Erickson v. Bell

• Decision Date: 09 June 1880
• Citation: 6 N.W. 19,53 Iowa 627
• Parties: ERICKSON v. BELL.
• Court: Iowa Supreme Court

53 Iowa 627

6 N.W. 19

ERICKSON

v.BELL.

Supreme Court of Iowa.

Filed June 9, 1880.

Appeal from Buena Vista district court.

Action of replevin. The petition shows that plaintiff is the absolute owner of the property, and that defendant holds it under a chattel mortgage for the purpose of sale and foreclosure, but plaintiff avers that the mortgage has been fully paid. The owner admits the possession of the property, and alleges that the mortgage under which it is held still justly subsists and has not been paid. There was a verdict and judgment for plaintiff. Defendant appeals. Other facts in the case appear in the opinion.Lot Thomas, for appellant.

Robinson & Milchrist, for appellee.

BECK, J.

1. The plaintiff claims that the note secured by the chattel mortgages is usurious, and that the payments made thereon and upon the unlawful interest are sufficient to fully discharge the note and mortgage; that the defendant insists that the plaintiff is estopped from setting up usury in the note, for the reason that, before the holder of the note acquired it, he applied to plaintiff for information in regard to its validity, and was informed that it was “all right,” and the amount purporting to be due thereon was unpaid. The evidence tends to prove the following facts:

In 1875 plaintiff borrowed of D. C. Thomas $100, for which he gave his note for $120, and 10 per cent. per annum interest, payable one year after date. Certain payments were made upon this note. All the business was done by D. C Thomas, and plaintiff had no reason to believe that he was acting as the agent of another. This note was endorsed by D. C. Thomas, without recourse, to John Lewis. It was usurious.

In 1878 plaintiff arranged with D. C. Thomas for an extension or renewal of the note by the execution of a new note and mortgage, the contract providing for the payment of unlawful interest. When the note and mortgage were presented to plaintiff for execution, he discovered that Thomas Thomas, the father of D. C. Thomas, was made the payee of the note and mortgage. This instrument secured the balance due upon the first note, with usurious interest. The plaintiff was informed by D. C. Thomas that he was procuring the loan from Thomas Thomas. The amount due on the first note, without deducting the amount of usury paid, was $95. The second note was due in 10 months, and was for $115. D. C. Thomas executed and handed to plaintiff a receipt for $18, for services in procuring the loan; but nothing was paid. The $18 was included in the note. No money passed to or from either of the parties in this transaction.

It does not appear that the last note was ever in the hands of Thomas Thomas. D. C. Thomas acted as agent for his father, and received certain payments made on the last note. The payments on the first were also made to him. The first note D. C. Thomas gave to Lewis, who immediately returned it, and took a receipt, which specified that it should be held for collection. All payments were made to D. C. Thomas. The agreement between him and Thomas Thomas was to the effect that the former should pay to the latter the money received for loaning, and 10 per cent. per annum interest, and retain all interest collected above the lawful rate and commissions. This was the arrangement with both Lewis and Thomas Thomas.

The court correctly instructed the jury that if the two notes were separate transactions, the last one was not subject to the usury paid on the first; but if the last one was a continuation of the original transaction--was a renewal of the first--it was usurious.

2. The court gave to the jury the following instruction, which is complained of by defendant:

“In determining whether the first note was usurious or not, you are told that if D. C. Thomas loaned $100 to Erickson, and took his note for $120, drawing 10 per cent. interest per annum, that he did not say or pretend that the money was not his own, and Erickson believed that it was Thomas' money, then you should find that the first note was usurious; but if Erickson knew that Thomas was acting as agent for John Lewis, or any other third person, or if Thomas told him he was so acting, and he in fact was acting as an agent, then the note would not be usurious, unless the party for whom he was acting authorized him to charge more than 10 per cent. interest, or had knowledge that he was doing so.”

The instruction contemplates the facts that the note referred to was made payable to D. C. Thomas, and that plaintiff had no knowledge that the money was not really the property of the agent, but believed that it was.

A person dealing with an agent in regard to personal property entrusted to him by the principal, without knowledge that the property is not owned by the agent, but supposing him to be the owner thereof and the principal in the transaction, will possess all the rights that he would have acquired had the transaction been with the real principal. See Story's Agency, § 444. This rule is applicable to the case before us. It is founded upon the plainest principle of law and justice.

In support of his position that the instruction is erroneous, counsel for plaintiff cites Lee v. Chadsey, 3 Abbott, Court of Appeals Decisions, 43, and Estevez et al. v. Purdy et al. 66 N. Y. 446. These cases, as well as Bell et al., Adm'rs v. Oliver, ...