The representative. [volume] (St. Paul, Minn.) 1893-1901, 1894-03-21
WHAT FORMS USURY
A Very Important Letter ON the
Usury Question.

l received letter from a farmer
near CrOOkston, Minnesota. in refer
ence to case where he made loan of
$1,000, received but 81 800, gave note
and mortgage for $1,000 at per cent,
thus paying 10 per cent, instead of
10 per cent. l referred the letter to
Mr.. Il. r. Kane, (see his ADVERTISE
ment in another columnD, and he
writes me as follows:
*x*
ST. PAUL, Feb. "a, '94
HON. IGNATIUS DONNELLY,
Your inquiry in connection with
your correspondent letter just re-
ceived, and in reply thereto permit
me to say: There is no uncertainty
in the laws of this state relating to
usury; but there is always an element
of uncertainty, as to whether or not
the facts and circumstances of par
ticular case, will bring that case
within the meaning of the law. The
failure of your correspondent to dis
close many material circumS tanceS,
surrounded and connected with the
transaction to which he refers, rem
ders it impos sible to determine
whether or not he is the victim of an
injustice for achich the lar giues him a
remedy.
Assuming however, the existence
of facts which his letter does not dis
close. | will state my opinion on the
law of the case providing my assump-
tiOnS were true.
If the party, company, or corpora
tiOn, who lent the money to your cor
respondent be one and the same who
retained the two hundred dollars as
a bonus or commission. Then in my
opinion there is no doubt of the
transaction being usuriOus. And
that would be true whether the note
and mortgage was executed in their
name, or in the name of some assist
ant or friend, for the purpose Of COW
ering the transaction. The law con-
siders the substance rather than the
form of the transaction.
If the company or corporation who
retained the two hundred dollars
from your correspondent was the
agent of an eastern house or corpora
tion, having in their possession money
belonging to said eastern concern for
the purpose of loaning the same ac-
according to their discretion. or if
they were receiving commission
from their eastern correspondents
for all loans made for said eastern
house. Then the principal would be
charged with a knowledge of the il
legal conduct of the agent, and under
the law would be held liable and the
transaction would be held usurious.
If the real party in interest, that
is the party who really loaned the
money. received any portion of the
commission retained knowingly, he
would be p,ina fucia guilty of charg-
ing usurious interest. and the con-
tract would be usurous, although
there might be circumstances sur
rounding the last transaction that
would relieve it from the taint of
usury.
If however the party retaining the
bonus was acting solely as the agent
of your correspondent, and your cor
respondent agreed to pay twice that
amount for his services, then there is
no privity between said agent and
the party lending the money. The
party retaining the commission how
ever must be in fact and reality the
sole agent of the borrower, and hav-
ing money in his hands for invest
ment for one party he cannot assume
to be the agent for persons applying
to him for loans, for public policy
prevents a man from acting, in such
a double capacity. Important ques-
tions to know in passing upon the
Bona FSdes of this transaction are the
following:
To whom was the mortgage en-
acted?
To whom are the payments of in
terest to be made? l mean who re-
ceives the money when paid in?
The nature of the so-called agents
ness,-banker, broker, etc.,
whether the grantee in the mort
gage, is resident of the state, and
if not where it does exist?
Many of those firms loan money OF
their own in the name of some Gum-
my in another state, and the dummy
uses them in like manner, but no such
chicanery when once exposed can
nullify the usury law.
T. r. KANE.
x*
Since then received tine following
letter:
RENvILLE, Minn., Feb. %, '94
HON. IGNATIUs DONNELLY:
short time ago there was an arti.