceased, James Garrett, had an understanding with witness that the balance due on the account sued on was to become due in July, 1896, and that the deceased, James Garrett, told witness W. H. Garrett in July, 1896, that he owed witness; because the witness was an interested party, and could not testify to a declaration of the deceased, and to contracts made with him and deceased which were not in writing.-all of which is fully shown in defendant's bill of exceptions No. 1." The record shows that W. H. Garrett, in his own behalf, testified as set forth in the foregoing assignment. The testimony was objected to, the objection overruled, and a bill of exceptions taken. This evidence was clearly incompetent, under article 2302, Rev. St. 1895. Parks v. Caudle, 58 Tex. 216; Reddin v. Smith, 65 Tex. 26; Johnson v. Lockhart (Tex. Civ. App.) 40 S. W. 640.

Appellant's third assignment reads: "The court erred in permitting the plaintiff to

prove by the witness T. C. Spradlin that after the death of James Garrett, deceased, the witness and plaintiff, W. H. Garrett, and defendant, D. L. Garrett, examined the books of deceased, and, from the best they could tell, deceased owed plaintiff about $208, and witness told defendant that the witness believed James Garrett, deceased, owed plaintiff about $208; because the books of deceased were better evidence, and because the statement by witness to defendant was hearsay,-all of which is shown by defendant's bill of exceptions No. 3." The record shows that the witness Spradlin, in behalf of appellee, testified, over objection by appellant, that he (witness) examined the books of James Garrett after his death, and, from the best he could tell, deceased owed plaintiff $208, and further testified as set forth in said assignment of error. Objection was made to the testimony, as stated in the foregoing assignment, and the objection was overruled, and the evidence admitted, to which appellant took a bill of exceptions. The books of the deceased were not shown to have been lost, and there was no excuse given for the failure to produce the books upon the trial. The books themselves were the best evidence. The statements of the witness as to the contents of the books were purely hearsay, and the evidence was incompetent. If the appellee desired to show an indebtedness due him by the books of James Garrett, deceased, he should have introduced said books in evidence. Baldridge v. Penland, 68 Tex. 441. 4 S. W. 565.

By the fourth assignment appellant claims that the account sued upon was barred by the statute of limitations of two years. The evidence upon this contention is conflicting. In view of the disposition we make of this case, we do not deem it proper to comment upon the testimony. The statute prescribes that, upon the death of any person against whom there may be a cause of action, the law of limitation shall cease to run against such cause of action until 12 months after such death, unless an administrator or executor shall have sooner qualified according to law upon such deceased person's estate, in which case it shall cease to run only until such qualification. Sayles' Rev. Civ. St. 1897, art. 3369.

Appellant's fifth assignment reads: "The evidence shows that the defendant, D. L. Garrett, has got no legal authority to allow the claim against the estate of James Garrett, deceased, and did not have, and did not have when the claim sued to establish was presented to the defendant; because the judgment of the court admitting the last will and testament of James Garrett, deceased, to probate, and appointing D. L. Garrett executor of said will, had been appealed from, and was pending in the district court of Rains county, Tex., when said account was presented to defendant for allow

ance, and, by virtue of said appeal, defendant's acts as executor of the estate of James Garrett, deceased, were estopped." The will of James Garrett, deceased, was admitted to probate, and letters of executorship granted appellant on April 2, 1897, and he qualified as such executor on April 25, 1897. An appeal was taken from said order to the district court by parties contesting the probate of the will, the order granting letters of executorship to appellant, and said appeal was perfected April 30, 1897. The account sued upon was sworn to May 31, 1897, and was presented to appellant for allowance, as executor, in the month of September, 1897; and this suit was instituted on said account September 18, 1897. The term of the district court of Rains county to which the appeal was prosecuted did not begin until the last of November, 1897, and said appeal was pending at the time of the presentation of the account to appellant for allowance or rejection; and, at the time of the institution and trial of this suit, said appeal had not been disposed of. Under our statute, trials in the district court on appeal from the county court in probate matters are had de novo; and, such being the case, the judgment in the county court is annulled by the appeal, and the executor during the pendency of such appeal is without authority to act. Rev. St. 1895. art. 2262; Moore v. Jordan, 65 Tex. 395; Kelly v. Settegast, 68 Tex. 13, 2 S. W. 870; 1 Williams, Ex'rs, *490. The record clearly shows that, pending the appeal from the county to the district court, the account was presented to appellant as executor for his acceptance or rejection. He has no authority to act pending such appeal; and as no suit could be maintained for the account until rejected by a legal representative of the estate of James Garrett, deceased, it follows that this suit cannot be maintained. Rev. St. 1895, art 2082. The judgment will be reversed, and the cause dismissed. Judgment reversed, and cause dismissed.

1. A merchant, being involved, organized a corporation, taking all but two shares of its stock in his own name, and transferred his stock in trade to it as a consideration therefor. He then sold all the shares but one, chiefly to members of his own family. He was manager of the corporation, and, in making the trade, acted for both parties. Held, that a finding that the corporation was a party to the fraud was justified.

2. Rev. St. 1895, art. 219, requires an application for garnishment to state that the gar1 Writ of error granted by supreme court.