Eagle Rock Corporation v. Idamont Hotel Company, 6572

Citation85 P.2d 242,59 Idaho 413
Decision Date04 October 1938
Docket Number6572
CourtUnited States State Supreme Court of Idaho


1. A mortgage securing a note was not tainted with usury because of deduction of commission and membership fee for stock in corporate lender from amount loaned in absence of showing that lender received any part of commission or that mortgagor did not receive stock in corporate lender to amount of membership fee paid.

2. In determining whether usurious interest has been charged or collected under a particular contract, it is not permissible to consider only a portion of the term, but the test is whether the lender charged or received profit on his investment in excess of the maximum rate for the full period of the loan. (I. C. A., sec. 26-1905.)

3. Under statute fixing maximum annual rate of interest at 10 per cent, a mortgage securing loan of $53,000 at 8 per cent for 120 months would not be tainted with usury because of deduction of $1,060 from principal at time of loan as additional interest payment, since total interest payments over entire period of loan, including amount of deductions would not equal 10 per cent of principal. (I. C. A., sec 26-1905.)

4. Where the borrower may by performance avoid liability for payment of an additional sum, the extra payment is not regarded as interest for the use of the money but as a means to enforce punctual payment, and as a penalty for default and a contract providing for a higher or even excessive rate after maturity or default is not regarded as "usurious." (I. C. A., sec. 26-1905.)

5. A mortgage securing a loan of $53,000 at 8 per cent for 120 months from which deduction of $1,060 was made at time of loan as asserted additional interest payment, was not rendered usurious by acceleration of rate of interest to 10 per cent under provision of mortgage for payment of 10 per cent interest after the maturity or due date of any instalment or the whole of the principal, since, if the mortgagor had made the payments as called for by the contract and in compliance with the terms thereof, the aggregate interest collected or collectable would not have exceeded the statutory maximum of 10 per cent interest charge. (I. C. A sec. 26-1905.)

6. An oral agreement between the grantor and the grantee of a part of a tract of city property whereby, after conveyance, a single building was to be constructed on the entire tract and the upper floors of the part of the building located on property conveyed to grantee were to be used as part of a hotel and were to be reached by entrance and lobby on property retained by grantor, was not rendered ineffective as grant of easement over land retained by grantor because wife of grantor failed to sign or acknowledge a written instrument purporting to convey the easement, where wife was present at time of oral agreement and acquiesced therein and joined in deed conveying property to grantee as part of plan.

7. A presumption that the use of an easement was under a claim of right and adverse, arises from an undisputed use of an easement for the established period of prescription, and the burden is on the party alleging that the use has been by virtue of license or permission to prove that fact by affirmative evidence.

8. A contract or agreement looking to the acquisition of a right of passage and resting entirely in parol is enforceable in equity where the licensee or grantee has entered into possession, expended money and made improvements in such manner and to such an extent that a refusal to enforce the agreement in specific terms would work a fraud on the licensee or grantee, since the parties cannot be placed in the position they originally occupied.

9. Where, pursuant to an oral agreement, the owner of city property conveyed part of tract to grantee who expended money for construction of part of building which was located on his portion of the tract and his proportionate share of the cost of construction of a hotel lobby, hallway, stairway, and heating plant in part of building located on part of tract retained by grantor with understanding that upper floors of portion of building which were located on grantee's part of tract and which could be reached only through lobby and stairway should be used for hotel, the grantee was entitled to an easement through part of building located on part of tract retained by grantor as means of access to upper floors of portion of building constructed on his property.

10. Where, pursuant to oral agreement, part of tract of city property was conveyed to grantee and building was constructed on entire tract, and the upper floors of the portion of the building which was located on the grantee's property continuosly after the erection of the building were used for hotel purposes and were reached by sole means of access through lobby and stairs located on part of tract retained by grantor, the successors in interest of grantor were charged with notice of existence of easement which was apparent from a mere examination of the premises. (I. C. A., sec. 54-603.)

11. A stipulation in a mortgage for an allowance for attorney's fees in case of foreclosure is valid but should be enforced only for reasonable amount and, in determining what amount is reasonable, the court should allow no more than is actually received or contracted for by the attorney for his services.

12. In suit to foreclose mortgage providing for payment of reasonable attorney's fee, allowance of attorney's fee to plaintiff was error, in absence of evidence that plaintiff had obligated himself to pay either a reasonable or any attorney's fee to its attorney for the prosecution of the action.

APPEAL from the District Court of the Ninth Judicial District, for Madison County. Hon. C. J. Taylor, Judge.

Action to foreclose mortgage on real property. Judgment of foreclosure. Modified as to attorney's fees and affirmed. Judgment awarding respondent Skelton an easement in premises. Affirmed.

Judgment in favor of respondent Skelton affirmed, with costs. Judgment in favor of respondent Eagle Rock Corporation affirmed in part, and cause remanded with instructions.

W. A. Ricks and Merrill & Merrill, for Appellants.

The note and the mortgage sued on, providing for a rate of interest after maturity in excess of the highest rate allowed by law, is usurious and subject to the prohibition of the above statute. (27 R. C. L., sec. 33, p. 232; Thompson v. Gorner, 104 Cal. 168, 37 P. 900, 43 Am. St. 81; Parks v. Lubbock, 92 Tex. 635, 51 S.W. 322; J. I. Case Threshing Mach. Co. v. Tomlin, 174 Mo.App. 512, 161 S.W. 286; Red Bud Realty Co. v. South, 153 Ark. 380, 241 S.W. 21; National L. Ins. Co. v. Hale, 54 Okla. 600, 154 P. 536, L. R. A. 1916E, 721; Portis v. Merrill, 33 Ark. 416.)

Test of usury is whether or not a contract has been made whereby a greater rate of interest than that authorized by law may be charged, either directly or indirectly, and where aggregate amount of interest to be paid falls within the terms of the usury statute, contract will not be relieved from the operation of such statute because it reserves to borrower an option to pay entire debt at any time (same being payable otherwise in instalments), and the earliest interest instalments fall within the rate of interest which may be legally charged. (Ford v. Washington Nat. Bldg. & L. Inv. Assn., 10 Idaho 30, 76 P. 1010, 109 Am. St. 192.)

Where, in addition to the interest, if any, stipulated in a contract of loan or forbearance, the creditor exacts of the debtor, as a condition of the loan or forbearance, or for making the same, an additional sum, or the transfer of property, whether designated as a bonus or a commission, or by any other name, the transaction is tainted with usury. (66 C. J. 220, sec. 148, note 51; Madsen v. Whitman, 8 Idaho 762, 71 P. 152; Stevens v. Home Sav. & L. Assn., 5 Idaho 741, 51 P. 779, 986; Haines v. Commercial Mortgage Co., 200 Cal. 609, 254 P. 956, 255 P. 805, 33 A. L. R. 725.)

Whatever may be the law in other states, the rule is well established by the Supreme Court of this state, and fixed by statute that the husband cannot sell, convey, or encumber the community real estate unless the wife join with him in executing and acknowledging the deed or other instrument of conveyance by which the real estate is sold, conveyed, or encumbered. (I. C. A., sec. 31-913; Childs v. Reed, 34 Idaho 450, 202 P. 685; Fargo, v. Bennett, 35 Idaho 359, 206 P. 692; Myers v. Eby, 33 Idaho 266, 193 P. 77, 12 A. L. R. 535.)

The modern decisions seems strongly inclined to hold parol agreements, looking to the encumbering of real property with a servitude, as a mere license revocable at will, and this we think, the much safer rule. (Howes v. Barmon, 11 Idaho 64, 81 P. 48, 114 Am. St. 255, 69 L. R. A. 568.)

Courts have upheld with great steadiness the general rule that a parol license to do an act on the land of the licensor, while it justifies anything done by the license before revocation is nevertheless revocable at the option of the licensor, and although the condition was to confer a continuing right, and money had been expended by the license upon the faith of the license, this is plainly the rule of the statute. It is also the rule...

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25 cases
  • Anderson v. Whipple
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    ...v. Davidson, 15 Idaho 787, 100 P. 91; Annotation 65 A.L.R. 7-110; Wolf v. Eagleson, 29 Idaho 177, 157 P. 1122; Eagle Rock Corp. v. Idamont Hotel Co., 59 Idaho 413, 85 P.2d 242; Johnson v. Flatness, 70 Idaho 37, 211 P.2d 769; Anselmo v. Beardmore, 70 Idaho 392, 219 P.2d 946. The improvements......
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    ...that economic advantage accrued to the party asserting the claim of usury unlike the situation here. In Eagle Rock Corporation v. Idamont Hotel Co., 59 Idaho 413, 85 P.2d 242 (1938), this Court held that a transaction was not made usurious by a commission fee paid to third parties or by a c......
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