Court Opinion

ID: 6677820
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:17:45.015754+00
Date Added: 2024-06-11T16:00:45.120090
License: Public Domain

Mr. Chief Justice MoIver,
dissenting. While I concur in all other respects in the opinion prepared by Mr. Justice McGowan, I can not agree with him in sustaining the plea of *185usury set up by the executors against the claim presented by the American Freehold Land Mortgage Company of London against the estate of the testator, John A. Brown. That claim is based upon a note, secured by a mortgage, executed on the 28th day of June, 1887, whereby the said John A. Brown promised to pay to the said Mortgage Company the sum of seventy-five hundred dollars, on the 28th of June, 1892, with interest from date at the rate of eight per cent, per annum. Under the law as it is stood at the time of the execution of this contract, parties might lawfully contract in writing for the payment of interest at any rate they might agree upon, provided such rate did not exceed ten per cent, per annum. Act of 1882, 18 Stat., 35. It is is obvious, therefore, that this contract does not, on its face, show any taint of usury; and, on the contrary, the parties might have lawfully contracted for interest at the rate of ten instead of eight per cent. But while this is so, yet it does not follow necessarily that there was no usury in the transaction; for if the borrower can show that, notwithstanding the fact that the contract on its face shows no usury, yet, as a matter of fact, there was usury in the transaction, he is at liberty to do so; the burden of proving that is, however, upon the borrower. Usury is an affirmative defence, which must be pleaded and proved by the party seeking to avail himself of such defence. Ex parte Monteith,. 1 S. C., 227. The question, therefore, is whether respondents have succeeded in proving that there was usury in this transaction.
Without undertaking to question any of the findings of fact by the Circuit Judge (although some of them, perhaps, may be open to objection), or to enter into any consideration of the testimony in the case, it seems to me that the real question in the case is, does the mere fact that the lender knows, when he advances the money, that the borrower had contracted to pay, out of the sum loaned, an intermediary employed to negotiate the loan an exorbitant charge for -commissions, in any way affect the lender, so as to taint the contract with usury,- unless the lender was induced to make the loan by participating in, or expecting to participate in, the benefits to be derived from such charge of commissions? Upon this question we have no *186authority in this State, so far as I am informed, and the authorities elsewhere are directly conflicting, being, as I think, pretty evenly divided, so that this court is free to decide between these conflicting views. Without burdening this opinion with any review of the cases cited to sustain one side or the other of this question, all of which I have carefully examined, I will content myself with saying, that I am decidedly of opinion that those cases which hold that mere knowledge on the part of the lender that the borrower has contracted to pay the intermediary employed to negotiate the loan an exorbitant charge for his services, and the services of those whom he may employ, cannot and ought not to affect the lender, unless it is shown that he either participated in, or expected to participate in, the benefits to be derived from such charge. It seems to me that the true rule upon the subject is no where better stated than by Bleckley, chief justice, in the case of Merck v. American Freehold Land Mortgage Company, 79 Ga., 213, reported, also, in 7 S. E. Rep., 265, in these words: “Where the lender of money neither takes, nor contracts to take, anything beyond lawful interest, the loan is not rendered usurious by what the borrower does in procuring the loan and using its proceeds. Thus, that the borrower contracts with one engaged in the intermediary business (of) procuring loans, to pay him out of the loan for his services, and does so pay him, will not infect the loan, the lender having no interest in such intermediary business of its proceeds.”
I suppose that in most cases a person desiring to borrow money, in order to effect his object, is compelled to incur some expense, either directly or by the employment of a,n agent; and what possible concern the lender can have in the expenses which the borrower may see fit to incur in obtaining the money which he wishes to borrow, I am unable to conceive. A person having money to lend is only bound to see to it that his contract is within the law, and is under no obligation whatever to concern himself with a contract which the borrower chooses to make with a third person, in which the lender has no interest. If a person residing in the country desires to borrow money from another person residing in a distant city, and instead of *187negotiating the loan himself, chooses to employ an agent to visit the city for the purpose, the fact that the lender knows that the borrower has paid, or has contracted to pay, suck agent not only his actual expenses, but also an exorbitant charge for his skill and services in negotiating the loan, cannot affect the lender, who has nothing in the world to do with any agreement between the borrower and intermediary agent as to the compensation which the latter is to receive. It is none of the business of the lender, and he has no right to interfere with or concern himself about it. If, then, the lender has no right to dictate or control the terms of an agreement between the intermediary agent and the borrower for the compensation of the former, I do not see upon what principle of law or justice the lender can be held responsible for, or be affected by, such agreement. Nor do I see how the fact that the intermediary agent employed by the borrower to negotiate the loan is also the agent of the lender, either special or general, can affect the question. Even when that is so, the fact still remains that the money which the borrower pays, or contracts to pay, to the intermediary, is not paid “for the hiring, lending, or useofmoney or other commodity,” but is paid for the services of the intermediary — a totally different, thing.
But what is more important, is that this defence of usury rests solely upon statute, and cannot be sustained until it is shown that the provisions of the statute have been violated. The first section of the act of 1882, above cited, provides that: “No greater rate of interest than seven (7) per centum per annum shall be charged, taken, agreed upon or allowed * * * for the hiring, lending or use of money or other commodity, except upon written contracts, wherein, by express agreement, a rate of interest not exceeding ten per cent, may be charged. No person * * * lending or advancing money or other commodity upon a greater rate of interest shall be all owed to recover any portion of the interest so unlawfully charged,” &c. Now, until it is shown that the lender has either “charged, taken, agreed upon or allowed” a greater rate of interest than the statute prescribed, it is very clear that there has been no violation of the statute; and until it appears that the person lending *188or advancing the money has charged a greater rate of interest than that allowed by the statute, such person does not forfeit his right to recover any interest. The fact that the borrower has paid, or contracted to pay, some one else an amount, however exorbitant, not for the “hiring, lending or use of money,” but for the services of such person in negotiating the loan, cannot possibly affect the question, for that does not come within the terms of the statute. '
Even assuming, therefore, that the Mortgage Company well understood, at the time they advanced the money, that the borrower was under a contract to pay Duncan out of the money his exorbitant charge as commissions for his services and the services of those whom he employed, I am unable to perceive upon what principle that could affect the contract between Brown and the Mortgage Company, for there is not the slightest testimony, so far as I can see, that the Mortgage Company either received, or expected to receive, any portion of the amount which Brown had agreed to pay Duncan for his services. All that the company contracted for, and all that it has ever demanded, is lawful interest.
I need not go into any consideration of the amount which' should have been allowed, as my main object is to put on record my decided objection to the doctrine that mere knowledge on the part of the Mortgage Company of the contract between Brown and Duncan is sufficient to infect the claim of the Mortgage Company with usury.
Judgment affirmed.