Fitzgerald v. Union Central Life Ins. Co.

• Decision Date: 25 June 1930
• Docket Number: No. 8734.,8734.
• Citation: 42 F.2d 76
• Parties: FITZGERALD et ux. v. UNION CENTRAL LIFE INS. CO.
• Court: U.S. Court of Appeals — Eighth Circuit

42 F.2d 76 (1930)

FITZGERALD et ux. v. UNION CENTRAL LIFE INS. CO.

No. 8734.

Circuit Court of Appeals, Eighth Circuit.

June 25, 1930.

Usher L. Burdick, of Fargo, N. D. (Robert A. Eaton, of Edgeley, N. D., on the brief), for appellants.

Herbert G. Nilles, of Fargo, N. D. (Daniel B. Holt and John S. Frame, both of Fargo, N. D., on the brief), for appellee.

Before VAN VALKENBURGH, Circuit Judge, and DAVIS, District Judge.

DAVIS, District Judge.

The appellants, Joseph F. Fitzgerald and Mary A. Fitzgerald, his wife, brought an action to quiet title against the Union Central Insurance Company, appellee, and others, in the district court of Dickey county, N. D. The cause was removed to the United States District Court for the District of North Dakota. The answer of the life insurance company asserted that it was the owner and holder of two mortgages on the real property described in the complaint securing the payment of $3,500 and $1,000 respectively, and, by way of counterclaim, the foreclosure of the mortgages on account of default in the terms and conditions thereof was prayed.

All defendants, except appellee, disclaimed any interest in the property and dropped out of the case. Thereupon the cause seems to have been treated, solely, as an action to foreclose the mortgages. The District Court found for appellee on its counterclaim, sustained the validity of the mortgages, determined the amount due thereunder, and ordered the foreclosure of the same. The case is brought here on appeal.

The facts are appellants owned certain farm land in Dickey county, N. D., which was subject to certain mortgages thereon, one of which had been foreclosed, and on which the period of redemption was running at the time the loans were made by the appellee. In 1918, G. E. Lane of Ellendale, N. D., solicited the appellants to make them a loan on the property; after some negotiations the appellants signed an application in writing to the life insurance company for a loan of $3,500 on the amortized plan payable annually at the rate of $8.7184 per $100. At the same time the borrowers agreed to pay to Lane as a commission $175 and gave him a note secured by a mortgage. The borrowers were also informed that they would be required to pay a commission of 1½ per cent. of the amount of the loan to Eaton & Eaton, a copartnership of Fargo, N. D., payable each year over a period of ten years. In due time the papers covering these transactions were presented to and signed by the appellants. That is, the mortgage and notes in favor of the appellee, the mortgage and note in favor of Eaton & Eaton, and the mortgage and note in favor of G. E. Lane. The appellants received the $3,500 represented by the mortgage.

In 1920 the life insurance company made appellants an additional loan of $1,000. The commission mortgage to Eaton & Eaton was satisfied, and the amount unpaid thereunder was renewed into another set of notes and a mortgage in favor of Eaton & Eaton. Lane's mortgage securing his commission of $175 in the first transaction was also satisfied. As a result of these transactions the situation with reference to the property was as follows: First, the Union Central Life Insurance Company held a first mortgage securing $3,500, the debt therein represented by twenty notes for $305.15 each, one of said notes being due each year for twenty years; second, the Union Central Life Insurance Company held a second mortgage for $1,000 securing twenty notes for $87.18 each, one of said notes being due each year for twenty years; third, Eaton & Eaton (or the Eaton Loan Agency) held a third mortgage securing $572.50, the debt being evidenced by nine notes, one for $52.50, and eight for $62.50 each, one of said notes being due April 1st of each year for a period of nine years. The interest on the mortgages held by the appellee was calculated at the rate of 6 per cent. per annum.

The appellants urged that the court improperly overruled a motion for the continuance of the cause, and incorrectly computed the amount due under the mortgages; but these assigned errors were abandoned at the time the cause was presented.

It was next asserted by the appellants that Mr. Lane was the agent of the insurance company and made misrepresentations chargeable to the company in the negotiation of this loan. Mr. Fitzgerald stated at the trial that he hired Lane, a banker of the county seat of Dickey county, to get this loan, and that Lane was his agent. Every fact and circumstance in the case, the statement of which may well be omitted, indicates conclusively that Lane was the agent of appellants.

If it were otherwise, it is not shown that false representations were made to induce the appellants to borrow money. The claim is that a representation was made that the interest rate would be 4½ per cent. The claim is based upon a circular letter issued by Eaton & Eaton, and exhibited by Lane to the appellants during the negotiations for the loans. It contained the following statement:

"We are making amortization loans under twenty year payment plan, and with conditions that the loan can be paid in full or in part any day of the year before maturity. Under this plan of loaning, the borrower at the close of twenty years pays less cash in full payment of the mortgage than he would if he borrowed the money at simple interest at four and one-half per cent."

We are unable to understand how this can be construed into a statement that the appellants were to pay interest at the rate of 4½ per cent. The representation was "the borrower at the close of twenty years pays less cash in full payment of the mortgage than he would if he borrowed the money at simple interest at 4½...