Case Name: Gokey v. Knapp
Court: Iowa Supreme Court
Jurisdiction: Iowa
Decision Date: 1876-09-19
Citations: 44 Iowa 32
Docket Number: 
Parties: Gokey v. Knapp.
Judges: 
Reporter: Iowa Reports
Volume: 44
Pages: 32–35

Head Matter:
Gokey v. Knapp.
1. Principal and Agent: authority op agent: usury. Where an agent for the loaning of money lent it at usurious rates, it was held that he would not be presumed to have had the authority to make the loan upon such conditions, and that his act would not affect his principal.
Appeal from Floyd Cvreuit Court.
Tuesday, September 19.
This suit was brought to cancel of record two mortgages executed by plaintiff to defendant upon a certain piece of land in Floyd county. The defendant denied the allegations of the petition, and by cross-petition prayed for a foreclosure of the mortgages. The plaintiff for a reply to the cross-petition averred that the mortgages were usurious. The court made the following findings of fact and law.
“In the latter part of June, or the month of July, 1873, plaintiff, Gokey, applied to one Danforth for a loan of money to pay off a mortgage on Gokey’s land held by parties in Wisconsin. Danforth, at that time, agreed to let Gokey have the money, when it was wanted by Gokey, at fifteen per cent, and Gokey agreed to pay the fifteen per cent for the use of the money. Afterwards, in August, 1873, Danforth wrote to O. S. Knapp, his brother-in-law, then living in Chicago, for money to loan to Gokey and others, and on the 27th day of August, 1873, O. S. Knapp sent Danforth a draft from Chicago, Illinois, for $1,200 to be loaned by Danforth to Gokey and others who had applied to Danforth for the loan of money.
“2. Knapp had before that time, in the month of July or early part of August, sent Danforth $1,500 to be-loaned out.
“3. Calvin Danforth lives in Charles City, Iowa, and is engaged in loaning money for himself and others and in farming.
“J. The money loaned to plaintiff, for which the notes and mortgages set up in defendant’s cross-bill and answer were taken, belonged to O. S. Knapp, then of Chicago, Illinois.
“ 5. That all the agreement between Danforth and Knapp consisted of Danforth writing to Knapp for the money and telling Knapp that he could get ten per cent per annum for the money, and he sent the money t.o Danforth and authorized him to make the loan to plaintiff.
“ 6. Danforth, loaned Knapp’s money to plaintiff and that, at the time of the loan of the first amount, Danforth paid over to one Russell, the party who drew the papers, $180, who counted $160 of the money over to Gokey and paid Danforth $20 of the amount claimed by Danforth as his commission for making the loan.
“That at the time of second loan Danforth handed to the party $95 and kept $5, as per agreement between Danforth and Gokey.
“That Danforth kept said amount of $25 on two loans.
“That Knapp never received nor contracted to receive any of the $25 paid. ■ to Danforth, or any more than the ten per cent expressed on the face of the notes in suit, and never authorized Danforth to loan the money in any other way than at ten per cent interest, and never knew that Danforth ever' received any part of the money, but supposed and believed that plaintiff, Gokey, received the $180 on the first loan, and $100 on the second loan.
“That Danforth acted as the agent of defendant Knapp in the loan of this money.
“That Gokey received on the first note $160, and $95 on the second note.
' “That the $180 note was made September 2d, 1873, and the second note, for $100, was made October 21st, 18-73, and both were secured by the mortgages set out in Knapp’s cross-petition.
- “At the times the loans were made to Gokey the notes and mortgages were read over to him, and he knew they were made to Knapp.
“.Plaintiff, Gokey, is a Oanada-Erenchman, and imperfectly understands and speaks the English language. .
“ As law on the facts I find—
“That the taking of the bonus of $25 by Danforth, the agent of Knapp, made the contracts usurious, and find that Knapp is entitled to recover on said two notes the sum' of $160, the amount received by Gokey on the first note above ■the amount paid to Danforth, and $95 on the second note, being $255.
“That the school fund is entitled to judgment on the two contracts for $50.50.
“ That defendant Knapp is entitled to the $50 attorney’s fee, contracted for in the notes and mortgages.”
Judgment and decree were entered in accordance with said findings. Defendant appeals.
Starr, Patterson de Ramson, for appellant.
G. F. Boulton, for appellee.

Opinion:
Adams, J.
Although Danforth may have been the agent of Knapp for the purpose of loaning the money, and may have contracted for more than ten per cent interest, yet the loan was no.t necessarily usurious. An authority, to loan money at a legal rate of interest does not include by implication the authority to loan it at an illegal rate. An authority to violate the law will never be presumed.
When Danforth exacted, in addition to the ten per cent interest, which was embraced in the note, something for the benefit of himself, he went outside of the legitimate purposes of his agency; and as Knapp did not authorize it, either expressly or by implication, he should not be affected thereby. Story on Agency, section 170; Tyler on Usury, 156; Condit v. Baldwin, 21 N. Y., 219; Bell v. Day, 32 Id., 165; Rogers v. Buckingham, 33 Conn., 81.
Reversed.