Court Opinion

ID: 8008738
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:55:52.135504+00
Date Added: 2024-06-11T16:35:59.112178
License: Public Domain

Black, J.
This was a suit to enjoin the sale of certain real estate under a deed of trust given to secure a promissory note made by the plaintiff, Israel Landis, and two other persons as his securities, for sixteen thousand dollars, due in two years after the date thereof with interest at the rate of ten per cent, per annum, interest payable annually. The note is payable to the defendant, Albe M. Saxton, executor of the estate of John Patee, deceased. The defendant filed answer in which he set up, the note and deed of trust and prayed for a foreclosure. Various payments were conceded to have been made on the note from time to time, and as the issues over the credit of date January 20, 1874, were ruled for the appellant, they need not be further eon'sidered. The contest in this court grows out of a claim of the plaintiff for a deduction of one thousand dollars from the face of the note, which was refused by the circuit court, and hence there was a decree of foreclosure from which the plaintiff appealed.
The facts as to the one thousand dollars are as fol*380lows : In 1868, and at the date of the note, Landis was embarrassed and went to Saxton to borrow fifteen thous- and dollars. He offered to pay Saxton a bonus of one thousand dollars for a loan of that amount of money, or for negotiating a loan. Saxton, who was then the executor of the Patee estate and president of a bank, agreed to let him have the money from the Patee estate on the proposed terms, and thereupon the note and deed of trust were executed. The funds of the estate were then in gold coin, then at a premium. Saxton converted' the same into currency, and on the second of April, 1868, made a memorandum on the note to the effect that interest should commence-from that date. At the same time Saxton deposited to the credit of Landis fifteen thousand dollars, and took a credit for himself of one thousand dollars, thus reducing, we infer, the Patee estate account sixteen thousand dollai’s. Plaintiff in his testimony says he did not agree to give defendant a bonus of one thousand dollars, but the other evidence and the attending circumstances show conclusively that he did, and that the transaction was as before stated. The plaintiff drew out and used the fifteen thousand dollars placed to his credit. Nothing more was said of the matter until in 1880 or 1881, when the plaintiff ’ s son discovered from the father’s pass-book that only fifteen thousand dollars had been received on the note, and then for the first time followed the demand’for a deduction of one thousand dollars.
An agent for loaning money may take a reasonable commission from the borrower, even with the knowledge of the lender, and still the transaction will not be usurious, though the amount of interest reserved to the • lender be the full lawful interest. Smith v. Wolf, 55 Iowa, 555; Atchison v. Chase, 28 Minn. 211; Tyler on Usury, 172. Had the one thousand dollars been paid to some third person solely for negotiating the loan and without any participation therein by the.Patee estate, it *381must follow the transaction could not be declared usurious.
Fellows v. Longyor, 91 N. Y. 324, was a suit to foreclose q, bond and mortgage. In that case Mrs. Longyor gave the bond and mortgage to Downer, guardian, for five thousand dollars. He, as guardian, assigned the bond and mortgage to Mrs. Fellows, who prosecuted the foreclosure suit. In that case it appears Mrs. Longyor actually got the five thousand dollars. The transaction was connected with another, and for both Downer individually received a bonus. It did not appear what, if any, specific part of the bonus was to be allowed for the loan of the five thousand dollars. It is there said the funds did not, in equity, belong to Downer, but were the property of the estate of which he was the representative ; and the conclusion is reached that he could not be considered the lender of the trust funds within the meaning attached to that term by the statute relating to usury.
Here the executor, not as such, but Saxton individually, is the owner of the note, and in point of fact only fifteen thousand dollars was paid to Landis. • Whether the note should be held to be tainted with usury in the hands of the Patee estate or its assignees, other than Saxton, presents a question which we do not determine. Saxton having become the owner of the note seeks to foreclose the mortgage, and in the case of Fellows v. Longyor, supra, it was an assignee from the estate who sought to foreclose the mortgage. This difference in the parties is material and opens the way for the application of other rules of law. Saxton as executor was a trustee. He had no right to speculate with the trust property or to make gains therefrom individually beyond his allowed compensation and the law fixed the amount of his compensation. It is against public policy to allow an executor or administra*382tor to make commissions over and above that allowed by law by speculating or loaning the trust funds. Saxton’.s ■contract for the bonus was illegal, a contract which a . court would not enforce. Story on Agency, sec. 330. A trustee cannot hold on to money thus illegally made by the use of the trust property, or by the use of his position as trustee, and he might be required to account therefor to the beneficiary in the trust. Bent, Receiver, v. Priest, 86 Mo. 475. It is equally clear that the courts will not enforce the performance of the illegal contract. Story Eq., sec. 298. If the defendant is not here literally seeking to enforce the verbal bargain by which he received the bonus, he Is seeking to enforce the contract, by the enforcement of which he is enabled to hold on to the bonus and without which he cannot retain it. In •short, having accounted to the estate for the note he must now collect the note to the full amount or lose the bonus. It is but an indirect way of recovering back that which was received by an illegal and prohibited contract. We cannot see that, in contemplation of law, Saxton occupies any other or better position than that of suing Landis directly for the bonus. In such a suit he would not receive the aid of the courts. It follows that-the deduction of one thousand dollars must be made from the face of the note.
Section 1008, Revised Statutes, provides that: “Where a tender and no deposit shall be made, as provided in the preceding section, the tender shall only have the effect, in law, to prevent the running of interest or accumulation of damages from and after the time such tender was made.” While a tender was made by the plaintiff to the defendant on the tenth of June, 1881, we do not understand that any deposit of the money tendered was ever made in court, and the only effect oi the tender, if sufficient in amount, was to stop the running- of interest. The tender cannot have the effect to deprive the defendant of his security created by the deed *383•of trust for so much as may be fouud due at the time the tender was made. Authorities cited a do say that where a tender has been made of the amount due it discharges the lien, still, without regard to the statute, a court of equity would not decree affirmative relief, such as the release or satisfaction of a mortgage or deed of trust or other lien without payment of the amount due at the date of- the tender. A party who seeks equitable relief must do equity. Until plaintiff does make such payment he cannot have the deed of trust declared satisfied as prayed for in his petition. Tuthill v. Morris, 81 N. Y. 98; Cowles v. Marble, 37 Mich. 158. But so far as this case is concerned, the statute before quoted is conclusive, and as before stated the only effect of the tender was to stop the running of interest.
The judgment is reversed and the cause remanded to be proceeded with according to the principles before stated.
All concur, except Henry, C. J., who dissents.