Lewis v. Willoughby

• Decision Date: 19 May 1890
• Citation: 43 Minn. 307,45 N.W. 439
• Parties: LEWIS v WILLOUGHBY ET AL.
• Court: Minnesota Supreme Court

43 Minn. 307

45 N.W. 439

LEWISvWILLOUGHBY ET AL.

Supreme Court of Minnesota.

May 19, 1890.

(Syllabus by the Court.)

1. Evidence held sufficient to justify the jury in finding a mortgage usurious.

2. Where an agent, intrusted with entire management of his principal's business of making, negotiating, and collecting loans, exacts, for the benefit of the principal, a bonus in excess of legal interest, which is included in the amount of the securities, there being no evidence that it was done without the authority or consent of the principal, the act of the agent must be held, as a matter of law, to be the act of the principal.

3. Any matter, such as fraud or illegality, which, if proven, would affect the validity of a written contract, may be proven by oral evidence. The rule against varying or contradicting written instruments by oral evidence is inapplicable to such cases.

Appeal from district court, Steele county; BUCKHAM, Judge.

Carman N. Smith, for appellants.

Wheelock & Sperry, for respondent.

MITCHELL, J.

In their answer the defendants justified the taking and conversion complained of under a chattel mortgage executed by plaintiff to defendant Willoughby, and alleged facts authorizing them, under the “insecurity” clause in the mortgage, to take the property before the maturity of the debt secured. The plaintiff replied, denying the existence of any such facts, and alleging that the mortgage was usurious. Aside from the measure of damages or value of the property, the only issues on the trial were: First, whether the mortgage was usurious; and, if not, second, whether facts existed justifying the mortgagee in taking the property before the maturity of the debt.

The court very properly instructed the jury that, if they found the first in the affirmative, they need go no further, but must find a verdict in favor of the plaintiff for the full value of the property, but, if they found both in the negative, they should find in favor of plaintiff only for the excess of the value of the property over and above the amount due on the mortgage; and, if they found the first in the negative and the second in the affirmative, they must find for the defendants. It is evident from the amount of the verdict, viewed in the light of the evidence, that the jury found the mortgage usurious, and hence never reached the second question. We shall first consider the assignments of error affecting the question of usury.

1. One is that the verdict was not justified by the evidence. On the question of usury, the only direct evidence was that of plaintiff and of Bates, the agent of plaintiff, who transacted the business for him. The two flatly contradicted each other. Plaintiff swore positively that the amount of the mortgage, $7,025, was made up of $3,500, money loaned; $3,125, the agreed price of some cattle which Bates compelled him to buy of Willoughby as a condition of getting the loan; and $400 bonus over and above 10 per cent. interest, which the mortgage drew. Bates, on the other hand, swore with equal positiveness that the agreed price of the cattle was $3,525, and that no bonus whatever was exacted. So far as we can judge of it on paper, plaintiff's testimony seems the most circumstantial and consistent. There was very little corroborative circumstantial evidence on either side. Defendants' counsel lays much stress upon a written memorandum of the terms of the bargain executed by plaintiff and Bates before the mortgage was executed, in which the purchase price of the cattle is stated and set down in accordance with Bates' testimony. But, when we consider that, if the transaction was usurious, the most natural thing would be to attempt to conceal it under the guise of a part of the price of the cattle, the recitals incorporated into the writing are not very persuasive evidence. Counsel also relies on some evidence tending to show that the cattle were actually, reasonably worth $3,525. But the evidence as to values was conflicting, and mere estimates or opinions; and the most of what defendants rely on consists of plaintiff's estimates of values when the property was taken, six months after the mortgage was executed. And, while it is true that proof of any great discrepancy between the actual value and the pretended purchase price of property is often the means of unearthing usury cloaked under the form...