Case Name: WALTER B. HOBART v. DESIRE H. MICHAUD AND ANOTHER
Court: Minnesota Supreme Court
Jurisdiction: Minnesota
Decision Date: 1926-04-01
Citations: 167 Minn. 1
Docket Number: No. 25,201
Parties: WALTER B. HOBART v. DESIRE H. MICHAUD AND ANOTHER.
Judges: 
Reporter: Minnesota Reports
Volume: 167
Pages: 1–5

Head Matter:
WALTER B. HOBART v. DESIRE H. MICHAUD AND ANOTHER.
April 1, 1926.
No. 25,201.
Norton & Norton, for appellant.
Oppenheimer, Diclcson, Hodgson, Brown & Donnelly, for respondent.
Reported in 208 N. W. 191, 209 N. W. 39.

Opinion:
Quinn, J.
This is an action brought to restrain the foreclosure of a real estate mortgage, expunge it from record and to cancel the note secured thereby upon the ground that the indebtedness represented thereby is tainted with usury. The foreclosure was for the full amount of the note with interest. The cause was tried to the court, findings were made and judgment ordered in favor of the defendant Michaud. From a judgment entered upon the order, plaintiff appealed.
There is no conflict in the evidence except as to the claim of plaintiff that the respondent retained the sum of $100 from the amount of the loan as a commission to himself. The respondent admits that he retained $261.10 from the amount loaned, but he claims that he disbursed the same in payment of the expenses of making the loan, which plaintiff was liable for, as follows: $110 to Adelard Michaud as a commission for making the loan for appellant; $50 to respondent's attorney for examining the abstract and passing upon the title to the land; $1.10 for revenue stamps on note and $100 to himself for services in making an examination of the land and placing a value thereon as security for the loan.
Plaintiff was in need of a loan of $5,500 and so informed Adelard Michaud who undertook to procure the loan for plaintiff. He inter viewed respondent and arranged for a meeting, at the latter's office on September 14, 1923, at which time he went with plaintiff's father and talked the amount of the loan and the security over with respondent. The note for $5,500, payable in 90 days with interest at the rate of 6 per cent per annum, together with the mortgage in question securing the payment thereof, was prepared. Respondent required that the note and mortgage be executed, the mortgage recorded, and an abstract of title to the land, showing the record of the mortgage. The requirement was complied with, plaintiff paying the expenses thereof. In the meantime, respondent examined the land in company with appellant. The note, mortgage and abstract were delivered on the eighteenth of September, examined and approved by Mr. O'Neill, respondent's attorney, and the transaction closed by respondent paying the sum of $5,228.90 to appellant.
There is no material dispute in the testimony as to the respondent being a competent person to value the land as security for the loan, nor that the services were of the value charged, and the trial court so found. The sole question for determination is whether the expenses so charged were such as to constitute usury. In other words, do the facts of themselves show an intent on the part of the respondent to take and receive a greater compensation than 10 per cent allowed by law for the future use of the money? See Ward v. Anderberg, 31 Minn. 304, 17 N. W. 630; Swanson v. Realization & Deb. Corp. 70 Minn. 380, 388, 73 N. W. 165. It is the general rule that a lender, acting in good faith, may properly require of the borrower a reasonable compensation for services in connection with a loan in addition to the maximum legal rate, without rendering the loan illegal, even though the services so rendered may be such as the lender would ordinarily perform in his own interest, but the lender will not be permitted to cloak his usurious intent with pretended services. The findings of the trial court are to the effect that there was no such intent or corrupt motive connected with the transaction, and the evidence supports the findings. 39 Cyc. 981, and cases cited.
In Swanstrom v. Balstad, 51 Minn. 276, 53 N. W. 643, it was held that, upon a loan of money, the retaining by the lender, with the assent of the borrower, of a sum out of tbe amount loaned for services rendered by the lender to tbe borrower, and not for tbe use of tbe money, does not make tbe transaction usurious. The lender may require tbe borrower to' pay for tbe cost of examining tbe title to land offered as security and of inspecting and reporting upon tbe same as security. 89 Cyc. 982, note 63; Daley v. Minn. Loan & Inv. Co. 43 Minn. 517, 45 N. W. 1100. Nor does tbe payment of a commission to an agent render tbe transaction usurious. Mackey v. Winkler, 35 Minn. 513, 29 N. W. 337.
While it appears that tbe services of tbe lender required but little time and effort, and that tbe charge therefor was high, yet tbe borrower made no protest but quietly acquiesced until pay day. Tbe learned trial court found from tbe evidence that tbe services were so rendered and that they were of tbe value charged. There was proof in support of these findings and this court cannot interfere therewith. There was a specific finding that tbe $260 was disbursed for expenses in connection with the loan and that no part of it was retained by the lender as commission nor for tbe use of tbe money. Tbe burden, of course, was upon tbe borrower to establish tbe charge of usury. Central B. & L. Assn. v. Lampson, 60 Minn. 422, 424, 62 N. W. 544; Yellow Medicine Co. Bank v. Cook, 61 Minn. 452, 458, 63 N. W. 1093; Saxe v. Womack, 64 Minn. 162, 167, 66 N. W. 269.
Affirmed.