Nichols v. Osborn

• Decision Date: 01 April 1886
• Citation: 41 N.J.E. 92,3 A. 155
• Parties: NICHOLS v. OSBORN and Wife.
• Court: New Jersey Court of Chancery

3 A. 155

41 N.J.E. 92

NICHOLS

v. OSBORN and Wife.

Court of Chancery of NEW JERSEY.

April 1, 1886.

On bill to foreclose. On final hearing on pleadings and proofs.

Frank Bell, for complainant.

Leslie Lupton, for defendant, Uzal M. Osborn.

RUNYON, Ch. The proof is that Osborn, the mortgagor, applied to Robert E. Chetwood, a counselor at law, for a loan of $0,000, which the latter had advertised. The money belonged to William E. Nichols, the complainant's father. Osborn obtained the loan, and agreed to pay Chetwood 10 per cent. for his commissions for making it. The mortgage was given for $6,000. Chetwood paid Osborn only $5,400. Nichols is dead, and the complainant holds the mortgage by assignment from Nichols' executors. Osborn, in his answer, sets up the defense of usury. The proof does not sustain it. According to his own testimony, Osborn agreed to pay Chetwood 10 per cent., or $600, for his commissions, and there is no evidence whatever that Nichols received any of that money, nor that he did not pay over to Chetwood the whole of the $6,000. There is no evidence to connect him in any way with the bargain for commissions, or to show that he had even any knowledge of either branch of the transaction. It is true, Chetwood says he only received 2 per cent. for his commissions, and does not deny that the agreement was that he was to receive 10 per cent., and admits that he paid Osborn only $5,400. But whether he received the rest of the 10 per cent., and paid it to Farnham, who also was the lender's agent in making the loan, does not appear. Nor does it appear whether Farnham got it from the lender directly or not. Farnham is dead. Osborn's testimony is that Chetwood retained $600 for his commissions, and that that was in accordance with the agreement between them. There will be a decree for the complainant for principal, interest, and costs.

NOTE.

Where illegal interest as bonus is paid to the agent of a mortgagee, under the terms of the contract between the agent and the mortgagor, with the knowledge of the mortgagee, the mortgage is tainted with usury. Bonus v. Trefz, (N. J.) 2 Atl. Rep. 309.

When an agent, who is authorized by his principal to lend money for a lawful interest, exacts for his own benefit more than the lawful rate, without authority or knowledge of his principal, the loan is not thereby rendered usurious. Call v. Palmer, 6 Sup. Ct. Rep. 301.

When an agent, without the knowledge or consent of the principal, takes a bonus or commission to himself beyond the legal rate of interest, the usury of the transaction does not affect the loan of the principal. Bingham v. Myers, (Iowa,) 1 N. W. Rep. 613. And in this case—where the agent was the husband, and the principal the wife—the court hold that knowledge on her part of the usurious character of the transaction in her behalf could not be presumed from the relationship of the parties, as against their positive evidence to the contrary.

In Acheson v. Chase, (Minn.) 9 N. W. Rep. 734, C. made A. his agent to loan money at A.'s discretion, (land securities to be taken in C.'s name,) at the lawful rate of interest, which was then 12 percent. C. was to pay A. nothing for his services to him in and about making loans, but he authorized him to collect of the borrower a reasonable compensation for such services. A. made a loan to the plaintiff of $500, upon plaintiff's note and mortgage for that sum, drawing 12 per cent....