Court Opinion

ID: 7809587
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:11:13.082949+00
Date Added: 2024-06-11T16:30:24.207121
License: Public Domain

WOOD, J. This action was brought by appellant against appellees to recover a balance alleged to be due on a promissory note and to foreclose a mortgage on certain real estate executed to secure the note. The note, on its face, was for the sum of $300 with interest at the rate of 10 per cent, per annum. The defense was a plea of usury. Appellee, M. J. Phillippe, testified concerning the execution of the note as follows: “Through Mr. Nunnelley I borrowed the money from Alfred Hawn to pay off the indebtedness against the land. I borrowed $300 from Mr. Hawn which I understood covered the amount due against the land together with interest and also cost of suit. We executed to Mr. Hawn our note for $300 and a mortgage on the land to secure the same. I gave Mr. Nunnelley, .as I said in my examination in chief, the sum of $15 to secure this loan for me. I was in the State of Oklahoma at the time and I live in Oklahoma now. The $15 was paid to Mr. Nunnelley for securing me the loan and the note given to Mr. Hawn for the $300 drew 10 per cent. only. My wife died on the 18th of July, 1917. The deed to this land was made to me and my wife jointly, and I now own the land and no one else has any interest in it.' I own now all the interest that my wife owned prior to her death. ’ ’ Alfred Hawn testified: ‘ ‘ The note in suit was made to me. The first suit was started and I furnished Mr. Phillippe the money to pay for the original debt. I just loaned Mr. Phillippe $300. My recollection is that Mr. Nunnelley came to me and told me that Mr. Phillippe was giving him $15 to procure this loan of $300 and I don’t remember how much of the $15 he gave me but it is my best impression that I and Sam Nunnelley divided the $15. After I loaned the $300 I sold and transferred the note and mortgage to Mrs. Sarah E. Jones. I know that I got some of the $15 but don’t know how much I got for letting Mr. Phillippe have the $300. The court found that: “The defendant’s plea' of usury should be sustained; that, in the contract for the loan of said money, the said Alfred Hawn in addition to the 10 per cent, interest specified in said note, took and received a further additional sum of money for the forbearance of said loan, and that said note became and is void. The court further finds that the defendant and cross-complainant, Lela Phillippe, departed this life July I18, 1917, and that her death was suggested and admitted in open court, and said cause proceeded to a hearing without objection from either party.” The court entered a decree dismissing appellant’s complaint for want of equity, from which is this appeal.  (1) “The burden of proof is on the party who pleads usury to show clearly that the transaction is usurious.” Holt v. Kirby, 57 Ark. 251, 256; Citizens Bank v. Murphy, 83 Ark. 31, 36; Smith v. Mack, 105 Ark. 653. In Scruggs v. Scottish Mortgage Co., 54 Ark. 566, 569, we said: “To constitute usury, there must be an agreement to pay for the use of money more than 10 per cent, interest.” And in Citizens’ Bank v. Murphy, supra, we said: “To constitute usury, there must be an agreement on the part of the lender to receive, and on the part of the borrower to give, for the use of the money, a greater rate of interest than 10 per cent.” In Garvin v. Linton, 62 Ark. 370, 379, Judge Battle, speaking for the court, .said: ‘‘ There need not be, under our statute, a mutual agreement to give and receive unlawful interest to constitute usury. If it be actually reserved, taken, or secured, or agreed to be taken or reserved, the contract is void for usury. As it may be reserved, taken, or secured by contract without the knowledge of both parties, a concurrence of the intent of both of them is not an essential element of usury under the statute. There must be an intent to take unlawful interest to constitute usury.” When the language in these cases is taken in connection with the facts under review therein, there is no conflict in the decisions, and the law as announced in Garvin v. Linton, supra, must be taken as the settled law in this State. The reason for the rule there announced is forcefully stated by Mr. Justice Mitchell in Lukens v. Hazlett, 37 Minn. 441, quoted by Judge Battle in Garvin v. Linton, supra, as follows: “There are some loose statements in the text boohs, and perhaps some judicial authority, to the effect that, to render a contract usurious both parties must be cognizant of the fact constituting usury, and must have a common purpose to evade the law. But it seems to us that it would be contrary both to the language and policy of the usury law to hold any such doctrine, as thus broadly stated. These laws are enacted to protect the weak and necessitous from oppression. The borrower is not particeps criminis with the lender, whatever his knowledge or intention may be. The lender alone is the violator of the law, and against him alone are its penalties enacted. It would indeed be strange if the only party who could violate the law had intentionally done so, and could escape its penalty because, by some device or deception, he had so deceived the borrower as to conceal from him the fact that he was taking usury. ’ ’ Now, it matters not whether Nunnelley be regarded as the agent of the borrower, or as the agent of the lender, or as the agent of both, in conducting the negotiations and in consummating the contract between the appellees and Hawn, because the undisputed evidence clearly justifies the conclusion that Hawn intentionally received, in addition to the 10 per cent, specified in the note, a bonus from Nunnelley for making the loan. The evidence shows that this payment of the bonus was contemporaneous with the contract evidenced by the note, and was part of the consideration for it. It could hardly be contended thqt if the makers of the note at the time of its execution had paid to Hawn the sum of $7.50 as a bonus for making the loan in addition to the 10 per cent, specified in the note, that such transaction would not be usurious. Yet in legal effect this is precisely what was done, because Nunnelley told Hawn that he was receiving from the appellees the sum of $15 which he was dividing with him for the purpose of obtaining the loan. The evidence clearly sustains the finding of the trial court “that in the contract for the loan of said money the said Alfred Hawn, in addition to the 10 per cent, interest specified in said note, took and received a further and additional sum of money for the forbearance of said loan.” Such is the only reasonable deduction to be drawn from the testimony. It is undoubtedly true that a borrower may pay a fee or bonus to his agent who procures a loan for him, and where this is done before or after the contract for the loan is executed, it is no concern of the borrower what disposition his agent may make of the bonus thus received. The agent of the borrower may do as he pleases with his own money, and if on his own account, and not as the agent of the borrower, before or after a loan has been consummated by him, he pays to the lender a certain sum in consideration of making the loan, the sum paid under such circumstances could not be considered, between the borrower and the lender, as for the use of the money. Such is the effect of our holding in Sumpter v. Hot Springs Savings, Trust and Guaranty Co., 126 Ark. 155, where we said: “If the person making the loan acted as the agent of the borrower alone, whether he received or did not receive a bonus is immaterial on the plea of usury; what the borrower pays to his own agent for procuring a loan is no part of the sum paid for the loan or forbearance of money. ’ ’ But here as we have shown, the transaction was but tantamount to the lender receiving direct from the borrower a bonus in excess of 10 per cent, per annum for the forbearance of his money.  (2) The decree recites that “the defendant and cross-complainant, Lela Phillippe, departed this life July 18, 1917, and that her death was suggested and admitted in open court and said cause proceeded to a hearing without objection from either party.” Appellee, M. J. Phillippe,- testified as follows: “The deed to this land was made to me and my wife jointly, and I now own the land and no one else has any interest in it, or in other words, I mean to say that I own now all of the interest that my wife owned prior to her death.” It does not appear that there was any request in the court below to have the cause revived in the name of the heirs of Lela Phillippe. The recitals of the decree show that the cause proceeded, after her death was suggested, to a hearing without objection from either party and was evidently disposed of upon the theory that M. J. Phillippe was the sole owner of the land and the only party in interest as defendant and cross-complainant. His testimony tended to prove that such was the case and there is no testimony in the record to the contrary. It must be presumed therefore, in favor of the decree of the trial court that it found that an order of revivor was unnecessary. The decree is therefore affirmed. Mr. Justice HUMPHREYS not participating.