Rossberg v. Holesapple

Decision Date27 July 1953
Docket NumberNo. 7802,7802
Citation260 P.2d 563,123 Utah 544
PartiesROSSBERG et al. v. HOLESAPPLE et al.
CourtUtah Supreme Court

John Farr Larson, Salt Lake City, for appellants.

Woodrow D. White, Salt Lake City, for respondents.

WOLFE, Chief Justice.

Action by the appellants to foreclose certain security given by the respondents for the payment of a $1600 promissory note executed by them. The respondents denied liability on the ground that the note was usurious. From a judgment declaring the note and the security null, void and usurious and cancelling the same, this appeal is prosecuted.

The evidence is substantially without dispute. On April 11, 1951, the respondents, as buyers, and Jack H. and LaVon M. Rohlfing, as sellers, executed an 'Earnest Money Receipt and Agreement' for the purchase and sale of a house in the southeastern section of Salt Lake City for the sum of $16,500. Mr. Rossberg, one of the appellants, a salesman for the Christensen Realty Company, handled the sale. Respondents made a payment of $500 upon signing the agreement and agreed to pay an additional $2000 on delivery of a final contract of sale on or before April 20, 1951. The balance of the purchase price was to be paid in monthly installments. On April 20th, the respondents were unable to make the $2000 payment, having been unable to obtain the funds from relatives as planned, and the next day informed Mr. Rossberg to that effect. After some discussion with the repondents, Rossberg indicated that he might be able to obtain the funds for them. He explained that he did not have the money himself, but that he thought he could borrow it from his father-in-law in Logan, 86 miles distant. Mr. Holesapple, one of the respondents, testified Rossberg advised the respondents, however, that it would cost them $100 to obtain the necessary funds, but that he (Rossberg) and his employer (Mr. Milton Christensen) would bear that charge in view of the fact that they were realizing a commission on the sale of the Rohlfing house. Both Mr. Rossberg and Mr. Christensen deny that they agreed to bear the $100 charge.

At the request of the respondents, Rossberg traveled to Logan and borrowed $1500 at six per cent interest from a friend of his father-in-law, the father-in-law vouching for Rossberg's credit. When Rossberg informed the respondents that he had obtained $1500 for them they expressed satisfaction and agreed to meet with him that day to close the transaction, but they failed to do so, and later the same day informed Rossberg that they could not go through with the purchase. The next day Rossberg, his wife, and Mr. Christensen, being of the opinion that the Rohlfing house was a good buy, entered into a contract with the Rohlfings for its purchase. The Rossbergs and Mr. Christensen each made a payment of $1250 to the Christensen Realty Company pursuant to that contract. At the same time another contract was signed by the Rohlfings wherein the respondents were named as buyers. Mr. Rohlfing instructed Mr. Christensen and he agreed that if the respondents became able to purchase, they should be allowed to do so, and the other contract would be destroyed. Later that same day the respondents approached Mr. Christensen and informed him that they had changed their minds and would like to purchase the house if Rossberg would loan them $1500. Rossberg agreed to do so and destroyed the contract which he and his wife and Mr. Christensen had entered into with the Rohlfings. The respondents then signed the contract for the purchase of the house which the Rohlfings had signed earlier that day. The respondents also executed a promissory note for $1600 payable in 90 days to Rossberg and his wife, bearing interest at six per cent, and Rossberg paid the sum of $1500 to the Christensen Realty Company for the benefit of the respondents. As security for the payment of the note, the respondents assigned to the Rossbergs their interest in their contract with the Rohlfings. Respondents understood at that time that the Rossbergs had executed a contract for the purchase of the home and were relinquishing their rights in the property in favor of the respondents. Mr. Holesapple, one of the respondents, testified that in signing the promissory note he understood he was paying a $100 fee for obtaining the money; that he had no knowledge of what constituted usury and did not intend to violate the law; and that he could do nothing else but sign because 'they had five hundred dollars of my money' (earnest money), although he admitted Mr. Christensen had told him on several occasions that he would refund his $500 payment if the respondents could not go through with the purchase.

See 15-1-2, Utah Code Annotated 1953, provides: 'The parties to any contract may agree in writing for the payment of interest for the loan or forbearance of any money, goods or things in action, not to exceed, except as otherwise provided by law, ten per cent per annum; * * *.' Sec. 15-1-6 declares void all contracts in which a greater amount of interest is reserved, taken or secured, and sec. 15-1-9 authorizes courts to enjoin suits brought to recover on usurious contracts and to cancel the contract and any security given for the payment thereof.

The appellants assail the judgment rendered below, which declared the note usurious and cancelled the note and the security, on the ground that the evidence fails to establish a corrupt or unlawful intent to violate the usury law. It is well settled in this state that such an intent on the part of the lender, at least, is a necessary element of usury and must be proved. Cobb v. Hartenstein, 47 Utah 174, 152 P. 424, 430; Mathis v. Holland Furnace Co., 109 Utah 449, 166 P.2d 518. In the Cobb case, this court speaking through Mr. Justice Frick said: 'As we have seen * * * in order to establish usury, the existence of an unlawful or corrupt purpose is one of the essential elements which must be clearly proved to exist at the time the contract or transaction which is claimed to be usurious is entered into. Where the contract upon its face is usurious, the intention may be inferred, and the inference may be so strong that no express denial can avoid the same. Where, however, as here, the contract is a legitimate one, and is one that is frequently used by stockbrokers, but it is nevertheless contended that it is a mere shift, cloak, or cover for usury, then it requires substantial evidence of a corrupt or unlawful intent, or some fact or facts from which such an intention may be clearly inferred.' In that case the plaintiff and defendant were stockbrokers engaged in buying and selling stock on commission and on personal account. It was contended by the plaintiff, and the district court found, that contracts which they had entered into whereby the plaintiff purportedly purchased on a margin and the defendant purportedly sold on a margin certain mining stock at an agreed price was in fact a cloak to cover a usurious loan of money between the parties. We reversed the judgment of the district court, holding that in view of the fact that the contracts were not regarded by the parties as loan contracts but were in daily use by stockbrokers on a local stock exchange, there was no evidence of an intent on either part to loan or borrow money at a usurious rate.

In the instant case, it is clear that the transaction between the parties was nothing more than a simple loan of money and that the parties so regarded it. While it is true that there is no evidence that either party had the specific intent to violate any law or understood what constituted usury, the necessary intent to constitute usury is the intent to exact payments which exceed the amount of interest allowed by the statute--not the specific intent to violate the statute. Manchester Realty Co. v. Kanehl, 130 Conn. 552, 36 A.2d 114; Atlas Realty Corp. v. House, 123 Conn. 94, 192 A. 564, 567. In the last cited case the court quoted with approval the following statement from 66 C.J. pp. 177, 178, 179: 'The intent which enters into and is essential to constitute usury is simply the intent to take and reserve more than permitted by law for the loan. * * * By the weight of authority usurious intent is implied if excessive interest is intentionally taken or reserved. * * * If the mistake be as to the legal right to acquire the excessive payment, which is received in good faith, there is nevertheless usury. Ignorance of the law excuses no one, not even an honest money lender.' See Washington Fire Insurance Co. v. Maple Valley Lumber Co., 77 Wash. 686, 138 P. 553, to the effect that the law presumes the necessary unlawful intent from the mere fact of intentionally doing that which is forbidden by the statute.

The note in question is not usurious on its face. It provides for the payment of $1600 in 90 days, plus interest at 6%. Both parties readily admit, however, that the respondents only received $1500. Appellants attempt to justify their $100 bonus on the grounds that (1) the transaction was a sale of the appellants' credit instead of a loan of money from them, and (2) part of the $100 was to cover Mr. Rossberg's expenses in traveling to Logan to obtain the funds from a third person. As for the first ground urged, it is well established that a sale of credit, as distinguished from a loan of money, does not come within the purview of usury laws. 55 Am.Jur. 343; Oil City Motor Co. v. C. I. T. Corp., 10 Cir., 76 F.2d 589, 104 A.L.R. 240; annotation at 104 A.L.R. 245. But we need not here pursue the technical differences between a sale of credit and a loan of money. Suffice it to say that the mere fact that Mr. Rossberg had to travel to Logan and use his credit to borrow the necessary money from a third party before he could make available the funds to the respondents does not make the transaction between the appellants and respondents a sale or loan of credit instead of a loan of money. Chakales v. Djiovanides, 161...

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  • Brent Brown Dealerships v. Tax Com'n, Mved
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    ...and Brent Brown is not excused from complying with the law simply because the law was unknown to him. See Rossberg v. Holesapple, 123 Utah 544, 260 P.2d 563, 566 (1953) ("Ignorance of the law excuses no one ...." (quotations and citation omitted)). The imposition of the $135,000 fine did no......
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    ...herein. 1 Neil v. Utah Wholesale Grocery Co., 61 Utah 22, 210 P. 201; Olsen v. Reese, 114 Utah 411, 200 P.2d 733, 736; Rossberg v. Holesapple, Utah, 260 P.2d 563; Johnson v. Allen, 108 Utah 148, 158 P.2d 134, 159 A.L.R. 256.2 Ashton Jenkins Ins. Co. v. Layton Sugar Co., 85 Utah 333, 39 P.2d......
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    ...in advance to reimburse the lender for such costs. (Chandler v. Cooke (1931) 163 Miss. 147, 137 So. 496, 498; Rossberg v. Holesapple (1953) 123 Utah 544, 260 P.2d 563; and see cases collected in 91 A.L.R.2d 1389, 1398--1400.) Thus, even if we were to hold that the defendant may charge Burr ......
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