D & M Development Co. v. Sherwood & Roberts, Inc.

• Decision Date: 08 July 1969
• Docket Number: No. 10366,10366
• Citation: 93 Idaho 200,457 P.2d 439
• Court: Idaho Supreme Court
• Parties: D & M DEVELOPMENT COMPANY, Inc., Plaintiff-Respondent, v. SHERWOOD AND ROBERTS, INC., Defendant-Appellant.

Page 439

457 P.2d 439

93 Idaho 200

D & M DEVELOPMENT COMPANY, Inc., Plaintiff-Respondent, v. SHERWOOD AND ROBERTS, INC., Defendant-Appellant.

No. 10366.

Supreme Court of Idaho.

July 8, 1969.

Rehearing Denied Aug. 18, 1969.

Racine, Huntley, Herzog, Olson & Zener, Pocatello, for appellant.

Thomas A. Miller, of Hawley, Troxell, Ennis & Hawley, Boise, amicus curiae.

Baum & Peterson, Pocatello, Thomas A. Olson, of Landol, Gary & Olson, Bozeman, Mont., for appellee.

SHEPARD, Justice.

The sole question of law presented by this appeal is whether a 'commitment fee' or 'brokerage fee' is to be defined as interest when it is contended that a lending arrangement carries interest in excess of the maximum permitted by our statute and is therefore usurious. We hold that such a fee does not constitute interest.

In this case extensive interrogatories, affidavits and depositions were taken, filed and are a part of the record from the court below. Both parties filed motions for summary judgment stating that there were no material issues of fact for decision by the trial court. The trial court agreed and granted summary judgment in favor of respondent and in addition thereto filed extensive findings of fact.

Because of our holding, the details of the transaction must be examined and set forth at some length. Respondent D & M Development Company was engaged in the promotion and anticipated construction of a shopping center in Pocatello, Idaho. In December of 1964 a certain parcel of land located in the center of the project was about to be sold to third parties and the success of the entire project required the immediate obtaining of capital necessary to purchase that parcel and other necessary parcels. Approximately $250,000 was needed for the land acquisition.

Officers of the respondent ascertained that Sherwood and Roberts, Inc., of Walla Walla, Washington, held a second mortgage on the crucial parcel of land. An officer of the respondent contacted the Walla Walla firm in the hope of obtaining capital. As a result of that contact an officer of the Walla Walla firm met with the officers of respondent in Pocatello. He suggested to the respondent an overall financing package, which included not only the capital for the immediate land acquisition but also an interim construction loan to be superseded and followed by a permanent loan. Roy Miller, Sr. Vice President of the respondent, stated repeatedly that he felt that he had been confronted with a take it or leave it three loan package. The President of the Walla Walla firm, however, denied that the acceptance of the two large construction loans was a condition precedent to the granting of the land acquisition loan. In any event, respondent authorized the Walla Walla firm to obtain commitments for all three of the loans under certain terms. ¹

On December 18, 1964, respondent executed a promissory note for $306,000, payable January 1, 1966, bearing interest at 8%. The note was secured by the parcels of land to be purchased and by the deposit of securities owned by Mr. and Mrs Roy F. Miller, Sr., which were listed on the New York Stock Exchange and had a then market value of $75,000. The loan evidenced by the note was made by the appellant in this action, Sherwood and Roberts, Inc., which is an Idaho subsidiary of the Walla Walla corporation. Respondent actually received only.$249,750. The remaining $56,250, called at various times a 'brokerage fee' or a 'commitment fee,' was distributed $15,000 to Sherwood and Roberts, Spokane, Inc., and $41,250 to Sherwood and Roberts, Northwest, Inc., both of which corporations are subsidiaries of Sherwood and Roberts, Inc., of Walla Walla, Washington. The respondent used the net sum of.$249,750 to acquire the necessary lands. The court below disregarded the various separate corporate entities which appear to comprise the totality of the Sherwood and Roberts, Inc. operation. We express no opinion on such treatment since our ultimate conclusion is unchanged in either event. For convenience, our reference herein will be to Sherwood and Roberts as a whole.

The controversy in this matter stems from the $56,250 referred to as 'brokerage' or 'commitment' fee, and the function that charge has in the transaction. Respondent views the charge as hidden interest. Appellant argues that the function of the $56,250 is set forth in the authorization for the loan commitment (footnote 1, supra), which, in pertinent part, is as follows:

'In consideration of your (Sherwood and Roberts Inc.) obtaining written commitments for all three loans, which are accepted by us, we hereby agree to pay you for your services a brokerage fee of $56,250.00.

'The payment of the brokerage fee of $56,250.00 shall be made to you at the time the first of these three loans is closed and we hereby authorize the lender or lenders making such loans to pay said brokerage fee from the loan proceeds in accordance with the provisions hereof and have executed an extra copy of this authorization for delivery to said lender or lenders.'

Simultaneously with the execution of the above quoted authorization by respondent, Sherwood and Roberts, Inc. agreed to make all three loans. Separate instruments signed by officers of Sherwood and Roberts, inc. begin with the following recitation:

'Based on your (D & M Development Co., Inc.) application for a loan and the information contained therein, we are pleased to advise you that, subject to the conditions herein set forth, this Company (Sherwood and Roberts, Inc.) agrees to make the following loan to be secured as provided herein.'

The interim construction loan commitment was for $1.650,000 for one year at 6 1/4% interest. The commitment required that the loan be closed on or before March 1, 1965, or otherwise the obligation of the lender would terminate. The permanent loan commitment was for a loan of $1,650,000 for a period of 26 years bearing interest at 6%. That loan was to be closed on or before March 1, 1966, or the obligation of the lender would terminate.

On February 17, 1965, respondent advised appellant that an extension of the commitment for the interim construction loan was needed beyond March 1, 1965 to April 1, 1965. The extension was granted by appellant. During this period of time appellant was attempting to broker the permanent loan commitment and on April 28, 1965 obtained advice from the Mutual Benefit Life Insurance Company of New Jersey that it would make the permanent loan for the shopping center. The respondent received the documents evidencing the interim construction loan, but said documents were never executed by respondent and the commitment for the interim construction loan was allowed to expire.

At this point, Sherwood and Roberts, Inc. had honored fully all three of its loan commitments and nothing further remained for respondent to do except sign the various documents and draw the monies. On May 26, 1965, however, respondent advised Sherwood and Roberts, Inc. that it would not need the interim or permanent loans as committed by Sherwood and Roberts, because respondent had secured the needed funds from another company under more advantageous conditions.

The land acquisition loan in the amount of $306,000 made by appellant was repaid in full by respondent on September 28, 1965, together with $18,456.28 in interest. Said interest does not exceed the maximum interest allowed by our statute.

Beginning in October, 1965, correspondence was initiated by respondent questioning the propriety of the 'brokerage' fee and indicating that the said fee presupposed the placing of all three loans by appellant. Appellant replied that the brokerage fee had been earned when the written commitments for all three loans were made by Sherwood and Roberts, Inc. and accepted by respondent. After further correspondence stating and restating the positions of the parties, respondent brought this action on December 2, 1966 alleging that the brokerage fee of $56,250 and the sum of $18,456.28 both constituted interest on the sum of.$249,750 actually received by respondent and that the transaction was therefore usurious. Upon the motions for summary judgment made by both parties, as aforesaid, the view of respondent was adopted by the district court. It found that the sums were interest on the $306,000 loan and that the said amount exceeded the maximum interest chargeable under our statute, I.C. § 27-1905 ², and was therefore usurious. The court, under the provisions of our statute, I.C. § 27-1907 ³, trebled the amount which it had adjudicated as interest and awarded judgment for respondent in the amount of $224,118.85. We hold that such action was error.

As indicated heretofore, the trial court in this matter accompanied his judgment with certain findings of fact. It is the established rule of this state that when evidence is wholly in the form of depositions and documentary evidence, as here, findings of fact are not binding on a reviewing court. Poesy v. Closson, 84 Idaho 549, 374 P.2d 710 (1962); Saccomano v. North Idaho Shingle Co., 73 Idaho 284, 252 P.2d 518 (1952); West v. Brenner, 88 Idaho 44, 396 P.2d 115 (1964). In such cases, the appellate court may determine the facts de novo from the record. Koron v. Myers, 87 Idaho 567, 394 P.2d 634 (1964); Idaho Power Co. v. City of Buhl, 62 Idaho 351, 111 P.2d 1088 (1941); Burns v. Skogstad, 69 Idaho 227, 206 P.2d 765 (1949); Hale v. McCammon Ditch Co., 72 Idaho 478, 244 P.2d 151 (1952).

In summary judgment cases, findings of fact are not required at all. I.R.C.P. 52(a). Certainly, a summary judgment cannot be granted where there are any disputed issues of material fact. I.R.C.P. 56(c). However, courts frequently do make findings of fact when granting motions for summary judgment, and '(s)uch findings may well be helpful to the appellate court in making clear the basis for the trial court's decisions.' 3 Barron and Holtzoff, Federal Practice and Procedure, § 1242, at 201 (Rules...