Brown v. the Scottish-Am. Mortgage Co..

• Decision Date: 13 June 1884
• Citation: 110 Ill. 235,1884 WL 9876
• Parties: AZRA F. BROWN et al.v.THE SCOTTISH-AMERICAN MORTGAGE COMPANY.
• Court: Illinois Supreme Court

110 Ill. 235

1884 WL 9876 (Ill.)

AZRA F. BROWN et al.

v.THE SCOTTISH-AMERICAN MORTGAGE COMPANY.

Supreme Court of Illinois.

Filed at Ottawa Jun. 13, 1884.

OPINION TEXT STARTS HERE

APPEAL from the Appellate Court for the First District;--heard in that court on writ of error to the Circuit Court of Cook county; the Hon. THOMAS A. MORAN, Judge, presiding.

Mr. B. M. MUNN, and Mr. EDWARD J. HILL, for the appellants:

The allowance of $50 as the master's fees for the report, is $40 in excess of the amount limited by statute. Rev. Stat. chap. 53, sec. 20; Lee v. Rowley, 4 Bradw. 218; Harvey v. Harvey, 87 Ill. 54.

The powers of a foreign corporation depend for their validity under the laws of its own sovereignty. Bank of Augusta v. Earle, 13 Pet. 519.

The weight of authority is against the existence of corporate authority, unless clearly shown by express grant or by clear implication. Ramsey v. Peoria Marine and Fire Ins. Co. 55 Ill. 311.

No corporation can exist without some domicil where it may do business. Land Grant Ry. and Trans. Co. v. Coffee County, 6 Kan. 245.

Under the general issue the better opinion seems to be that a corporation is not bound to prove its corporate existence, for its right to sue is thereby admitted; but when put in issue by nul tiel corporation, the allegation must be substantially proven. Angell & Ames on Corp. sec. 634; 16 Johns. 300; McIntire v. Preston, 5 Gilm. 48; Hargrave v. Bank of Illinois, Breese, 84; Jones v. Bank of Illinois, Id. 86.

Under the plea of nul tiel corporation the burden of proof is on the party alleging corporate existence. Ramsey v. Insurance Co. supra; Cross v. Pinckneyville Mill Co. 17 Ill. 54; Marsh v. Astoria Lodge, 27 Id. 421; President and Trustees of Mendota v. Thompson, 20 Id. 197; Baker v. Administrator of Backus, 32 Id. 79; Tarbell v. Page, 24 Id. 46; Stone v. Great Western Oil Co. 41 Id. 85.

A plaintiff corporation, by taking issue on a plea of nul tiel corporation, takes upon itself the burden of proving its corporate existence in accordance with its allegations and replication, and the estoppel to deny the corporate existence is waived. 1 Chitty's Pleading, 634; Smith v. Whittaker, 11 Ill. 417.

Mr. THEODORE SHELDON, for the appellee:

The master's fee has not yet been allowed. The item of his fee is no part of the report, but a mere direction to the clerk in taxing the costs. The allowance of such costs is not reviewable in this court. Ling et al. v. King & Co. 91 Ill. 571.

Appellants having contracted with the appellee as a corporation, obtained the loan from and delivered to it as such corporation, eo nomine, the note, coupons and deed of trust securing the same, are thereby estopped from denying its corporate existence, or its power to loan money, or to bring suit to recover money so loaned. Angell & Ames on Corp. (10th ed.) 649; Hermann on Estoppel, secs. 579, 580; Bigelow on Estoppel, (2d ed.) 424; Steam Navigation Co. v. Weed et al. 17 Barb. 578; Lombard v. Chicago Sinai Congregation, 64 Ill. 477.

Had the entire commission been received by the mortgage company it would have made the rate of interest for the five years exactly ten per cent, which was then lawful, but the commission went to the brokers who procured the loan. McGovern v. Union Mutual Life Ins. Co. 109 Ill. 151.

It is claimed the estoppel was waived by the company failing to plead the same by demurrer to the answer of nul tiel corporation. A demurrer to an answer in chancery is at least unusual. The estoppel was properly raised by the general replication.

Mr. JUSTICE SCHOLFIELD delivered the opinion of the Court:

This was a bill in chancery, by the Scottish-American Mortgage Company, (Limited,) against Azra F. Brown, Lydia Elizabeth Brown, his wife, Philo Allen, and Mary Allen, his wife. Philo Allen and Mary Allen made default, and a decree pro confesso was rendered against them. Azra Brown and Lydia Elizabeth Brown answered, denying the existence of the complainant as a corporation, and also its right or power to loan money in this State. They allege that the loan mentioned in the bill was made by James Duncan Smith and Thomas J. Gordon, capitalists of Scotland, in the kingdom of Great Britain, to Azra F. Brown, through their agents, Henry I. Sheldon and Daniel H. Hale, of the firm of Daniel H. Hale & Co., of Chicago, and not by or through them as officers of complainant; that as such agents they were guilty of fraud and circumvention, in exacting usurious interest and a bonus of $225 for negotiating said loan, and in requiring the giving of the principal note of $4500 when the borrower received only the sum of $4220. There was a replication to the answer, and the cause was, at the October term, 1882, of the court, referred to the master in chancery, to take and report the evidence, and his conclusions thereon. The master in chancery subsequently made his report, in writing, to the circuit court, and Brown filed exceptions thereto, and afterwards, at the February term, 1883, of the court, these exceptions were overruled, and the court decreed a foreclosure of the mortgage. Azra and Lydia Elizabeth Brown sued out a writ of error from the Appellate Court for the First District, upon that decree, and that court, at its October term, 1883, affirmed the decree of the circuit court. They now appeal from that affirmance to this court, and bring this record before us for review.

The charge in the answer that there was fraud and circumvention in the loan in charging usurious interest, is very clearly not made out. In the first place, it is not shown that the firm of Daniel H. Hale & Co., to whom the $225 was paid, were the agents of complainant in making the loan. If they were not the company's agents, but were the agents of Brown, in that transaction, although he might have paid them an amount which, added to the current interest upon the note, largely exceeded legal interest, it would not prove usury in the loan. It can not concern the lender what the borrower pays to his own agents. ( Kihlholz v. Wolf, Ex'x. 103 Ill. 362; Phillips v. Roberts, 90 Id. 492.) The burden of proving a transaction usurious rests upon the party alleging it. ( Boylston v. Bain, 90 Ill. 283; Kihlholz v. Wolf, Ex'x. supra.) In the next place, at the time this loan was made (July 15, 1875,) it was lawful to exact ten per cent per annum interest on money loaned. The note given bears interest only at the rate of nine per cent per annum, and runs for five years. It has been held, and is the well settled law of this court, that it is not usurious to exact the payment of interest in advance. ( Mitchell v. Lyman et al. 77 Ill. 525; Goodrich v. Reynolds, 31 Id. 490; McGill v. Ware, 4 Scam. 21.) One per cent on $4500 (the amount borrowed) for five years makes just $225; and so, in any view, interest has not been exacted beyond the rate of ten per cent per annum--the then legal rate. McGovern v. Union Mutual Life Ins. Co. 109 Ill. 151.

The objection to the master's fee is untenable. Without stopping to inquire whether the amount charged is illegal, we deem it sufficient to say the circuit court has never adjudicated upon that question. The facts are, the master appended below his signature to his report, a statement of costs, as a guide to the clerk in making up his fee bill. It is not within the reference, is no part of the report proper, and the court in approving the report is not to be presumed to have passed upon it. When the fee bill is made up including it, it will be...