Matthews v. Georgia State Savings Association

Decision Date14 January 1918
Docket Number90
Citation200 S.W. 130,132 Ark. 219
PartiesMATTHEWS v. GEORGIA STATE SAVINGS ASSOCIATION
CourtArkansas Supreme Court

Appeal from Clay Chancery Court, Western District; Archer Wheatley Chancellor; reversed in part, affirmed in part.

Decree reversed and cause remanded.

F. G Taylor, for appellant.

The loan is usurious. The payment or charge for interest prior to the time the money was received and the payment of a commission to Brown and the expenses of McRaven constitute usury. Webb on Usury, § 308, and note 1; 29 Cyc. 956 and notes 27-8-9; 54 Ark. 566; 29 Cyc. 975 and note 21; 105 Ark 653.

Huddleston Fuhr & Futrell and Hitck & Denmark (of Georgia), for appellees.

1. The loan is not usurious. 129 Ark. 167; 74 Ark. 241; Webb on Usury, § 219.

2. Brown's fee for examining the title and preparing the abstract and McRaven's expenses did not make the loan usurious. 39 Cyc. 982; Webb on Usury, § 323; 51 Ark 548; 55 Id. 268; 62 Id. 431, etc. See also 39 Cyc. 945, 654, 985; 29 A. & E. Enc. Law 486, 505-6-8; Webb on Usury, § 119, etc., 221; 37 Ark. 534; 68 Id. 162.

3. The partial payment plan was correctly applied here. Webb on Usury, § 219; 1 Cranch (C. C.) 498; 22 Fed. Cases, No. 13107; 13 Peters 359; 21 Fed. Cases No. 12156a; 1 Johns Chy. 13; Southerland on Damages, § 379.

4. On the cross-appeal Brown was not appellants' agent and his fee was not chargeable to appellant. Nor did it make the loan usurious. 51 Ark. 534, 548; 63 Id. 385; 123 Ark. 612; 126 Ark. 155; 67 Id. 159; 2 C. J. 656, 1224; 31 Cyc. 1224; 105 Ark. 653.

5. McRaven's expenses were properly chargeable to appellant. 3 Cyc. 982; 62 Ark. 431; Cent. Digest, §§ 113-116.

6. The insurance premium was a proper charge against appellant. 27 Cyc. 1077.

STATEMENT OF FACTS.

J. A. Matthews instituted this action in the chancery court against the Georgia State Savings Association and A. D. McRaven to cancel, on the ground of usury, a mortgage executed by him on certain real estate situated in the Western District of Clay County, Arkansas, to said association to secure it for a loan made to him. The association defended on the ground that there was no usury in the transaction and filed a cross-complaint asking for a judgment against Matthews for the amount of his debt and for a foreclosure of the mortgage given to secure it.

According to the testimony of J. A. Matthews himself, he dealt with A. L. Brown of Corning, Arkansas, as agent for the Georgia Savings Association. Brown charged him, and he paid Brown, the sum of $ 35 as a commission for procuring the loan. McRaven, an agent of the association, came from Little Rock, Arkansas, to Corning, Arkansas, to inspect the property and Matthews paid one-half of his railroad fare which amounted to $ 7.50. Matthew executed his bond to the association for the sum of $ 2,800 with 10 per cent. interest per annum from date until paid and the date of the bond was the 21st day of May, 1915. A deed of trust was executed by Matthews to the association on the same day upon the real property involved in this suit for the purpose of securing the bond and McRaven has been substituted as trustee in said deed of trust. By the terms of the bond, Matthews obligated himself to pay to said association at its place of business in Savannah, Georgia, on or before the last business day in each month until ninety-six monthly payments have been paid, the sum of $ 40.79, which is made up of the sum of $ 29.15 as installment of principal and $ 11.64 as installment of interest upon said loan. It was also stipulated in the bond that he should take out and keep paid the sum of $ 2,800 fire insurance and $ 2,800 storm insurance. The money was not received by Matthews until June 9, 1915. He commenced paying installments in the sum of $ 40.79 on the last day of June, 1915, and made all the payments monthly thereafter until January 1, 1916.

According to the testimony of Edward W. Bell, he was the managing vice-president and had had charge of the business of the Georgia State Savings Association since October, 1890. The letter of acceptance outlining the terms and conditions under which the association would make a loan to Matthews was written by him on the 6th day of May, 1915, at the association's office in Savannah, Georgia. In January, 1915, the association ratified the appointment of A. L. Brown as its local attorney and correspondent at Corning, Arkansas. The association never gave him authority in the matter of procuring or granting loans. The association agreed to consider such applications from his customers as came up to its requirements. Where such customers made formal applications for a loan the association made the necessary investigation as to property values, etc., and submitted the matter to its board of directors. If accepted by the board of directors, the applicant was then notified of the terms and conditions under which the loan would be granted. The association never agreed to pay Brown any commission or fee in connection with procuring or making loans and Brown never had any authority from the association to charge any commission therefor. The association never paid Brown any fee or commission for the loan made to Matthews and did not know about any commission having been paid him and received no part thereof. Brown was named by the association as an attorney satisfactory to the association to make abstracts and examine titles to real estate upon which loans are made in his county. A. D. McRaven was a loan inspector for the association in charge of the section of Arkansas in which the town of Corning is situated. He had no authority to make any contract on behalf of the association and worked on a salary paid him by the association. The association had no knowledge that Matthews paid to McRaven any part of his traveling expenses or inspection fee in examining the land in question. The $ 2,800 loan to Matthews was closed on June 9, 1915. When the check of the association for this amount payable to the order of Matthews was issued and sent to A. L. Brown and Matthews was notified to call on him at once and receive the money on June 8, 1915, the association wrote to Brown that the loan had been granted and that the first installment on the contract, $ 40.79, would fall due and must be paid by the last day of the present month and that he would also be due the association a like amount by the last day of each month thereafter until ninety-six installments had fallen due and had been paid in accordance with the terms of the contract.

The testimony of the vice-president was corroborated by that of the bookkeeper of the association. Other testimony will be stated or referred to in the opinion.

The chancellor found that there was no usury in the transaction and a judgment was accordingly entered against Matthews in favor of the association for the balance due it. A decree of foreclosure of the deed of trust given to secure the debt was also entered of record.

The plaintiff, Matthews, has appealed, and the defendant has taken a cross-appeal.

OPINION

HART, J., (after stating the facts).

We will first consider the cross-appeal. The chancellor found that A. L. Brown was the agent of the Georgia State Savings Association and was paid a commission of $ 35, but the chancellor did not find that such commission was paid with the lender's knowledge express or implied. After giving Matthews credit for the full amount of the commission paid with interest, the court rendered a judgment in favor of the association for the balance due it and entered a decree foreclosing the deed of trust securing the loan.

In the case of Vahlberg v. Keaton, 51 Ark. 534, 11 S.W. 878, the court said:

"The lender may receive for the forbearance of money 10 per cent. per annum and no more. In excess of that his agent can receive no bonus from the borrower. If the agent do receive from the borrower a bonus in excess of the highest lawful interest, either with his knowledge, or under circumstances from which the law will presume he had knowledge, then the transaction is usurious; while, if the agent received the excessive bonus without his knowledge, and under circumstances from which his knowledge could not be reasonably presumed, the transaction would not be usurious."

The bond provided that the loan in question should bear interest at...

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