Land Mortgage Inv. & Agency Co. Of Am. v. Gillam

• Decision Date: 03 April 1897
• Court: South Carolina Supreme Court
• Parties: LAND MORTGAGE INVESTMENT & AGENCY CO. OF AMERICA, Limited. v. GILLAM et al.

26 S.E. 990

49 S.C. 345

LAND MORTGAGE INVESTMENT & AGENCY CO. OF AMERICA, Limited.

v.GILLAM et al.

Supreme Court of South Carolina.

April 3, 1897.

Chancery Case—Referring Issue of Fact—Appeal — Exceptions — Mortgages — Agency — Usury — Counterclaim— Limitations—Attorney's Fees — Insurance — Liability of Mortgagee.

1. Ah order refusing to grant a jury trial in a chancery case, under Code, § 274a, does not preclude the chancellor's right to frame, for his enlightenment, an issue of fact to be tried by a jury.

2. An exception is too general where it alleges merely that the court erred in not ruling out, on appellant's objection, as incompetent and irrelevant, "all the testimony" of certain witnesses "as to acts and declarations of L. at the time of transaction, tending to show whom he represented, and for whom he was acting in the transaction, the same being an attempt to prove agency by the acts and declarations of the very person whose agency is the question at issue, " and being but the conclusions and deductions drawn from them.

3. Error cannot be predicated on an objection on which the court did not rule.

4. The acts of a person tending to show whom he represented on a particular occasion are competent evidence of agency.

5. A banking company prepared all the papers when a mortgage loan was made, sent the money to be disbursed, collected all interest for the lender, sent the coupons to the borrower when they were paid, and required all the money to be paid to it, and all communications to be addressed to it. It also made other loans for the lender. Held, that it was the lender's agent.

6. Where an agent for the loaning of money on mortgage security charges the borrower a cash commission of 20 per cent. on the face of the loan, with the mortgagee's knowledge, the mortgage is usurious.

7. Under Rev. St. § 1390, when it allowed the lender to charge 10 per cent. interest where the agreement was expressed in a written contract, a mortgage loan was made for five years, at 8 per cent. With the knowledge of the lender, his agent charged 20 per cent. of the loan as his cash commission. Held, that the mortgage was usurious, though the commission and 8 per cent. interest did not exceed 10 per cent. for the five years.

8. Under Rev. St. § 1391, providing that a lender receiving unlawful interest shall forfeit double the sum so received, collectible in a separate action, or allowable as a counterclaim to an action to recover the principal sum, limitations do not apply where the recovery is sought as a counterclaim.

9. Where a mortgage is tainted with usury by reason of a 20 per cent. cash commission charged by the lender's agent with the lender's knowledge, the mortgagee cannot on foreclosure recover attorney's fees provided for in the mortgage, since under Rev. St. § 1390, the lender in such case is allowed to recover only the sum actually advanced.

10. Where a mortgagee agrees to keep the property insured in an amount equal to one-third of the principal of the loan, and makes default, and the property is destroyed, and on foreclosure it appears that the mortgage was usurious, and that the recovery is limited by Rev. St. § 1390, to the sum actually advanced, the mortgagee's liability under the insurance agreement is one-third of that amount.

11. Where the mortgagor was not notified that the property had not been insured by the mortgagee, who retained, from the loan, money with which to pay the premium, and agreed to have insurance written equal to one-third of the loan, a default in procuring insurance before the property was destroyed is not excused by showing that no insurer would take the risk.

McIver, C. J., and Jones, J., dissenting.

Appeal from common pleas circuit court of Edgefield county; Ernest Gary, Judge.

Action by the Land Mortgage Investment & Agency Company of America, Limited, against Mattie S. Gillam and others. From a decree in favor of plaintiff, but allowing certain counterclaims to defendants, plaintiff appeals. Modified.

The facts as set out in the "case, " plaintiff's Exhibit D, defendants' Exhibits 2 and 3, the decree of Judge Gary, and plaintiff's sixth exception follow:

This is an action for the foreclosure of a mortgage of real estate situate in Edgefield county, asking for a sale of the mortgaged premises and a judgment for deficiency, and was begun on 14th October, 1892. The plaint, which was served on the defendant Mattie S. Gillam on 23d November, 1892, alleges that on the 24th day of December, 1886, the plaintiff, at the request of the defendant Mattie S. Gillam, advanced and lent her the sum of one thousand dollars ($1,000), and thereupon the said defendant made and delivered to the plaintiff her principal note, dated on that day, and payable on 24th December, 1891, at the office of the Corbia Banking Company, in New York City, for one thousand dollars, besides coupons for theinterest due before maturity (interest is stipulated In the said note to be at rate of 8 per cent. per annum, payable annually); that, in order to secure the said note and the covenants contained in the mortgage, the said Mattie S. Gillam executed and delivered to the plaintiff her mortgage, dated January 1, 1887, recorded January 29, 1887, covering the lands described in the complaint. The complaint also alleges that the said mortgage contains covenant on part of mortgagor that, in the event of foreclosure of mortgage in court, the mortgagor agrees to pay attorney fee of $100, for which the said mortgage shall stand as security; and the complaint further alleges that the defendants the Bank of Edgefield and S. B. Burton claim to have interests or liens on the mortgaged premises that arose subsequently to the lien of plaintiff's mortgage. The answer of the defendant Mattie S. Gillam, which was served on December 13, 1892, is as follows: "The defendant Mattie S. Gillam, answering the complaint herein, by Croft & Chafee, her attorneys, (1) admits that she signed such a note and mortgage as are referred to in the complaint, but that she did not receive the amount of money called for by said note and mortgage, but that she only received the sum of $775, the sum of $25 being retained by the plaintiffs for the purpose of insuring the buildings on the premises of this defendant, and the further sum of $200 was retained by Fred. T. Lockhart, the agent of the plaintiff, as commissions for the benefit in part of said company; and this defendant was required to pay interest on the whole amount of said note, which make the interest paid in fact by this defendant at the rate of ten per cent. per annum on the money actually borrowed by this defendant; and that said contract is therefore usurious, and the plaintiff is not entitled to recover any interest upon the principal sum of said note. (2) This defendant, further answering the complaint herein, and by way of counterclaim, alleges that she has paid to the plaintiff the sum of $80 for interest on the 1st day of December, 1887, and the sum of $80 on the 1st day of December, 1888, 1889, 1890, respectively, the same being charged as interest on the said note; that this defendant only received the loan of $800, although her note was given for $1,000, so that the interest actually paid by this defendant to the plaintiffs was at the rate of ten per cent, per annum on the money borrowed; and that the plaintiffs are therefore guilty of usury in making such contract, and in receiving such amount of interest; and that, by reason of such unlawful act on the part of the plaintiffs, this defendant is entitled to receive of the plaintiffs the sum of $192, with interest on $48 from the 1st day of December, 1887, and interest on $48 from the 1st day of December, 1887, and interest on $48 from the 1st day of December, 1889, and interest on $48 from the 1st day of December, 1890. (3) This defendant, further answering the complaint herein, and by way of a second counterclaim, alleges that, at the time of the execution of said note and mortgage, the plaintiffs, through their agent, retained $25 of the money which was charged in the loan to this defendant, which they alleged was for the purpose of insuring the buildings on the mortgaged premises for the purpose of securing said loan, and which insurance the plaintiffs, through their agent, agreed to take out to the amount of $1,000; but that the plaintiffs and their agent were so negligent and unmindful of their agreement, failed to do. (4) That on or about the 12th day of December, 1891, the dwelling house on said premises was destroyed by fire, thereby causing a loss to and damage to this defendant in the sum of $1,000; and this defendant charges that said loss and damage was caused solely by the negligence of the plaintiffs and their agent to effect said insurance as they agreed to do, to the damage of this defendant in the sum of $1,300. (5) This defendant, further answering the complaint, denies each and every other allegation therein contained which has not hereinbefore been specifically admitted. Wherefore this defendant demands judgment that the complaint be dismissed; second, for the sum of $192, with interest as aforesaid, as demanded in the first counterclaim; third, for the sum of $1,300, her damage sustained, as alleged in the second counterclaim; fourth, for such other relief as may be just, and the costs of this action. Croft & Chafee, Defendant's Attorneys. December 10th, 1892." The plaintiff duly replied to the counterclaims, denying each of them, but, if adjudged that the transaction was usurious, then pleads the statute of limitations as a bar to the recovery of penalties on payments made three years prior to the date of the service of said counterclaims, December 13, 1892.

On January 13, 1893, the attorneys for Mrs. Gillam served a notice of motion to submit certain issues to a jury. This motion was duly heard at March term for Edgefield county, by Judge Witherspoon, who at same time heard demurrer to answer of defendant ...