Cuendet v. Love, Bryan & Co.
| Decision Date | 07 March 1933 |
| Docket Number | 22200 |
| Citation | 57 S.W.2d 701 |
| Parties | CUENDET v. LOVE, BRYAN & CO. et al |
| Court | Missouri Court of Appeals |
J. W McAfee, of St. Louis, for appellant.
Bryan Williams, Cave & McPheeters, of St. Louis, for respondents.
BENNICK Commissioner. BECKER, P. J., and KANE and McCULLEN, JJ concur.
BENNICK, Commissioner.
This is a suit in equity by plaintiff, Eugene S. Cuendet, the alleged assignee of the interest of defendant Russell B. Nash in a certain note and deed of trust securing the same which are pledged with respondents, who are investment brokers doing business as Love, Bryan & Co., as collateral security for a loan advanced by respondents to Nash; the purpose of the suit being to have the pledge declared void for usury, an accounting taken, and the pledge delivered to plaintiff upon such conditions as are equitable and just.
Originally the suit was brought against Love, Bryan & Co., designated in the petition as a corporation. Subsequently, an amended petition was filed, joining as parties defendant the individuals alleged to be copartners, doing business as Love, Bryan & Co. By a second amendment, Nash, who is plaintiff's son-in-law, was also added as a defendant.
As to much of the evidence there is no dispute. Nash, along with his brother, owned four lots in University City, Mo.; and some time previous to the transaction in question respondents (who will be hereinafter referred to as Love, Bryan & Co.) had advanced Nash four construction loans of $ 9,000 each against the four buildings which were then in process of erection upon the lots. In other words, the security of Love, Bryan & Co. consisted of first mortgages upon the real estate.
Later it developed that Nash would have insufficient resources to complete three of the buildings, and in January, 1930, he called at the real estate mortgage department of Love, Bryan & Co., and disclosed that he was faced with unpaid obligations in the sum of $ 4,629 for labor and materials which had gone into the buildings. The real estate mortgage department in question was in charge of respondent Christopher and his assistant, one George H. Aye.
At that time Nash deposited with Love, Bryan & Co. the security or pledge in issue, which consisted of a note for $ 6,000, secured by a deed of trust on property located at 2612-2616 North Twenty-First street, in the city of St. Louis. Said note had been executed on December 10, 1929, by one Lillian Hand, a straw party for Nash and his wife who owned the property, payable to one J. J. Diefer, who had thereafter indorsed the note in blank and delivered it, along with the deed of trust securing it, to Nash. It appears that Love, Bryan & Co. were desirous of discontinuing their connection with the loans, and that the purpose of the deposit of the note and deed of trust by Nash was to assure the payment of all the outstanding labor and material bills.
Nash thereupon made efforts to obtain the funds from various persons, but being unsuccessful, requested Love, Bryan & Co. to negotiate in his behalf. They thereupon arranged with the Laclede Bond & Mortgage Company to undertake the refinancing on long terms, and obtained from that company an agreement to lend $ 9,500 on each of the three buildings still in construction, or a total of $ 1,500 over and above the principal of the indebtedness of Nash to Love, Bryan & Co. The Laclede Bond & Mortgage Company required, however, that all outstanding bills for labor and materials be paid, and that the buildings be completed without having mechanics' liens filed against them.
Love, Bryan & Co. thereupon informed Nash of the commitment of the Laclede Bond & Mortgage Company, and he agreed to take the new loans, and out of the proceeds to repay Love, Bryan & Co. the principal and interest due them upon the original loan, which, when done, left a credit standing to the account of Nash in the sum of $ 488.95.
Nash, however, was still short of the necessary funds with which to complete the buildings without liens, and after figuring his resources as against his liabilities, it was concluded by him and Love, Bryan & Co. that $ 4,278 additional funds would be required to pay all his bills. He thereupon endeavored at the suggestion of Love, Bryan & Co. to borrow the money on the Hand note and deed of trust from several mortgage companies and banks, but being again unsuccessful, Love, Bryan & Co. finally agreed to lend him the sum of $ 4,278 upon the security of such note and deed of trust. Thereupon, on February 20, 1930, Nash executed to Love, Bryan & Co. his negotiable promissory note for $ 4,278, bearing interest at the rate of 6 per cent. per annum, and made payable ninety days after date. On the back of the note was the notation that the Hand note and deed of trust had been pledged as collateral security for its payment.
Under the arrangements entered into between Nash and Love, Bryan & Co. at the time of the completion of the loan transaction, it was agreed that Love, Bryan & Co. should retain the proceeds of the loan so made by them, and pay the same out to persons who had claims for labor and materials. The purpose of having Love, Bryan & Co. so retain the funds was to avoid the filing of mechanics' liens against the property, in view of the assurance given the Laclede Bond & Mortgage Company that all such claims would be paid. Love, Bryan & Co. did thereupon from time to time make payments to the account of Nash upon his orders, and in fact paid out $ 25.63 in excess of the amount standing to his credit, which consisted of $ 4,786.95, comprising the proceeds of the note in the sum of $ 4,278, the balance of $ 488.95 on hand from the Laclede Bond & Mortgage Company loan, and a cash payment by Nash of $ 20. All of such payments had been made by Love, Bryan & Co. by March 28, 1930, when the buildings were finally completed.
As to all of the above facts there is no dispute between the parties, the dispute arising in regard to a charge made by Love, Bryan & Co., spoken of by plaintiff as a 3 per cent. commission on the loan, in the sum of $ 128.34. This, of course, is the basis of the claim of usury.
The testimony of Nash was that in the course of the negotiations leading up to the execution of the note, he was informed by respondent Christopher that he would be charged the customary commission of 3 per cent. on the loan, or 1 per cent. a month if the loan ran longer than three months. He denied that Christopher had told him that in addition to 6 per cent. interest, they would charge him their estimate of the approximate value and cost of their services in appraising the property and disbursing the fund, which they figured at about 3 per cent. of the loan, and that they would give him a credit against such charge if he paid the loan off in less than three months.
On the other hand, Christopher testified that what he told Nash was that the services of Love, Bryan & Co. would be valued at at least 3 per cent. of the amount of the loan if it ran to maturity, and that he appreciated at the time that along with the necessity of appraising the collateral security, the extensive amount of unpaid bills would entail a great deal of work on the part of his company. He positively denied having told Nash that the commission would be 1 per cent. a month, but testified that he did tell him that if the loan was paid prior to maturity, Love, Bryan & Co. would be glad to reimburse any portion of the charges they had made.
Aye who was Christopher's assistant, testified that he was present when the matter in question was discussed with Nash, and he corroborated...
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