Greever v. Persky

• Decision Date: 04 November 1942
• Docket Number: No. 7943.,7943.
• Citation: 165 S.W.2d 709
• Parties: GREEVER v. PERSKY.
• Court: Texas Supreme Court

Page 709

165 S.W.2d 709

GREEVER v. PERSKY.

No. 7943.

Supreme Court of Texas.

November 4, 1942.

Rehearing Denied December 2, 1942.

Error to Court of Civil Appeals of Second Supreme Judicial District.

Action by Goldie Persky, as guardian of the estate of I. B. Persky, against B. B. Greever. Judgment non obstante veredicto for plaintiff was reversed and remanded by Court of Civil Appeals, 156 S.W.2d 566, and defendant brings error.

Judgment of Court of Civil Appeals affirmed, and judgment of district court reversed and cause remanded for new trial.

Ray Bland, John C. Kay, and Kilgore & Rogers, all of Wichita Falls, for plaintiff in error.

J. R. Wilson, of Wichita Falls, for defendant in error.

ALEXANDER, Chief Justice.

This is a usury case. There is no dispute in the testimony on most of the material points in the case. The facts, as testified to by the defendant, B. B. Greever, are substantially as follows: In the year 1936 I. B. Persky was in financial difficulties and needed money. He contacted Greever, who was not in the loan business, and offered to pay him a commission of three per cent per month for a period of ninety days if Greever would use his credit and procure for him a loan of $15,000. Greever, who did not have the money himself, but did have the collateral with which to borrow the same, borrowed on his own notes and collateral $10,000 from one bank and $5,000 from another, and deposited the same in the bank in his general checking account. Persky had nothing to do with the procuring of these loans. Greever then advanced the money to Persky in installments as he needed it, taking his notes therefor, payable to Greever in thirty days. These notes provided for interest after maturity. As these notes matured from time to time they were renewed with similar notes. Persky actually paid Greever the three per cent per month on the loans, not only during the first ninety days as per the original agreement, but continued to pay the three per cent on the loans for several months thereafter, and Greever accepted same as "commissions." These payments, which were credited by Greever as "commission" were not paid at the time the renewal notes were executed, but were paid thereafter at irregular intervals and in irregular amounts. When Greever would receive a check for one of these irregular payments he would mark on it "commission," and credit it accordingly. Greever testified positively that Persky only agreed to pay a commission for a period of ninety days, and whatever commissions were paid thereafter were paid voluntarily by Persky, without any previous agreement obligating him to do so. It appears to be agreed that none of the payments made as "commissions" was intended by either of the parties to be applied on the principal of the notes given by Persky to Greever. The jury in answer to special issues found, in effect, that the money advanced by Greever to Persky was a loan, but that it was the intention of both Persky and Greever that the sums paid as commissions should constitute "compensation for B. B. Greever's services in procuring from the bank upon his own credit, or his own securities, the money which he advanced to I. B. Persky." Upon motion, the court rendered judgment non obstante veredicto, holding as a matter of law that the transactions were usurious loans, and that all payments made as "commissions" should be applied as interest, and allowing plaintiff to recover accordingly. The Court of Civil Appeals reversed the judgment of the trial court and remanded the cause for a new trial. 156 S.W.2d 566.

It is defendant's view that the payments in question were paid to him as commissions for lending his credit to Persky and obtaining for him the loans from the banks. According to Greever's own testimony he borrowed the money from the banks on his own notes and collateral, and placed it in his bank account; and then lent it to Persky from time to time as he needed it. He took Persky's notes for the loans, and when they matured they were renewed by mutual agreement. As the money was collected it was placed by Greever in his own account. There is nothing in the evidence to show that the money borrowed from the banks was set aside to Persky, or that, as Persky repaid it, it was in turn paid over to the banks. Stripped of any unnecessary details, it appears to be a case in which Greever furnished the collateral and borrowed the money from the banks on his own account, and lent it to Persky for a consideration in excess of ten per cent per annum.

An agent or a broker may lawfully charge a commission for his services in negotiating a loan with a third party, and such commission will not be taken into consideration in determining whether or not the loan is usurious, where it is done in good faith, and not as a mere cloak to avoid the usury law. But, in order to be valid it must appear that the loan was ultimately made with or passed on to a third party, and that the extra charge was made in good faith for so negotiating the loan. Such a charge may not be made where the party charging the commission is merely lending his own money. 42 Tex.Jur. 933; Trinity Fire Ins. Co. v. Kerrville Hotel Co., 129 Tex. 310, 103 S.W.2d 121, 110 A. L.R. 442; Deming Inv. Co. v. Giddens, Tex. Civ.App., 41 S.W.2d 260, writ dismissed; Deming Inv. Co. v. Clark, Tex.Civ.App., 89 S.W.2d 853; Adleson v. B. F. Dittmar Co., 124 Tex. 564, 80 S.W.2d 939; Nevels v. Harris, 129 Tex. 190, 102 S.W.2d 1046, 109 A.L.R. 1464. In this case the party charging the commission did not negotiate the loan to a third party, but made it himself out of his own funds; and, as a consequence, the commission charged and collected by him must be included as interest charged for the use of the money lent.

It is insisted by the defendant that the commission charged by him constituted a lawful charge for the sale and advancement of his credit, to enable the borrower to obtain the money. It may be accepted as true that where one acts in good faith, and not for the purpose of concealing a usurious loan made by him, he may sell his credit to a borrower for a consideration; and to that end may endorse, guarantee, or become surety for the payment of a loan made to the borrower by a third person at the highest lawful rate of interest, without rendering either the contract for the sale of his credit or the loan made by the third party usurious. Oil City Motor Co. v. C. I. T. Corp., 10 Cir., 76 F.2d 589, 104 A.L.R. 240. See, also, 21 A.L.R. 895; 105 A.L.R. 813. But, again, in order for such a transaction to be legal, the sale of the credit must be made for the purpose of enabling the borrower to obtain the money from a third party, or the transaction must be something other than a mere loan of money. The fact that the party has to pledge his credit or collateral with a third party in order to obtain the funds which he himself lends to the...