Hobart v. Michaud
| Decision Date | 01 April 1926 |
| Docket Number | 25,201 |
| Citation | 208 N.W. 191,167 Minn. 1 |
| Parties | WALTER B. HOBART v. DESIRE H. MICHAUD AND ANOTHER |
| Court | Minnesota Supreme Court |
Action in the district court for Ramsey county to restrain the foreclosure of a real estate mortgage and for other relief. The case was tried before Orr, J., who ordered judgment in favor of defendant Michaud. Plaintiff appealed from the judgment. Reversed after reargument and new trial granted.
Usury not proved.
1. Evidence considered and held that it does not establish the charge of usury set forth in the complaint and therefore plaintiff was not entitled to the relief asked for.
Burden of proving usury on person who charges it.
2. The burden is upon the party alleging the charge of usury to negative by competent proof every fact which if true would render the transaction lawful.
Payment of commission.
3. Payment of a commission, to an agent of the borrower, by the lender does not render the loan usurious.
Retention by lender of sum for his services and not for use of money.
4. The retaining by the lender, with the assent of the borrower, of a sum out of the amount loaned for services rendered by the lender to the borrower, and not for the use of the money does not render the transaction usurious.
Usury 39 Cyc. p. 980 n. 48; p. 981 n. 58; p. 982 n. 63, 64; p. 1051 n. 42; p. 1056 n. 79.
See note in 21 A.L.R. 797, et seq.
See notes in 19 L.R.A(N.S.) 391; 46 L.R.A.(N.S.) 1157; 27 R.C.L. p. 236; 4 R.C.L. Supp. p. 1749.
Norton & Norton, for appellant.
Oppenheimer, Dickson, Hodgson, Brown & Donnelly, for respondent.
This is an action brought to restrain the foreclosure of a real estate mortgage, expunge it from record and to cancel the note secured thereby upon the ground that the indebtedness represented thereby is tainted with usury. The foreclosure was for the full amount of the note with interest. The cause was tried to the court, findings were made and judgment ordered in favor of the defendant Michaud. From a judgment entered upon the order, plaintiff appealed.
There is no conflict in the evidence except as to the claim of plaintiff that the respondent retained the sum of $100 from the amount of the loan as a commission to himself. The respondent admits that he retained $261.10 from the amount loaned, but he claims that he disbursed the same in payment of the expenses of making the loan, which plaintiff was liable for, as follows: $110 to Adelard Michaud as a commission for making the loan for appellant; $50 to respondent's attorney for examining the abstract and passing upon the title to the land; $1.10 for revenue stamps on note and $100 to himself for services in making an examination of the land and placing a value thereon as security for the loan.
Plaintiff was in need of a loan of $5,500 and so informed Adelard Michaud who undertook to procure the loan for plaintiff. He inteviewed respondent and arranged for a meeting at the latter's office on September 14, 1923, at which time he went with plaintiff's father and talked the amount of the loan and the security over with respondent. The note for $5,500, payable in 90 days with interest at the rate of 6 per cent per annum, together with the mortgage in question securing the payment thereof, was prepared. Respondent required that the note and mortgage be executed, the mortgage recorded, and an abstract of title to the land, showing the record of the mortgage. The requirement was complied with, plaintiff paying the expenses thereof. In the meantime, respondent examined the land in company with appellant. The note, mortgage and abstract were delivered on the eighteenth of September, examined and approved by Mr. O'Neill, respondent's attorney, and the transaction closed by respondent paying the sum of $5,228.90 to appellant.
There is no material dispute in the testimony as to the respondent being a competent person to value the land as security for the loan, nor that the services were of the value charged and the trial court so found. The sole question for determination is whether the expenses so charged were such as to constitute usury. In other words, do the facts of themselves show an intent on the part of the respondent to take and receive a greater compensation than 10 per cent allowed by law for the future use of the money? See Ward v. Anderberg, 31 Minn. 304, 17 N.W. 630; Swanson v. Realization & Deb. Corp. 70 Minn. 380, 388, 73 N.W. 165. It is the general rule that a lender, acting in good faith, may properly require of the borrower a reasonable compensation for services in connection with a loan in addition to the maximum legal rate, without rendering the loan illegal, even though the services so rendered may be such as the lender would ordinarily perform in his own interest, but the lender will not be permitted to cloak his usurious intent with pretended services. The findings of the trial court are to the effect that there was no such intent or corrupt motive connected with the transaction, and the evidence supports the findings. 39...
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