Hatcher v. Union Trust Co.
| Decision Date | 13 April 1928 |
| Docket Number | No. 26531.,No. 26308.,26308.,26531. |
| Citation | 219 N.W. 76,174 Minn. 241 |
| Parties | HATCHER et ux. v. UNION TRUST CO. OF MARYLAND et al. |
| Court | Minnesota Supreme Court |
Appeal from District Court, Hennepin County; Reed, Judge.
Action by Albert T. Hatcher and wife against the Union Trust Company of Maryland and another. From a judgment entered on the court's findings, both plaintiffs and defendants appeal. Affirmed.
Tifft & Youngdahl, of Minneapolis, for appellants.
L. A. Stebbins, of Chicago, Ill., and Jamison, Stinchfield & Mackall, of Minneapolis, for respondents.
The action is brought to have the court set aside and cancel a trust deed and the notes secured thereby on the ground that the deed and notes provide for the payment of interest in excess of the rate permitted by the laws of this state, and are therefore usurious and void. The trial court found that the deed and notes were not usurious, and denied plaintiffs any relief on that ground. The court did find that certain notes, designated as second series notes, should be canceled on other grounds. Motions for amended and additional findings were made by each of the parties, and denied. Judgment was thereafter entered on the findings, and both parties have appealed from the judgment.
Plaintiffs' Appeal.
1. Plaintiffs are husband and wife. Plaintiff Albert T. Hatcher made written application to a loan broker at Minneapolis to obtain for him a loan of $40,000 upon real estate in that city. He agreed, in a separate writing given to the broker, to pay the broker a commission of $1,800 for obtaining the loan. The loan was obtained from the Mortgage Security Corporation, a Virginia corporation, and was secured by a trust deed of the property to defendants, as trustees. The court found that the broker was plaintiffs' agent in the matter, and that payment of such commission to the agent was not usury. These findings are sustained by the evidence. It is not usury for the borrower to pay a commission to his own broker for obtaining the loan where the lender receives no benefit therefrom and has not employed the broker as his agent. Grieser v. Hall, 56 Minn. 155, 57 N. W. 462; Bovee v. Butters, 92 Minn. 149, 99 N. W. 641; Hobart v. Michaud, 167 Minn. 1, 208 N. W. 191, 209 N. W. 39; Graham v. Fitts, 53 Fla. 1046, 43 So. 512, 13 Ann. Cas. 149; Polk Co. Savings Bank v. Harding, 113 Iowa, 511, 85 N. W. 775; Secor v. Patterson, 114 Mich. 37, 72 N. W. 9; Davis v. Sloman, 27 Neb. 877, 44 N. W. 41.
2. In his application for the loan, plaintiff Albert T. Hatcher agreed to pay the expenses for obtaining a guaranty on the notes by the National Surety Company, a policy of title insurance from New York Title & Mortgage Company, trustees' fees, and all other costs and expenses incurred by the Mortgage Security Corporation incident to the loan. These expenses were not to be taken out of the loan, but were to be covered by additional notes given, known as the second series of notes, and secured by the trust deed. The court found that the lender, in good faith, paid out and expended $1,657.25 for the purposes stated, being $1,364.25 paid National Surety Company for guaranteeing the notes, $70 for title insurance, $23 for trustees' fees, and $200 for attorney's fees for examination of papers and legal opinion; that these were proper and necessary expenses; and that there was no intent to charge usury and none was charged or exacted. The general rule is that a loan is not rendered usurious by the fact that the borrower is required to pay a reasonable compensation in excess of interest for services and expenditures incurred by the lender in connection with the loan, where there is no intent to evade the law, and the required payment does not result in giving to the lender a greater return for the use of the money than is allowed by law. Smith v. Parsons, 55 Minn. 520, 57 N. W. 311; Lassman v. Jacobson, 125 Minn. 218, 146 N. W. 350, 51 L. R. A. (N. S.) 465, Ann. Cas. 1915C, 774. "Expenses incident to making the loan and furnishing the lender satisfactory security for its repayment can in no sense be considered compensation for the use of the money loaned." Id. Under that rule title insurance and a guaranty of the notes would be "furnishing the lender satisfactory security" for the repayment of the loan. Such expenditures would not result in the lender receiving any greater interest or return for the money loaned, but would result in his receiving better security therefor.
It is an essential element of usury that the lender should intend to receive or reserve more than the law allows. Ward v. Anderberg, 31 Minn. 304, 17 N. W. 630; Patterson v. Wyman, 142 Minn. 70, 170 N. W. 928. If, however, the parties intentionally provide for a greater compensation for the use of the money than the law allows, the intent is presumed. The expenditure of $1,657.25 seems a large amount on this loan. If made in good faith, and without intent to take or reserve more than the law allows for the loan of the money, and it did not result in a greater return than the law allows, then it was not usury. These were questions of fact for the trial court, and there is evidence sufficient to sustain its findings.
The trust deed provides for monthly payments of $416 to one of the trustees, to be applied to the payment of interest and principal of the notes as the interest and notes come due. These payments will, at times, result in the accumulation of funds in the hands of the trustees before the payments are due. This would not seem to present serious difficulty. All money so paid is to be applied on the indebtedness as it falls due, and the trustees will be accountable therefor.
3. The record discloses that the case appeared on the jury calendar of the trial court. When called for trial, defendants' counsel objected to a jury trial, claiming that the case was not a case for trial by jury. Plaintiffs' counsel contended that it was a matter of discretion with the court whether or not the issue of usury should be submitted to a jury. The court stated that it was of the opinion that it had not the power to submit the issue to a jury because no application had been made to submit any question to a jury, and directed that the case proceed to trial without a jury. Neither party made any formal motion.
The case is not one wherein the plaintiffs have a right to a jury trial as a matter of law under section 9288, G. S. 1923. Trauernicht v. Kingston, 156 Minn. 442, 195 N. W. 278; Peck v. Schultz, 161 Minn. 519, 200 N. W. 930. The statute grants power to the court to order that the whole issue, or any specific question of fact in the case, be submitted to a jury. By court rule 25, the method is prescribed whereby either party so desiring may apply, by motion, for such order of the court. The failure to so apply does not prevent the court from exercising its power to order the issues or specific questions of fact submitted to a jury on its own motion at the time of the trial. Russell v. Reed, 32 Minn. 45, 19 N. W. 86; Johnson v. Holmes, 142 Minn. 54, 170 N. W. 709. Plaintiffs had made no motion for the trial of all or any issue of fact by a...
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